TMI Blog2008 (7) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... liquid hair dyes" under Tariff Item 14F and no excise duty was demanded in respect of the said item. 2. With effect from 1st March, 1975, Tariff Item 68 was introduced as a residuary entry in the Central Excise Tariff relating to "all other goods not elsewhere specified". As a result, all goods became excisable. Inasmuch as, it had been accepted by the Excise Department that "liquid hair dye" did not fall under Tariff Item 14F, the appellant started paying duty on the said product under Tariff Item 68 with effect from 1st March, 1975. Apparently, the classification list, which was submitted by the appellant, classifying the aforesaid product under Tariff Item 68, was also duly approved. 3. In relation to the aforesaid product, for the first time, the respondent No.1 issued a general show-cause notice to the appellant on 13th July, 1982, asking the appellant to show-cause as to why its "liquid hair dye" should not be classified under Tariff Item 14F and charged with duty accordingly. The notice, however, stated that pending determination of the question raised, the classification of the aforesaid product would continue to be under Tariff Item 68 on a provisional basis and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le excise duty in respect of items classified under Tariff Item 68 was payable at the rate of 8%, the excise duty payable for items classified under Tariff Item 14F was 105%. 8. It was also urged that commensurate with the sharp difference between the excise duty payable under Tariff Item 68 and Tariff Item 14F, the appellant company had raised the price of its product to the same extent to include the increase in excise duty payable. It was submitted that the appellant had, in fact, collected from the customer the excise duty, which was payable under Tariff Item 14F though camouflaging the same by increasing the price of the product. On behalf of the Excise Department, it was, therefore, submitted by way of an alternate submission that even if the appellant's product was covered under Tariff Item 68, even then the appellant company would be liable to pay duty at the rate of 105%, since the same had been collected from the consumer under the guise of increase in price and had not been passed on to the Excise Department. 9. On consideration of the detailed submissions made on behalf of the parties, the High Court ultimately held that "hair dye" manufactured by the appellant was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Toilet Preparations as indicated hereinbelow:- "14F - Cosmetic and Toilet Preparations not containing alcohol or Opium India Hemp or other Narcotic Drugs or Narcotics, namely: (i) Face Cream and Snow; (ii) Face Powder; (iii) Talcum Powder; (iv) Hair Lotion, Cream and Pomade." 15. Mr. Desai submitted that in view of the above, only those products, which fell within the categories indicated in 14F became taxable for the first time in 1961. 16. In May, 1974, Godrej Soaps introduced a new product known as "Godrej - Permanent Hair Dye" (Liquid Hair Dye) in the market. The said product was comprised of two components; one being a darkener and the other being a developer, which were required to be mixed in equal proportion to apply on hair for the purposes of darkening gray hair. Mr. Desai submitted that since the said substance was poisonous in nature, very elaborate instructions had been provided along with the product for its application. At that point of time, no excise duty was levied on the said product under Tariff Item 14F. 17. It was then submitted that on 1st March, 1975, Finance Act, 1975, introduced a residuary entry, namely, Tariff Item 68, in the First Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of India (supra) had distinguished the decision on applying the principle of "common parlance" in describing the product. Mr. Desai referred to the classic example on the concept of common parlance in The King vs. Planter Nut and Chocolate Company (1951 Canada Law Reports - Exchequer Court p. 122) referred to by the learned Single Judge. The question involved in the said decision was whether salted peanuts and cashew nuts could be considered to be "fruit" or "vegetable" within the meaning of the Excise Tax Act. Cameron J., who delivered the judgment, posed the test as follows : "...... would a householder when asked to bring home fruit or vegetables for the evening meal bring home salted peanuts, cashew or nuts of any sort? The answer is obviously `no'." 21. It was then submitted that various affidavits affirmed by customers regarding what they felt was meant by "hair lotion" and "hair dye" had been placed before the departmental authorities, but had not been given due importance in classifying the products in question. Taking note of the above, the learned Single Judge went on to observe as follows: "13. In my view, the impugned order of the respondent No.2 shows that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er "hair dye" is a "hair lotion" which is one of the items mentioned in Entry 36 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957. On considering the meaning of the expression "lotion" in detail, the High Court came to the conclusion that hair dye is a colouring material and is used to blacken gray hair. It was not used as a medicinal preparation to cleanse the hair or for skin disorder and was not, therefore, a hair lotion, within the meaning of entry 36 of the Andhra Pradesh General Sales Act, 1957 and was, therefore, taxable under the said Act. 24. It was submitted that as required under the Rules, the appellant company as assessee filed Classification List No. 484 of 1979 classifying "Godrej Permanent Hair Dye" (Liquid Hair Dye) under Tariff Item 68 and it had been duly approved by the Department. 25. Despite the above, on 13th July, 1982, the respondent issued a show-cause notice to the appellant as to why the said "hair dye" should not be classified under Tariff Item No.14F. It was also mentioned that while the matter was pending determination the classification of the said product would continue under Tariff Item 68 on a provisional basis under Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should commend itself to the authority. It also held that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. 29. Reference was also made to the decision of this Court in the case of Ram Avtar Bhudiaprasad vs. Assistant Sales Tax Officer reported in [1962 (1) SCR 279] wherein while dealing with the meaning of the word "vegetable" occurring in C.P. and Berar Sales Tax Act 1947, this Court held as follows:- "This word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning `that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it'. It is to be construed as understood in common language." 31. The decision of this Court in Commissioner of Sales Tax, Madhya Pradesh, Indore vs. M/s Jaswant Singh Charan Singh, reported in [1967 (2) SCR 720], where this Court was dealing with the word `charcoal', reiterated the same sentiment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gle Judge, it was submitted that the same had been affirmed by persons who claimed to be either dealers of "Vasmol Products" or consumers of the same and that they have merely stated that the said product was sold and purchased mainly as "hair dye" 35. It was submitted that the expression "namely" used in Tariff Item No. 14F had been used in an illustrative and not in a restrictive sense and that the use of the expression "namely" in the Tariff Item did not mean that only the items specified therein would fall within its ambit. It was submitted that the learned Single Judge had incorrectly held that items or entries in taxing statutes have to be understood according to the meaning given by people in trade and commerce, who were conversant with the subject and that technical and scientific tests offer only guidance within limits. The learned Additional Solicitor General submitted that the affidavits filed before the learned Single Judge were from traders who stated that "Vasmol Products" were hair darkeners and were not sold as cosmetics. Affidavits filed by users stated that "Vasmol" was being used by them as "hair dye" and not as "hair lotion" or "hair cream". Accordingly the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hair lotion as a separate category was included in the said Tariff Item. However, when in May, 1974, the appellant's company introduced its aforesaid product labeled-Godrej-Permanent Hair Dye, no excise duty was levied on the said product under Tariff Item 14F. It was only after the Finance Act, 1975, introduced a Residuary Entry, being Tariff Item No. 68, in the First Schedule to the Central Excise and Salt Act, 1944, that the appellant's product became taxable on and from 1st March, 1975, under Tariff Item 68. However, while under Tariff Item No. 14F tariff was imposed at the rate of 105%, tariff under Tariff Item 68 was imposed at the rate of 8%. It is subsequent to the introduction of Tariff Item No. 68 that the appellant's company was informed that its above-mentioned product did not fall under Tariff Item No.14F. 38. From the decisions cited by Mr. Desai, it would be clear that there is substantial difference between a hair dye and pomade and that while pomade is an ointment for hair, a lotion is used as a medicinal preparation to cleanse hair or for skin disorders. Since neither of the two definitions answers the description of the appellant's product, the Court came to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ric sense a hair dye may also be referred to as hair lotion, for the purposes of a taxing statute, its chemical composition and actual usage become relevant. 42. Mr. Desai laid great emphasis on the fact that the appellant's preparation was poisonous and had to be used with great care and caution in the manner indicated in the literature supplied with the product. The natural corollary of such submission is that the said product could not, therefore, be treated as a lotion to be used either as a scalp or hair nourisher or for medicinal purposes. 43. We are, therefore, satisfied that the view taken by the High Court was erroneous and during the relevant period, namely, January, 1982 to December, 1982, the demand made on behalf of the Revenue for payment of tariff according to Tariff Item 14F was erroneous and the judgment of the High Court based thereupon is liable to be set aside. 44. We, accordingly, allow the appeal, set aside the order of the High Court impugned in the appeal and quash the demand Notices dated 2nd August, 1982, 27th December, 1982 and 17th February, 1983 covering the period from January, 1982 to December, 1982 demanding payment of excise duty under Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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