- (1.) The Allahabad High Court has struck down Para 7 of the Exemption Notification No. 175 of 1986 dated March 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 ELT 181.
(2.) Rule 8 of the Central Excise Rules empowers the Central Government to exempt, subject to such conditions as it may specify, any excisable goods from the whole or any part of duty leviable on such goods.
(3.) By means of Notification No. 175 of 1986 issued under Rule 8 of the Central 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 : "3. Nothing contained in this notification shall apply if aggregate value of clearances of all excisable goods for home consumptions.- (a) by a manufacturer, from one or more factories, or. (b) from any factory, by one or more manufacturers had exceeded rupees one hundred 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 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 specified goods shall not, merely by reason of that fact, be deemed to have been manufactured by such other manufacturer or trader".;