UNION OF INDIA versus PALIWAL ELECTRICALS (P) LTD. AND ANR.

Citation: [1996] 3 S.C.R. 845 · Decided: 25-03-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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· UNION OF INDIA 
v.; 
PALIWAL ELECTRICALS (P) LTD. AND ANR: 
MARCH 25, 1996 . 
(B.P. JEEVAN REDDY _AND SUHAS C. SEN, JJ.J 
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Central Exdse Rule, 1944 : Rule 8. 
Excise-Spedfieigoods-'-Exemption from. duty Jo certain small scale 
industrie~otification for-Amendment of-Exclusion of benefit to small . c ' 
manrifacturers who affu:ed. brand nanie of other persons not eligible for 
exemption-Held not violative of Article l~bject of exemption notification. 
explained. 
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Excise duty-Power of Government to exempt-Nature and charac-
te~eld in public inieres~t is·d potent power to regulate and manage the D 
economy-Challenge to ex~mption poiiier-Held ·heavy bwden 'lies ·;,,;·the ' 
personwho·cJiallengfsit."·.,~ .... J· 
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In exercise of its power. under.Rule 8 of the' Central Excise' Rules;· 
1944, the Central Government issued a Notification No.175 of1986. Under E ; 
this' Notification exemption froin exdse duty was granted in favour of 
certain small scale Industries manufacturing the goods specified In the 
schedule tO ihe Notiri~iion Pro~ided their annu~l tu~~ver did riot exceed 
the limit prescribed •. Subsequenily this Notification was' amended by 
Notilieation No. m inserti~g Para 7 and Explan~U~n vin th~rein'. P~ra 
7 provided that. the· benefit or Noimca'tion No. 175 shall not· be available . : F 
to a. ~mall' manufacturer; who ·~rraxed the brand·na.;..e .. ~r 't~de~n~me 
(reiiistered ~r not) of anothe~ person, who is not eligible f~r' the grallt of ' 
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· , exemption under the said· notification. EXplanation VIII defined the ex:- . 
pressions "brand-name or irade-imme·. nie'A11ah'abad mg&· court siriick, 
do~ para~ 1 or _the __ ~~~'?~uo~ -N~un~u~n-~o. 1-1~ ~~f ~9_s_~· o~_ ih~.sroU~'~ :· '(; · : , 
that it was violative of Article 14 of the Constitution of India. Against the 
decision of th~ High Court an appe~I was preferred b~ro,'.e ·u,is C~urt.. 
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Allo"ing the appeal, this Court 
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HELD : 1. The impugned judgment is unsustainable in la;._.: It Is 'H' l · 
845 
846 
SUPREME COURT REPORTS. 
[1996] 3 S.C.R. 
A erroneous for the reason that it has not borne'ln mind the relevant 
consideration. The High Court erred In saying that the classification it 
brings about • assuming that it does so • is not reasonable or that it bas 
no nexus with the object underlying the Notification. Not only is Para 7 · 
consistent with the object underlying the Notification, it indi:ed promotes 
B it. (854-G-HJ 
Banner a11d Company v. Union of India, (1994) 70 ELT 181, disap· 
proved. 
Bush (India) Ltd. v. U11io11 of India & Ors., (1980) 6 ELT 258, Bata 
C (India) Ltd. v .Assista111 Collector of Central Excise, Patna, (1978) 2 ELT 211, 
Bapalal and Co. v. Government of India & Ors., (1981) 8 ELT 581, Carona 
Sahu Co. Ltd. v. Superilltendent, Central Excise & Ors., (1981) 8 ELT 730 
and Joint Secretary to Govemmellt of India v. Food Specialities Ltd., (1985) · 
22 ELT 324 SC, distinguished . 
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2. The.object of the notification is self-evidence. It is to help the small 
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manufactures to survive in the market which is dominated by .brand· 
names/trade-names. Thus it serves the socio- economic objectives of helping 
the small manufacturer and increasing the industrial production. Explana· 
tion IV of the Notification is really clarificatory in. nature. (849-C-E] 
Union of India & Ors. v. Cibatul Ltd., (1985) 22 ELT 302, referred to. 
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3. Th~ object underlying Par~'7 is self-evident. !fa small manufac· 
tur~r wh.f! ,~ffixes the brand-name or trade-name of an 'ineligible 
manufacturer' .(a convenient expression to denote. a manufacturer outside 
F . th~ puITi~~f N?tificatio~ No.175 ~f1986 and who ow~s or i~.entitled t~ 
use ll brand-name .or. trade-name), the very reason d'etre for granting the 
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exemption disappelll'S. By extending the benefit or exemption, the State. is. 
r.,;qoing p~blic revenue to which it is entitled under the :Act. The loss. io 
puhllt reve.;;-.e is supposed to be compensated by helping along th~ s;..au . 
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G ma11uracturers to survive in the market and continue to produc

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