TMI Blog1996 (3) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Rules, exemption from excise duty was granted in favour of certain small scale industries manufacturing the goods specified in the schedule to the Notification provided their annual turnover did not exceed the limit prescribed. The relevant portions of the Notification read : Nothing contained in this notification shall apply if the 3. aggregate value of clearances of all excisable goods for home consumptions. - by a manufacturer, from one or more factories, or(a) from any factory, by one or more manufacturers, had exceeded(b) rupees one hundred and fifty lakh in the preceding financial year. The exemption contained in this notification shall be4. applicable only to a factory which is an undertaking registered with the Director of Industries in any State or the Development Commissioner (Small Scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulations) Act, 1951 (65 of 1951)........ Explanation IV. For the purposes of this notification, where the specified goods manufactured by a manufacturer, are affixed with a brand name or trade name (registered or not) of another manufacturer or trade, such specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de name shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using `such name or mark with or without any indication of the identity of that person. Now, what does Para 7 provide and why? It provides that the benefit of Notification No. 175 shall not be available to a small manufacturer, who affixes the brand-name or trade-name (registered or not) of another person, who is not eligible for the grant of exemption under the said notification. Explanation VIII defines the expressions brand-name or trade-name . The explanatory note appended to the notification states that (T) his amendment seeks to deny small scale exemption in respect of specified goods affixed with the brand-name/ trade-name of a person who is not eligible for the exemption under Notification No. 175/86-C.E., dated 1-9-1986. The object underlying Para 7 is self-evident. If a small manufacturer who affixes the brand- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Investments Ltd. v. Union of India (1989) 3 SCC 698, Shri Srinivasa Theatre v. Government of T.N. (1992) 2 SCC 643 and Subhash Photographics v. Union of India [(1993) Supple. 3 SCC 323 : JT (1993) 4 SC 116]. Since the Parliament cannot constantly monitor the needs of and the emerging trends in the economy and is in no position to engage itself in day-to-day regulation and adjustment of import-export trade accordingly, power is conferred upon the Central Government to provide for exemption from duty of goods, either wholly or partly, and with or without conditions, as may be called for in public interest. We see no warrant for reading any limitation into this power. If the public interest demands that the exemption should be absolute, the Central Government can do so. Similarly, if the public interest demands that the exemption should be granted only subject to certain conditions it can provide such conditions. Then again if the public interest demands that conditions specified should relate to a stage subsequent to the date of clearance it can do so. The guiding factor is the public interest. 7.Though Rule 8 does not use the expression public interest unlike Section 25 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Legislature. The Courts should bear in mind the following observations made by a Constitution Bench of this Court in R.K. Garg v. Union of India - 1982 (1) S.C.R. 947 : Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. If has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straight jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitiously expressed than in Morey v. Doud (1957) 354 U.S. 457 where Frankfurter, J. said in his inimitable style : `In the utili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abuse come to light the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. 9.The same principle should hold good in the matter of Exemption Notifications as well, for the said power is part and parcel of the enactment and is supposed to be employed to further the objects of enactment - subject, of course, to the condition that the Notification is not ultra vires the Act, and/or Article 14 of the Constitution of India. (See P.J. Irani v. State of Madras - A.I.R. (1961) S.C. 1731 = 1962 (2) S.C.R. 169). 10.We are of the opinion that the judgment under appeal is erroneous for the reason that it has not borne in mind the aforementioned relevant consi- deration. It is equally in error in saying that the classification it brings about - assuming that it does so - is not reasonable or that it has no nexus with the object underlying the Notification. Not only is Para 7 consistent with the object underlying the Notification, it indeed promotes it, as explained hereinbefore. We are constrained to say that the High Court has not bestowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the ratio of Cibatul. Food Specialities Limited was a case where it manufactured certain goods whereupon it affixed the brand-name of Nestle under an agreement with the latter and sold them to Nestle. The question was as to how to value the said goods. The Revenue contended that the value should be determined on the basis of wholesale price at which Nestle sold those goods. The plea was rejected by this Court holding that the wholesale price at which Food Specialities sold the said goods to Nestle should be basis for determining the value. 13.For all the above reasons, we are of the opinion that the decision under appeal is unsustainable in law. For the same reasons, the decision of the Calcutta High Court in Banner and Company is also held to be wrongly decided. [We are, of course, not told whether any Letters Patent Appeal was preferred against the said judgment and if so, what was the result?]. 14.The appeal is accordingly allowed. There shall be no order as to costs as respondents though served is not represented. EDITOR'S COMMENTS The constitutional validity of Para 7 of Notification No. 175/86-C.E., has been considered by a number of High Courts. The Al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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