Advocates Appeared:
V. Sridharan,S.K. Sharma, K.K. Dutta

ORDER

Per S.L. Peeran:

The appellants are aggrieved with the order-in-original dt. 5.12.91 passed by Collector of Central Excise, Bangalore denying the benefit of the exemption notification No. 175/86 dt. 1.3.86 and has confirmed the differential CED amounting to Rs. 18,78,856.18 on the goods cleared during the period 1987-88 to 1989-90 under Rule 9 (2) of Central Excise Rules, 1944 read with the proviso of Section 11A of Central Excises & Salt Act, 1944. A penalty of Rs. 2 lakhs has also been imposed on the appellants. The facts of the case are that the show-cause notice dt. 20.8.91 was issued to the appellants. It is alleged therein that the appellants are manufacturers of Pneumatic valves, Cylinders, Base plate, manifold and fillings falling under Chapter 84 of Central Excise Tariff Act, 1985 and they had contravened rules 9(1), 52A, 53 read with Rule 226, 173B, 173G and 174 of Central Excise Rules, 1944, and further committed the offences specified in Rule 173Q (1) (a), 173Q (1) (c) and 173Q (l) (d) ibid, in as much as, they had suppressed the fact of manufacture of the said goods with brand name "Festo" which is owned by their collaborators M/s. FESTO KG (Festo Pneumatic), Germany, who are not eligible for exemption under Notification No. 175/86 dt. 1.386 as amended and cleared the same during the period 1987-88 to 1989-90, without following Central Excise procedures and without payment of Central Excise Duty, by wrongly availing exemption/concession under the said Notification, in contravention of the said rules with an intention to evade payment of Central Excise duty. Thus, duty evaded has been worked out to the amount already stated above. They have also been asked to explained as to why the benefit of the exemption/concession under the said notification should not be denied to them and penalty also imposed for the said contraventions.

2. In the Annexure to the show-cause notice, it is stated that the Central Excise Officers attached to Bangalore VI Divn. gathered intelligence that the brand name 'FESTO' which is affixed on their products by M/s. Festo, Bangalore is the trade name of their collaborator, who is not a person eligible for exemption under the said notification and therefore, were wrongly availing the benefits of the said notification. Therefore, the officer visited the factory on 21.6.90. The said officers during their visit found that all the products manufactured by them were affixed with the name 'FESTO'. The officers also noticed that the packings of the product packed in pouches also bore the name 'FESTO'. The embossing of the above name was not only by means of an adhesive label but also casted on the product. The officers later verified the collaboration agreement, project report and the company literature (catalogue) and other private records maintained by them. On examination of the same, the following facts were revealed. A perusal of the project report appears to indicate that M/s. Festo, Bangalore was promoted for the purpose of manufacturing pneumatic equipments in India and for the said purpose, the said company is having a 40% equity participation from FESTO K.G. West Germany and the collaboration has been approved by the Govt. of India. The collaboration agreement, literature (catalogue) and the project report appear to indicate that all the technical know-how and expertise for manufacturing the said products is provided by their collaborator, i.e. M/s. Festo K.G. Germany. The training, production, sales and service is also extensively done under their patronage and guidance which is of International standard. Their collaborators have been and still involved in offering Festo products, Festo Service and Festo know-how at 61 locations throughout the world of which M/s. Festo, Bangalore is one such. It is also stated that considering the good marketability of the product, the promoters i.e. M/s. Festo, K.G. Germany have decided to venture into this area and have started M/s. Festo, Bangalore. It is also stated that the documents of collaboration agreement also indicate that the contract products should be marked with designation indicating that they are made under licence of a collaborator and they are affixing the trade name of FESTO which is equally used by their collaborator. It is also stated that as can be seen by the company literature (catalogue) the different units of the collaborators in different countries bear the name 'FESTO' and the identification and advertising of the product is by the word 'FESTO' which is universal among them. This fact is also supported from the advertisement where the word 'FESTO' is printed on the world map as 'FESTO WORLD WIDE'. The statement of Shri K. Kneile, Project Manager of Festo, Bangalore was recorded on 21.6.90. He admitted that they were affixing the brand name 'FESTO' on their product and that FESTO is part of their company's name and as such it is used as brand name. In further statement dt. 25.7.90, they have submitted that foreign brand name is not allowed to be used for their products for internal sales although there is no objection to their use on the products to be exported and referred to a letter No.F.C. (II) 287 (85) 253 (85) dt. 15.5.86 issued by Govt. of India. Therefore, on the basis of these facts and circumstances, it has been alleged that the appellants have failed to declare in their declaration dt. 11.4.88 filed on 12.4.88 and the classification list, they are manufacturing branded goods and by suppressing the above facts deliberately wrongly availed the benefit under the above referred notification with a malafide intention to evade payment of excise duty in contravention of the said provisions referred to above.

3. The appellants filed a detailed reply dt. 11.11.91. By this reply, they have stated that the department was aware of the fact that they were affixing the brand name 'FESTO' on their products. In the detailed reply, given inter-alia, it is their plea that the brand name of their collaborator is 'FESTO PNEUMATIC is written in a particular style. The word 'FESTO' is inside a circle and written in white. There are two parallel lines covering the word "PNEUMATIC" tangentially to the circle. It is stated that" this manner of writing alone constitutes the brand name of their collaborator. On the other hand, they are using a single word 'FESTO' in block letters in ordinary English alphabets indicating the name of their company. Therefore, this does not constitute the brand name of their collaborator. They have stated that their collaborator has independently obtained Trade Mark Registration Certificate. They have stated that the expression 'FESTO' written in plain English language in block letters on the products supplied by them, represents the name of their company & it cannot constitute the brand name of their collaborator. They state that the entire basis of the show-cause notice is wholly incorrect. They have denied any suppression in the matter and stated that larger period cannot be invoked in their case.

4. The ld. Collector, after a careful consideration of the case, has rejected their pleas. The finding given in para 17 and 18 is reproduced herein below:

"17. The next point for consideration is that whether the markings 'FESTO' affixed/used by M/s. Festo Controls could be connected with the brand name of M/s. FESTO KG West Germany. The department's case is that the markings 'FESTO' affixed/used on the goods cleared by M/s. Festo Controls is nothing but the brand name of M/s. FESTO KG, West Germany and this concept is based on the collaboration agreement entered into between M/s. Festo Controls and M/s. FESTO KG, West Germany as also the project report and literatures now procured by the Investigating Unit. In this connection, it is also relevant to see from the records that at no point of time until the case is booked, M/s. Festo Controls brought to knowledge of the dept. on their own either the fact of their using/affixing markings 'FESTO' on the goods or the collaboration agreement and project report. The Defence claim is that the Deptt. had not proved that the markings "FESTO" is related to the brand name M/s. FESTO KG West Germany. The defence claim is not acceptable in view of the fact that the collaboration agreement cited in support of the Deptt's case lands evidence in favour of the deptt. As per the said collaboration agreement particularly para 11.2, the goods are made by M/s. Festo Controls according to the designs and quality laid down in the corresponding technical information and improvements furnished by their collaborators M/s. Festo KG. M/s. Festo are also permitted to mark on the goods with the designation indicating that the goods are made under the licence of M/s. Festo KG. On being questioned about these, Shri H. Kneile, the Project manager of M/s. Festo has stated that for using the brand name of M/s. Festo KG Germany, they have to get permission in writing from their collaborators which had not been obtained. If that is so, I fail to understand under what circumstances M/s. Festo Controls have incurred expenses towards royalty, as indicated in their project report. The very indication of incurring expenses towards royalty in their project report by M/s. Festo Controls clearly leads to believe that the royalty is paid for using the brand name of M/s. Festo KG West Germany. The Defence plea that the Deptt. had failed to prove that the markings 'FESTO' is clearly related to the brand name of M/s. Festo KG West Germany is, therefore, not acceptable. On the contrary, it is proved beyond doubt that the markings 'FESTO' is clearly related to the brand name of M/s. Festo KG West Germany. In view of this, the defence plea that the brand name of M/s. Festo KG West Germany is 'Festo Pneumatic' and not 'Festo' carries no weight. The defence plea that 'Festo' is their own brand name is not acceptable because the very marking 'Festo' has bearing in the minds of the buyers connecting the same with the brand name of M/s. Festo KG Germany. This fact is evident from the sale effected by M/s. Festo. Further, M/s. Festo KG, Germany use the same markings 'Festo' on the goods manufactured and sold by them as evidenced from the Invoice No. 240532 dt. 16.8.90 raised by them on M/s. Widia India Ltd., Bangalore, which clearly proves beyond doubt that the markings 'Festo' is relatable to the brand name of M/s. Festo KG Germany.

18. The next plea putforth by the defence is that they had not affixed/used the markings 'FESTO' on all the goods manufactured by them and according to them they had used only the pouches containing the markings 'FESTO' in which the goods in question were put in them and then cleared, that too only after 19.1.90. The defence claim made in this regard is not acceptable because the very fact of their using/affixing the markings 'FESTO' had not been intimated to the department. This part, if it was a fact that they had used the marking 'FESTO' for the goods cleared by them only after 17.1.90, they should have declared the said fact to the deptt. at least from 17.1.90 onwards if what they claim now is true. On the other hand, they did not do so because they knew too well that if such a fact is intimated, the undisclosed fact of their using the brand name of FESTO KG would be discovered by the department. The affidavits Dl, D2 & other exhibits E & F produced by the defence cannot therefore be accepted. This apart, this fact has not been disclosed by Shri H. Kneile, in his statement dt. 21.6.90, wherein he has clearly admitted that they were affixing the label 'Festo' on certain goos, while on certain goods the said markings were casted and certain items were placed in the pouches bearing markings 'Festo'. The defence claim that they had put all the goods in pouches containing markings 'Festo' is, therefore, not based on fact. Similarly, the defence plea that some of the goods indicated in the show-cause notice for bought out items and items got manufactured on job work basis, cannot also be accepted, in view of the fact that they were not disclosed to the department. Further, M/s. Festo Controls being C.Ex. licencees should have also indicated the fact of dealing with excisable goods which are brought out and also the goods got manufactured on job work basis, in the classification lists filed by them from time to time, if what they have now claimed is really a fact. Moreover, being C.Ex. licencees, they should also have observed certain procedures in respect of goods got manufactured on job work basis, which has not been followed by them for the well known reason that what they claim now is just an afterthought, made after such consultation and prevarication. This apart, no documentary evidence is also forthcoming from the Defence in support of either having purchased the goods or got the goods manufactured on job work basis. They have not even furnished the details of persons or source from whom they have purchased the said goods or the name of job workers, thereby making no way for the Dept. to verify as to what they claim now is a fact. Above all, these facts have also not been disclosed by Shri H. Kneile, the Project Manager in his statement dt. 21.6.90. Therefore, the defence claim made in this regard is not accepted.

5. We have heard ld. Advocate Shri V. Sridharan and ld. JDRs, Shri S.K. Sharma and Shri K.K. Gutta. Referring to the collaboration agreement and the Trade Mark Certificate issued to the appellant's collaborator, ld. Advocate submitted that the appellant is not using the registered trade mark of their collaborator. There is no connection between the word 'Festo' and that of the collaborators trade mark 'Festo Pneumatic', which is stylised in a particular manner. He submitted that the clause 11.2 of the agreement has been wrongly relied by the revenue as that Clause deals with the technical collaboration and there is no relationship with regard to the trade of brand name. Clause 11.4 states that:

"Upon termination of this Agreement, the Licensee shall forthwith cease using any name, marking or other term or designation indicating the Contract Products are made according to the Licensor's design, unless otherwise agreed to by and between the parties hereto in writing".

Referring to this Clause, the ld. Advocate submitted that there is no reference of use of brand name, as the appellants are not using their collaborators' brand name at all. He referred to the Project Report and submitted that there is no reference to the use of the brand name and the appellant's products also. It is his submission that the appellants are a small scale unit and they are independent of their foreign collaborators' company and that there is no nexus between their collaborators' product and their product and hence Clause 7 is not applicable to the facts of the case. He also referred to the ruling of Calcutta High Court as rendered in the case the of Banner & Co. Vs. Union of India as reported in 1994 (70) ELT 181, wherein the Court had struck down para 7 of the notification. He fairly submitted that the view expressed by the Karnataka High Court in the case of Nectar Beverages Pvt. Ltd. Vs. Union of India as reported in 1994 (70) ELT 172 are to the contrary. However, he submitted that as para 7 of the Notification has been struck down the question of applying the same does not arise. As regards the extension of larger period, the ld. Advocate submitted that the collaboration agreement and the catalogue had been furnished to the department and that the classification list had been approved only thereafter. He submitted that in Form V, they had mentioned the word 'Festo' as brand name and these forms had been counter-signed by the Inspector. He submitted that there is no deliberate attempt to evade the payment of duty and also any positive attempt to with-hold any information in this regard, he relied on the ruling rendered by the Tribunal in the following cases:

1. Ajit Metal Industries Vs. Collector of Central Excise 1993 (66) ELT 81.

2. Byco International & Others Vs. Collector of Central Excise, 1993 (49) ECR 126.

3. Agarwal Brothers Steel Rolling Mills Vs. Collector of Central Excise 1987 (27) ELT 334 (para 4).

He further submitted that there are some goods which did not carry any brand name and hence duty cannot be demanded by them. Ld. Advocate argued that duty has not been properly computed. The invoice relied in order by the ld. Collector was not part of the show cause notice. Therefore, he sought remand on the confiscation aspect.

6. Ld. JDR relied on the ruling rendered by the Tribunal on this issue in the case of Thio Pharma Vs. Collector of Central Excise as reported in 1992 (60) ELT 395. Ld. JDR submitted that the definition in para 7 of the notification was wide enough and it brings within its ambit any name or mark or even a symbol which would be used in relation with the specified goods by another company, who are not entitled to the benefit of the notification. He submitted that the 'Festo' is the common name of both the appellants and their collaborator. Therefore, it is part and parcel of the same company, the appellants are manufacturing the goods according to the specification and design of their collaborator. The goods were being marketed throughout the world. The goods were patented and its rights were held by the collaborator company. Ld. JDR also submitted that the appellants had not disclosed about the fact of use of the trade name "Festo" held by the collaborator and hence larger period was invokable.

7. Countering the arguments of the ld. JDR, the ld. advocate relied on the rulings rendered by Hon'ble Supreme Court in the following cases:

AIR 1970 Supreme Court 1982 at page 1985 The Malegaon Electricity Co. (P) Ltd.

Vs.

The Commissioner of Income-Tax, Bombay

2. Muthiah Chettiar Vs. I.T. Commissioner, Madras AIR 1970 Supreme Court 10

8. We have carefully considered the submissions made by both the sides and have perused the records, collaboration agreement, catalogue and the project report. On a very careful consideration of the materials placed before us, we are of the considered opinion that the appellants are not entitled to the benefit of the notification in terms of para 7 of the said notification. There is no infirmity in the findings given by the ld. Collector on this aspect of the matter and we adopt the reasoning given by him and confirm the same. There is very clear connection between the appellant's goods and the use of trade name 'Festo', which is a common name in the collaborator's trade mark "Festo Pneumatic". The trade name of the appellant's collaborator has been registered as "Festo Pneumatic". The mere fact that this trade name "Festo Pneumatic" is being not used on the appellant's product but only a word 'Festo' is not the only criteria for the consideration of the para 7 of the notification. The definition of the brand name given in the notification is very wide and it clearly spells out that the brand name and 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 invented word in 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 name goods and some other person using such name or mark with or without any indication of the identity of that person". There is no dispute in this matter that the common name both the appellant and the collaborator and their collaborator is Festo. The goods are manufactured as per the entire design and specifications of their collaborator. Their collaborator 'Festo K.G. Germany' are having substantial interest in the appellant's company. The word 'Festo' has assumed a recognisable trade and brand name in the market. Even if the word 'Festo Pneumatic' is not used but the fact that the goods are manufactured as per the collaborators specifications and that fact is noted on the wrapper clearly brings to the mind of the customers, an identification with the goods with the brand name of their collaborator. Therefore, the use of the word "Festo" links the appellant's goods with the goods of the other person who are not entitled to the benefit of the notification. It is further necessary to note that any person who uses a registered trade mark of another commit violation of the provisions of the Trade and Merchandise Marks Act, 1958. The appellant's collaborators have a clear right to seek injection against any person using the word 'Festo'. The fact that there is a collaboration agreement permitting the appellant to utilise the collaborators mark indicates that the collaborator and the appellants are jointly utilising the trade name. This can be clearly seen from para 11.1 to 11.3 of the collaboration agreement which is re-produced herein below:

"11.1 Subject to the Licensor providing the necessary Technical Information and Improvements, the Licensee shall take all reasonable measures to ensure that the Contract Products made under the Technical Information and Improvements of the Licensor conform to the quality laid down in such Technical Information.

11.2 The Contract products made by the Licensee according to the designs of the Licensor and conforming to the quality laid down in the corresponding Technical Information and Improvements furnished to the Licensee shall - if requested, or, at the request of the Licensee agreed to by the Licensor - by market with a designation indicating that they are made under licence of the Licensor. The layout of the designation and any other markings on the Contract Product as well as the use and layout of name of the Licensor shall be made with the prior written approval of the Licensor.

11.3 The Licensee shall forthwith, whenever called upon by the Licensor in that regard, cease using any reference to the name of the Licensor."

As can also be seen from para 7.1, of the agreement, the collaborator has granted rights to the appellant in respect of Technical Information and Improvement including patents of the licensor as per the terms of the contract. Para 7.1 to 7.3 states as follows:

"7.1. The Licensor for the period of this Agreement, grants to the Licensee under its Technical Information and Improvements furnished by the Licensor to the Licensee pursuant to this Agreement as well as under relevant patents of the Licensor which the Licensor has filed or will file for said Technical Information, non-exclusive, non-transferable rights to manufacture Contract Products in India and to see Contract Products in accordance with Article 7.2.

7.2 The Licensee shall make arrangements for the marketing of Contract Products in consultation with the Licensor. In the same way, the offer for export of Contract Products may be arranged to other countries all over the world, except where the Licensor has manufacturing or contractual relationship (e.g. licensing) regarding Contract Products, from time to time. Currently, the Licensor has licensing arrangements in the following countries:

Egypt, South Africa, Argentina, Brazil, Canada, Mexico, Peru, USA, Hong Kong, Korea, Kuwait, Lebanon, Malaysia, Philippines, Singapore, Taiwan, United Arab Emirates, New Zealand, Austria, Belgium, Bulgaria, Czechoslovakia, Denmark, Finland, France, Federal Republic of Germany, Great Britain, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, USSR, Yugoslavia.

7.3 During the term of the Agreement, the Licensor undertakes not to enter into a similar collaboration agreement with a third party for the manufacture of Contract Products in India without the prior written consent of the Licensee, which consent shall not be withheld unreasonably".

The above clauses clearly establishes connection in the course of trade between the specified goods, with the goods of their collaborator by use of the trade name and brand name "FESTO". The Tribunal has already taken a view that the use of such name will disentitle to the benefit of the notification as in the case of Thio Pharma (Supra). The finding of the third Member (Technical) in his order in para 19 is reproduced herein below:

"19. I have heard both the sides and have gone through the facts and circumstances of the case. For proper appreciation of the legal position, para No. 7 of Notification No. 175/86-CE and Explanations IV and VIII are reproduced below:

"7. The exemption contained in this notification should not apply to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification.

Provided that nothing contained in this paragraph shall be applicable in respect of the specified goods cleared for home consumption before the 1st day of Oct'87.

For the purpose 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 trader, such specified goods shall not, merely by reason of that fact, be deemed to have been manufactured by such other manufacturer or trader.

'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 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 the said goods and some person using such name or mark with or without any indication of the identity of that person".

A perusal of para 7 of the Notification No. 175/86-CE shows that the exemption contained in this notification will not apply to the specified goods where a manufacturer affixes specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification. Synthiko Formulations Pvt. Ltd. are not the manufacturers. They are the marketing/selling agents and they cannot have the benefit of Notification No. 175/86-CE. Explanation VIII of the said notification defines brand name or trade name. Brand name or trade name shall be the 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 work 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 the said goods and some person using such name or mark with or without any indication of the identity of that person. It is a settled law that dictionary meaning or other meanings can be resorted to only when in a particular statute given or defines particular work/words, then that meaning has to be adopted. The ld. Advocate's argument that house mark is different from brand name/trade name will not apply here, as the notification itself explains the meaning of brand name/trade name. Explanation VIII is very clear that the brand name or trade name may be registered or may not be registered, and it may be a name or a mark such as symbol, monogram, label, signature or invented word or wording which issued in relation to such specified goods for the purpose of indicating or so as to indicate a connection in the course of trade between the said goods and some person using such name of mark with or without any indication of the identity of that person, In may view, the word "Synthiko" has to be treated as a brand/trade name keeping in view the definition as given in Explanation VIII of the notification. I agree with the conclusions given by the ld. brother, Shri P.C. Jain, Member Technical. Accordingly, I am of the view that benefit of Notification No. 175/86-CE dt. 1st March, 1986 is not available to the goods under consideration".

9. Ld. Counsel submitted that para 7 of the Notification has been quashed by the Hon'ble Calcutta High Court in the case of Banner & Co. Vs. Union of India (Supra). However, we notice that the Karnataka High Court has taken a different view and we are inclined to accept the view given by the Hon'ble Karnataka High Court in the case of Nectar Beverages Pvt. Ltd. Vs. Union of India (Supra). In para 6.3, the Court has held that

"It will lead to absurd consequences if a power to issue an exemption notification gets exhausted and the said power does not include a power to withdraw the notification or vary it. Power to amend a notification should be read with the power to issue a notification, validity of the amendatory notification shall have to be examined with reference to the scope of the power under which original notification was issued. So long as the amendment made to a notification falls within the scope of the main power, for example, if the original notification itself had contained the variation or the amendment and such a notification is valid, there is no reason to hold that the same-result cannot be achieved by subsequent amendment or variation of the notification".

Again in para 7.4, the Court has held as follows:

"7.4. In fact, a product having a brand name or bearing a monogram can be considered as a distinct commodity having a special value in the market. As an article of commerce, it has special significance. A Goods in circulation with a particular brand name has its buyers looking for it because of the brand name and not because of the name of the manufacturer".

In para 9.3, the Court has held as follows:

"9.3. SSI Units using brand names of others are class by themselves, because the goods produced by them have certain advantages in the market. Therefore, it cannot be held that the classification is arbitrary and based or irrelevant considerations. Concession is granted obviously to SSI Units who has to struggle hard to earn a good market for their goods and to prevent brand name holders adopting the device of manufacturing those goods through SSI Units - Contention is accordingly rejected.

Further contentions raised in W.P. No. 7204 and 3805 of 1989 require to be considered".

The Hon'ble Karnataka High Court has gone in detail on the plea pertaining to denial of benefit of exemption to petitioners being arbitrary and violative of Article 14 of the Constitution. The Hon'ble Court in para 9 has rejected the said plea and the findings given in para 9 and 9.1 are reproduced herein below:

"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. Vs. Agricultural Income Tax Officer, Kasargod & Anr. (AIR 1963 SC 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 the requirements of Art. 14. It is also true that a greater latitude is given to the law maker in the matter of classifying the subjects for texation. The diverse and complicated problems of administration are taken note of by the Courts, while allowing greater flexibility in the matter of policies governing a fiscal statute.

"9.1 In M/s.Galaxy Theatre Vs. State of Karnataka (ILR 1991 Kar. 2468) a Bench of this Court observed at page 2478:

"Equality is not an abstract concept. Realities of life, practicality of administration, convenience of the public and requirement of simplicity of procedure are some of the factors to be considered as relevant in testing a complaint of discrimination".

Again at page 2482:

"When a tax levy is attacked as discriminatory, the harsh realities of discrimination its oppressiveness and palpable injustice or hostility by such a levy has to be clearly brought out by the petitioners who attacks the levy as discriminatory. In such a situation the entire global picture of expenditure, income capital outlay, normal returns, the affectation of the impugned tax, are to be pleaded and proved. Levy cannot be struck down on an application of any abstract formula.

At page 2484, while concluding the alleged discrimination passed on concession, the Bench held:

"In a recent decision in Sri Krishna Das Vs. Town Area Committee Chirgaon (1990 (3) SCC 645) levy of tax referred as weighing dues was challenged as discriminatory, in view of the exemptions granted to a few of the products. The observations of the Supreme Court found at page 654 are:

"The contention that the tax is discriminatory in view of the exemptions granted to some of the products and to those tax enter the TAC by rail or motor transport is equally untenable. It is for the legislature or for the taxing authority to determine the question of need, the policy to select the goods or services for texation, Courts cannot review these decisions. In paragraph 16 of the counter-affidavit the TAC tried to explain the reason for not taxing the salt, sugar and rice stating that they were not local produce but were imported from distant places and that the tax was levied only on the local produce which came from the neighbouring places. Court cannot review the wisdom or advisability or expediency of a tax as the Court has no concern with the policy of legislation, 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 commodity 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, because they are denied a concession given to others. A patently, arbitrary basis to deny a concession granted to others may invite Art. 14 of the Constitution".

10. In the light of the ratio laid down in the case of Thio Pharma and on the basis of our findings given above, we up-hold the Collector's order on this aspect of the matter. As regards, the plea that there has been no suppression in the matter, we are of the view that this is a matter purely coming within the realm of appreciation of facts. The appellants have stated that they had given all the details including the collaboration agreement as well as catalogue of the company. It has also been argued that the officials had scrutinised these documents and they were aware of the affixing of the word 'Festo' which is also the collaborated name. There is no detailed finding with regard to his plea and also on the plea of computation of duty, and on the plea that some of the items were not branded items and some were bought out items. It is just a proper that the issue pertaining to the limitation and computation of duty is remanded to the original authorities for de novo consideration. The appellants are to be given an opportunity to establish their plea that there is no suppression in the matter and the officials were aware of these facts. The appellants are entitled to cross examine the department officials to establish their case. In the result, the appeal is disposed of in the above terms.