Holding

Paragraph 7 of the exemption notification is constitutionally valid and the High Court’s order striking it down is set aside.

Summary

The Union of India appealed a decision of the Allahabad High Court that struck down paragraph 7 of Central Excise Notification No. 175 of 1986, which excluded from exemption any small‑scale manufacturer that affixed the brand or trade name of a person not eligible for the exemption. The Court examined whether this amendment violated Article 14 of the Constitution and whether the classification was reasonable and connected to the notification’s purpose of helping small manufacturers compete with well‑known brands. It held that paragraph 7 is consistent with, and furthers, the object of the notification and that the power to grant exemptions under Rule 8 of the Central Excise Rules is a valid legislative tool in the public interest. Consequently, the High Court’s judgment was set aside and the appeal was allowed.

Issues considered

Does paragraph 7 of Notification No. 175 of 1986, as amended, violate Article 14 of the Constitution?
Is the classification made by paragraph 7 reasonable and has a nexus with the object of the exemption notification?
Is the power to exempt under Rule 8 of the Central Excise Rules constitutionally valid?
Is the amendment to the exemption notification within the legislative competence of the Central Government?

Legislation cited

Subjects

Excise dutyExemption notificationArticle 14ClassificationCentral Excise RulesSmall scale industryBrand nameTrade nameLegislative powerPublic interest

Judgment

' · UNION OF INDIA
'~ v.;
PALIWAL ELECTRICALS (P) LTD. AND ANR:

MARCH 25, 1996 .

(B.P. JEEVAN REDDY _AND SUHAS C. SEN, JJ.J B'
'-.•
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 ofArticle l~bject of exemption notification.
explained. ·' · · · ··
(
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· . ·i._,•,• -·-:.i '· ;•·•.-_,, .... _ 1 • 1
··- ... ; : • ·. ,. ' . ' !- ·- • • ::.. : •: ,::; ., • ; ·, . ''• • " ·.·· .. ' -, -,_.

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,
,, .•• ' / . f~r' the
who is ·"not -eligible ..,,.. grallt
.... of :''
· , exemption under the said· notification. EXplanation VIII defined the ex:- .
_. --~~

or
pressions "brand-name 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.. ..
• • • ' , - ., •• , •• ' ··, • • • ' < • .'· - ',,.... --"'

Allo"ing the appeal, this Court
. ,l.

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 .
•
D 2. The.object of the notification is self-evidence. It is to help the small
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]
E Union of India & Ors. v. Cibatul Ltd., (1985) 22 ELT 302, referred to.

. 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
·: - · ·4'
.or.
-
trade-name),
· , ..
the very
'·. ., . , -
reason d'etre
• · - ·
for granting
.· . .• _• , • ··c
the
.• -

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 .
G ma11uracturers to survive in the market and continue to produce. Once the
sni'au .
·n;anufacturer
_.' ',. ·-t~ .,
becomes one "1th. his competitor, .
the. need for '
sup:
--
.
po.rting .cmt~bes disappears .. There. is .no reason why in such .a case the
State shouldforego the revenue due to it under the Act.

4. The. power of exemption is a potent weapon .in the hands of the
H Central Government to regulate and manage the economy and to achieve
\ \

U.0.1. v. .PALIWAL ELECTRICALS 847
c•
the various social and economic objectives :of the State. ·the esemption · A
· power is conceived in public interest.

Union of India & Ors. v. Mis. Jalyan Udyog & Anr., [1994) 1 SCC 319
and Orient Weaving Mills v. Union of India, AIR· (1963). SC 98 = [1962)
Supp. 3 SCR 481, referred'to. · · •· ·
"B
v.
· Elel Hoiels and lnvestnebts Ltd. Union Of India:, [1889) 3 SCC'69s,
. Sri Sriniva:Sa Theatre v. Government if Tamil Nadu, [1992) 2 SCC 643 aild
Subhash Photographies v. Union ofindia/[1993]·Supp. 3 Ste 31.3f:Jt
(1993) 4 SC 116, cited.

S. Gerierally speaking the' Exemption Notifii:ation aiid tlie'tenns and
.c
conditions prescribed 'therein represent the poliCies of .the /governineilt
. evolved to stibse..Ve public interest and public revenue. A heavy burden li~s
. upon. the person who challenges them on the ground of Article 14. Unless
othernise established the court must presume that. the said· amendment
was found by the CentralGovernnient to be necessary for giving effectto :b
-• itS 'poiicy (underlying the notification) cin the basis of the wotking of ihe
. said Notification a~ci. that such an amendment was found necessary to
prevent persons f;.om taking unfair advantage of the concession. In this
case,, the esplanatory note appended to amending Notification says so in
so many words. If nec~ssary .the Court could have cailed upon the Central 'E
Government to establish the reasons behind the amendment. (It did not
think it fit to do so) .. It is equally necessary to bear in mind that in
economic and. taxation sphere, a large latitude should be allowed to the
Legislature. [852-F-G)

. R.K Garg v. Union of India, [1982) l SCR 947; P.J. Ira11i v. State of 'F
Madras, AIR (1961) SC 1731 = [i962] 2 SCR 169; Morey v. Doud, [1957]
354 U.S. 457 arid New Ordeans v: Dukes, [i976J 427. U.S. 297, referred to.
~:· r
Secy. of Agriculture v. Central Reig. Refining Co.; (1950) 94 L. Ed. 381,
'Cited:'~'-·· · ·. -~,~-· ... 1 't' ;.

,, . ..
. ••·• I : ~- .. •· ' '~ ~.

CIVIL APPELLATE JURISDICTION : CiVil.Appeal'No. 693 of
1995.
. ''" . '
r• · - From the Judgmenrand Order dated 22:7.94.ofiht:j'.Jfahabad High
cCourt in C.M.W.P. No. 1262 of 1987. • . ·" .. "· •' ,. , 'H
848 SUPREME COURT REPORTS [1996) 3 S.C.R.

,A R.P. Srivastava and V.K. Verma for the Appellants.

The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. The Allahabad High Court has struck
doWn Para-7 of the Exemption Notification No. 175 of1986 dated March
B 1, 1986 (which para was inserted by the Notification No. 223 of 1987) on
the ground of violation of Article 14 of the Constitution of India. The
. decision under appeal is largely influenced by and follows the decision of
' a learned Single Judge of the Calcutta High Court in Banner and Company
v. Union of India, (1994) 70 E.L.T. 181.
c Rule.8 of the Central Excise Rules empowers the Central Govern-
ment to ei<i:mpt, subject to such conditions as it may specify, any excisable
goods from the whole or ·any part of duty leviable on such goods.

By means of Notification No. 175 of 1986 issued under Rufe 8 of
.D ,Central ExciSe Rules, exemption from excise duty was granted in favour of
cert;un sm~ scale industries manufacturing the goods specified in the
schedule tci the Notification provided their animal turnover did not exceed
.
the limit pi'escribed.
); .
Th~·relevantportions
. ... of the Notification read: J.
. "3:;Nothing contain~d in this notifii:ation shall apply if the ag-
E gregate value of clearances of all excisable goods for home con-
sumption. --

(a) by a manufacturer, from one or more factories, or

· (b) from any factory, by one or more manufacturers, had exceeded
F rupees one htindred and fifty lakh in the preceding financial year.

4. The exemption contained in this notification shall be applicable
only to a factory which is an undertaking registered with the
Director of Industries in any Staie or the Development Commis-
sioner (Small Scale Industries) as a small scale industry under the
G provisions of the Industries (Development and Regulations) Act,
1951 (65 of 1951) ........... ..

. Explanation IV. for the putjioses of this notification, where the
specified goods manufactured by a manufacturer, are affixed with
H a brand name or trade name (registered or not) of another
U.0.1.v.PALIWALELECfRICALS(B.PJ.REDDY,J.) · 849

manufacturer or trade, such specified goods shall not, merely by A
reason ·of that fact, be deemed to have been manufactured by such
other manufacturer or trader."

Explanation IV is of relevance. It provided that merely because the
brand-,riame' or trade-name of another manufacturer or trader was affixed
to the goods manufactured by a 'small manufacturer' (to use a convenient ·. B
expression denoting a manufacturer who is entitled to the benefit of the
said Notification) such good shall not be be deemed to be the goods
manufactured by such other inanufacturer_or trader.

The object of the notification is self-evidence. It is to. help the small C
manufacturers to survive in the market which is dominated .by brand-
• names/trade-names. It is a matter of common knowledge that people prefer
well-known brand-names. They put 'their! under an implicit faith that they
. are of reliable quality. In such a situation, a· small manufacturer faces an
uphill task;in having his goods accepted in the_ market. If he.prices his
goods at the saine level as the price of goods manufactured by a _well- D
known brand-name, he stands no chance; he will be priced out of market
) in no time. It is precisely to enable him to survive him in th~'market that
. the.said exemption is granted; By virtue of exemption fro~ duty, the small
manufacturer would be able to sell' his goods at'a cheaper price thus
making ihem' attractive in the market·.- and - more competitive:· The E
·notificadon thus serves the: socio-economic objectives of helping the smill
as
·manufacturers and increasing the industrial production, so far Explana-
tion IV iS concerned, it is really clarifieatory in nature; it merely reiterates
the principle of the decision of this Court in Union of India & Ors. v.
Qbatul limited, (1985} 22 E.L.T. 302. . • . . · .. .. . ...
... ·'. '• . . ~- F
. · ... On September 22, 1987, Notification No. 175 of l986-~as amended
by Notification No. 223 insertiiig Para 7 and Explanation VII there~ The

.
inserted provisions read as follows : . · ·
'
· ·

, . "7•.The exemption contained in this notification shall not apply to
· the specified goods where ·a manufacturer affixed .tlie specified G
goods with a brand name or trade name. (registered or not) of
.another pcroon who is not eligible for the grant of exemption tinder. '
this notification : · · ·' · ·•

Provided that nothing in this paragraph shall be applicable in H

..
850 SUPREMECOURTREPORTS [1996] 3 S.C.R.

A respect of. the specified goods cleared for home consumption
before the Ist day of October, 1987.

Explanation VIII. -- Brand name or trade 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
B invented word or writing which is used in relation to such specified
· goods for the purpose of indicating, or so as to indicate a connec-
tion 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."'
c
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
affores the brand-name or trade-name (registered or not) of another per-
son, who is not celigible for the grant of exemption under the said notifica-
D lion. 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,CE dated
1.8.86." The object underlying Para 7 is self-evident. If a small manufacturer
E who affJXes the brand-name or trade-name of an 'ineligible manufacturer'
(a convenient expression to denote a manufacturer outside the purview of
Notification No: 175of1986 and who owns or entitled to use ·a brand-name
or trade-name), the very reason d'etre for granting the exemption disap-
pears. The eice.hption is designed to enable the small ;nanufacturer to
p survive in·the market in competition with the ineligible manufacturer but if
he joins, or identifies himself with, the ineligible manufacturer, his goods
become one with the ~oods of such ineligible manufacturer. They become
indistinguishable. In the market, they will all be underst9od as one and
the same goods. They no longer need the benefit uncler the Notification. It
must be remembered that by extending the benefit of exemption, the State
·G is foregoing public revenue to which it is entitledtunder the Act. The loss
to public revenue. is supposed to be compensated by helping along the
sman manufacairers· to survive in the market and continue to produce.
Once he becomes one with his competitor, the need for. supporting--····
crutches disappears. There is no reason why in such a case the State should
H forego the revenue due to it under the Act. It is the insufficient apprecia-
852 SUPREME COURT REPORTS [1996] 3 S.C.R.

A Seciion 25 of the Customs Act, both the powers are conceived in public
interest. See the Constitution Bench decision in Orient Weaving Mills v.
Union of India, AIR (1963) SC 98 = [1962] Supp. 3 SCR 481 upholding
the constitutional validity of Rule 8. It is observed therein :

"The Act recognises and only gives effect to the well established
B principle that . there must be a great deal of flexibility in the
incidence of taxation of a particular kind. It must vary from time
to time, as also in respect of goods produced by different process
and different agencies ....... It is a function of the State, in order to
raise revenue for State purposes, to determine what kind of taxes -t
c shall be levied and in what manner. Its function, therefore, is to
raise revenues for public purposes. The State naturally is interested
in raising all the revenue necessary for public purposes, without
sacrificing the legitimate interests of persons and groups, who
deserve special treatment at the hands of the State for reasons,
which the State may determine, entitling them to be placed in a
D
special case.'

We are of the opinion that while examining the challenge to an
Exemption Notification under the Central Excise Act, the observations in
the decisions aforesaid should be kept in mind. It should also be remem-
E bered that generally speaking the Exemption Notification· and the terins
and conditions prescribed therein represent the policies of the government
evolved to subserve public interest and public; revenue. A very heavy
burden lies upon the person who challenges them on the ground of Article
14. Unless otherwise established, the courts must presume that the said
F amendment was found by the Central Government to be necessary for
giving effoct to its policy (underlying the notification) on the basis of the
working of the said Notification and that such an amendment was found
necessary to prevent persons from taking unfair advantage of the conces-
sion. In fact, in this case, the explanatory note appended to amending
Notification says so in so many words. If necessary, the Court could have
G called upon the Central Government to establish the reasons behind the
amendment. (It did not think it fit to do so.) It is equally necessary to bear
in mind, as pointed out repeatedly by this Court, that. in economic and
taxation sphere, a large latitude should be allowed to the legislature. The
Courts should bear in mind the following observations made by a Constitu-
H tion Bench of this Court in R.K Garg v. Union of India, (1982] 1 SCR 947:
• ,, U.0.1. v. PALiWAL ELECTRICALl).[RP.J. REDDY, J.] . 853

• · "Another rule of ecjuaJ.importartce.is that laws relatingto economic . A
activiiies should be viewed with gre~ter latitude thanlaws touching
civil rights su~h ·adreedom of speech; religion etc. It has been said
by nci less a person than Holmes, 1. that the ·1egis1ature should be
allowed some play in the joints, becausrit has to deal with complex B
problems .which do not nht . adniit of sol~tion through any • l
doctrinaire or straight i,acket formula and this is particularly true
·. •'·. ill (:ase of legislation ·dealillg wiih economic matteis~ Where, having
regard to. the nature ~f the problems required to be dealt with C
,, greater play in the joillts has to be allowed Jo the legislature. The
Court should feel. more."incliiled to give judieial deference to
legislative judgm~rit .ill .the field of econorriit .:regulation than in
.other areas where fundamental huri;an right are involved. Nowhere D
has this ·admonition been- more felicitiously expressed than in
·Morey v. Doud*, (1957) 354 US 457 where Frankfurter, J. said in
his inimitable style : .

.... ,· E
~'In th~. utilities, ta.X ~nd ecOndmic regµlation ca·ses, there are
. ;
good r~asons .for. judici:U self-restraint if not judicial dif-
. ' f~reiice. to legislative' judgment'. The legislatur~ after all has
the affirm~tive responsibility. Th~ cou;ts h{ve only the power F
. to destroy, not to rec()~struct WJien. these are aaded to the
' -' . - ' ' •" • •',• ·' - ._. ' -_ J- ' •
complexity of economic regulation, ..the uncertainty, the
- _. ' . .. {. . . .-," . -.•
' ' . .' :
l.iitbility to error, the.beWildering conflict Of the experts, and·
the number of tinie thejudges have ·been overruled by events- G
self-limitation can be seen fo be the path of judicial.wisdom
and iiistifotiorial prestige a'nd .stability.' ·. · .
..
•· :• ' ... l . . ' '· .

. . .' ~ . •·
The court must always remember.that. 'legislation is directed to H
p;actical problems, that the economic n;i"ch,.ti'ism is highly s~nsi-
tive. ~nd complex, that many P!oblems are singular and contingent,
that laws are not abstract propositions and do not relate to abstract
units and arenot to be measured by abstract symmetry' that exact
.~<lorn
.. '
~nd.
)'
nice adaptation
. '
of ·remedy
-
'are not
,.
:U~~y~ possible
. - and'
that 'judgment is , largely a prophecy based on. meagre and
.• It is true that Mory v. Doud, .was overruled later by the United §tates Supreme Court
in New Orleans v. Dukes, (1976) 427 US 297, but the said fact does not detract from
" the validit).' of the said rule stated in Morey v. Daud, rior does it iii any manner affect
the principle stated· tiy this CoUrt.
i
854 ' SUPREME COURT REPORTS [1996] 3 S.C.R.

A uninterpreted experience'. Every legislation particularly in
economic matters is essentially empiric and it is based on ex-
perimentation or what one may call trial and error method and
therefore it cannot provide for all possible situations or anticipate
all possible abuses. There may be crudities and inequities in
complicated experimental economic legislation but on that account
B alone it cannot be struck down as invalid. The Courts cannot, as
pointed out by the the United State Supreme Court in Secy. of
Agriculture v. Central Reig. Refining Co., (1950) 94 L. Ed. 381, be
converted into tribunals for relief from such crudities and inequi-
ties. There may even be possibilities of abuse, but that too cannot
c of itself be a ground for invalidating the legislation, because it is
not possible for any legislature lo anticipate as if by some divine
prescience, distortions and abuses of its legislation which may be
made by those subject to its provisions and to provide against such
distortions and abuses. Indeed, howsoever great may be the care
bestowed on its framing, it is difficult to conceive of a legislation
D
which is not capable of being abused by perverted human in-
genuity. The Court must therefore adjudge the constitutionality of
such legislation by the generality of its provisions and not by its
crudities or inequities or possibilities of abuse come to light the
legislature can always step in and enact suitable amendatory legis-
E , lation. That is the essence of pragmatic approach which must guide
and inspire the legislature in dealing with complex economic is-
sues.11

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
F
. 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, AIR (1961) SC 1731 = [1962] 2 SCR 169.
'
G 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
consideration .. It is equally in error in saying that the classification it brings
about - assuming that it does so - is not reasonabk or that it has no nexus
with the object underlying the Notification. Not only is Para 7 consistent
H with the object underlying the Notification, it indeed promotes it, as
\
y
U.0.1.v. PALIWALELECTRICALS [B.PJ. REDDY,J.] 855

explained hereinbefore. We are constrained to sJy that the High Court has A
not bestowed the care and consideration which is exj:Jected of it before it
strikes down such a Notification.'- or; ·for that matter, any statutory
provision. For the very reason, the decision of the. learned Single Judge of
the Calcutta High Court in Banner & Co. v. Union of India, (1994) 70 ELT
181 must also help to have been wrongly decided.
B
Before we conclude, ·w'e '·must deal with· one more aspect. The
decision .urider appeal 'quotes extensively fro;,,, and. relies upon, the
decision of the Calcutta High Court in Banner and C~nlp~ny. The Calcutta ·
High Court relied 'upon the decisions of the High Courts in Bush (India)
Limited v. Uni01i of India & Ors., (1980) 6 ELT 258, Bata (India) Liniited C
-I v. Assistant Collector of Celltra/ Excise, Patna, (1978) 2 ELT 211, Bapalal
and Company v. Government of India & Ors., (1981) 8 ELT 581, Carona
Sahu Company Li;nited v. Superintendent,· Central Excise & Ors., (1981) 8
ELT 730 besides the decisions of this Court in Cibatu/ (supra) and Joint
Secretary. to Government. of India v. Food Specialities Limited,. (1985} 22
ELT 324 SC. We may briefly refer to the said decisions and see whether D
any of them supports the decision arrived at by Calcutta and Allahabad
High Courts.

Bush (India) Limited was concenied with the meaning and scope of
the definition of "manufacture" in Section 2(1) and not with any Exemption E
Notification, much less with the Notifications concerned herein. The ques-
tion there was whether merely by placing the Garrard Record Changer
Decks on a wooden base with cover and selling it under the trade-name of
'Bush Auto-Changer', can it be regarded that a process of manufacture has
taken place. It was held that mere placing of a ready-to-use ·article on a F
wooden base, with or without a cover, with a view to make it more saleable
does not amount to process of manufacture .within the meaning of Section
2(1). Bala (India) Limited merely says that just because 'Bata' places it
· brand-name on the footwear manufactured by another, Bata cannot be
treated as manufacturer of the said goods. Bapa/a/ and Company deals with
Notification No. 119 of 1975 dealing with job works and the ~xemption G
granted to jqb workers. The decision in Carona Salm Company Limited is
similar to the decision in Bata (India) Limited. We are unable to see any
relevance these decisions have on the question at issue herein. We have
already referred to the ratio of Cibatul. Food Specialities Limited was a
case where it manufactured certain goods whereupon it affixed the brand- H
856 SUPREME COURT REPORTS [1996] 3 S.C.R.

A 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 con-
tended 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 the basis for determining the value.
B
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
C Appeal was preferred against the said judgment and if so, what was the
result ?]

The appeal is acco;dingly allowed. There shall be no order as to costs
as respondents though s~rved is not represented.

T.N.A. Appeal allowed.

''