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TMI Blog1994 (4) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods produced by them have certain advantages in the market. The classification among the SSI units between those using the brand names and those not using the brand names for consideration of the benefit in terms of the Notification is not arbitrary and is based on relevant consideration. The Hon ble Karnataka High Court held that the challenge to the validity of the Notification as unconstitutional is not acceptable. The Hon ble Karnataka High Court has held as under : 9. It was then contended that the denial of benefit of exemption to the petitioners is arbitrary and violative of Article 14 of the Constitution. Object behind the grant of exemption is to benefit the SSI Units; if so, why should the benefit be denied to a SSI Unit solely because, the manufactured goods bear a brand name. It was argued that there is no nexus between the basis of the classification and object of the notification. In this connection, Khandige Sham Bhat etc. v. Agricultural Income Tax Officer, Kasargod Another (AIR 1963 S.C. 591) was referred. Principles governing the applicability of Art. 14 of the Constitution are now quite settled. It is true that even a fiscal regulation has to satisfy th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so long as they are not inconsistent with the provisions of the Constitution. It is only where there is abuse of its powers and transgression of the legislative function in levying a tax, it may be corrected by the judiciary and not otherwise. Taxes may be and often are oppressive, unjust, and even unnecessary but this can constitute no reason for judicial interference. When taxes are levied on certain articles of services and not on others it cannot be said to be discriminatory. Cooley observes : Every tax must discriminate; and only the authority that imposes it can determine how and in what directions . The TAC having decided to impose weighing dues on the goods mentioned in the bye-laws it is not for the Court to question it on the ground that some similar commodities or commodities arriving by rail or road were not subjected to the tax." These words certainly do not exclude the judicial scrutiny of fiscal legislation under Article 14 of the Constitution, but permits a wide latitude to the legislature in selecting the subject for the levy; the legislative wisdom in granting exemption to similar subjects is to be rarely questioned." The petitioners allege discrimination, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual competition by big industries. The entire object is frustrated if the S.S.I. industries unit instead of selling its product in the market on its own name itself become prey of big industries and big Industrial Houses really eats up the entire benefit without embarking on any manufacturing articles at all." 16. Paraphrased, the object of the impugned notification appears to be two-fold : (i) to see that the big industrial houses did not avoid payment of excise duty, and (ii) to give an advantage to the small scale industries in the market as against big industrial houses . 17. As already held the question whether the Central Government can or ought to pursue these objects is not for this Court to determine. But in pursuit of these objects, Small Scale Industries catering to the needs of large scale units have been divided into two groups by the impugned notification (i) Small Scale Industries not putting the brand name of the large scale unit on the product supplied and (ii) small scale industries putting the brand name of the large scale unit on the goods to be supplied. It is to be emphasised that the only distinction between the two groups is that the first group puts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Superintendent of Central Excise Ors. : 1981 E.L.T. 730; Union of India v. Cibatul Limited : 1985 (22) E.L.T. 302 and the Joint Secretary, Government of India v. Food Specialities Ltd : 1985 (22) E.L.T. 324. 24. The putting of the brand name therefore is not a material factor for imposing excise duty. Apart from the judicial decisions on the point, Explanation IV to paragraph 6 of the earlier Notification clearly indicates that the putting of the brand name of the large scale unit would not mean that the small scale industrial unit was not the manufacturer of the goods. Therefore a mere adding of the brand name is an irrelevant consideration as far as the excise duty is concerned. 25. Therefore, having regard to the settled legal position even if a small scale industrial unit like the petitioner, affixed the brand name of the large scale unit, the manufacture would continue to be that of the small scale industry and the incidence of excise duty could be avoided by the Large Scale Unit, by requiring the Small Industrial Unit to produce specified goods without the brand name and then putting on the brand name itself and the Large Scale Unit would, even under the impugned no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would need a factual answer, only at the time of argument. Secondly, the question is whether the classification was rational having regard to the objectives irrespective of the question of prejudice and finally, the factor of prejudice is inbuilt in the situation where small scale industries like the petitioner would be at a more disadvantageous position than other similar small scale industries manufacturing materially identical goods for the same type of customer. 30. Neither of the objects specified in the affidavit of the respondents has therefore been achieved and it must be held that the distinction created by the impugned notification is arbitrary. Accordingly, the impugned notification cannot stand on the principle enunciated in Moti Das s case and must be quashed." 5. The Hon ble Calcutta High Court has held that the Notification, as amended, would offend Article 14 of the Constitution of India and, therefore, is not sustainable under the Constitution. 6. In view of the above conflicting views between the Hon ble Karnataka High Court and the Hon ble Calcutta High Court on the issue in question, on the basis of the pleas urged before us by the parties, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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