The Federal Court of Justice in Karlsruhe supported the appeal of a man who was fined 3,600 euros ($4,757) last year by a Stuttgart court for selling a range of anti-Nazi t-shirts and badges bearing the swastika with a large red line through it.

Under German law, performing a salute, wearing Nazi uniform or displaying the swastika can carry the penalty of a fine or up to three years in prison.

Judge ruled that the swastika ban did not apply for items that were clearly intended for anti-Nazi or anti-fascist purposes.

German politicians widely condemned the decision last September by Stuttgart judge Wolfgang Kuellmer to fine the man, who distributed the paraphernalia via a mail order service and a Web site.

Kuellmer had ordered the seizure of 16,500 pieces of merchandise, two palettes of brochures and around 8,400 publicity flyers bearing the logo -- a red circle with a line across it superimposed on the Nazi emblem.

Kuellmer said increasing use of the symbol, which is popular among left-wing activists and anti-neo Nazi campaigners in Germany, risked making the Nazi hooked cross acceptable again over 60 years after it was outlawed after World War Two.