Godrej Industries Ltd vs D.G Ahire Asstt Coll.Of Cent.Ex. & Anr

Tariff. However, "hair lotion" is 2 specified under Tariff Item 14F. Since

May, 1974, till 13th July, 1982, the Excise

Department did not raise any claim in

regard to "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

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 the appellant would have to

execute a bond for provisional assessment

under Rule 98. The appellant responded to

the notice and filed its written

submissions. Despite the above, four

specific demand notices dated 2nd August,

1982, 11th October, 1982, 27th December,

1982 and 17th February, 1983, were issued

to the appellant. The demand notice dated

11th October, 1982, was subsequently 4 dropped. The remaining three notices

covered the period from January, 1982 to

December, 1982.

4. The defence taken by the appellant in its

reply to the show cause notice relied, to

a large extent, upon a judgment of a

learned Single Judge of the Bombay High

Court in the case of Subhash Chandarnishat

vs. Union of India, reported in [1979 ELT

(J) 212]. The said matter involved two

products known as "Vasmol Emulsified Hair

Oil" and "Vasmol Pomade". The case made

out by the appellant in that case was that

both the aforesaid products were hair dyes

meant for the purpose of darkening hair

and could not, therefore, be classified

under Tariff Item 14F. On a consideration

of the material placed before him, the

learned Judge held that "Vasmol Emulsified

Hair Oil" and "Vasmol Pomade" did not fall

under Tariff Item 14F.

5

5. The appellant's submission was rejected by

the respondent No.1 by his order dated 24th

May, 1983, by which he held that the

appellant was liable to pay the excise

duty as claimed under the three notices

referred to above. Consequent to such

determination, a show-cause-cum-demand

notice dated 2nd June, 1983, was also

served on the appellant demanding the

excise duty for the subsequent period from

January, 1983 to March, 1983.

6. Being aggrieved by the said two notices

and the demand notice, the appellant moved

the High Court in its writ jurisdiction

challenging the said two notices dated 24th

May, 1983 and 2nnd June, 1983 and also

prayed for appropriate interim orders with

regard to the demand notice. The said

writ petition was admitted and interim

orders were passed thereon.

6

7. Elaborate submissions were made on behalf

of the parties before the High Court

regarding the classification of the

appellant's product as a "hair lotion"

which would bring it within the ambit of

Tariff Item 14F. Apart from the nature

and character of the product in relation

to the expression "hair dye" used in

Tariff Item 14F, it was also submitted on

behalf of the excise authorities that

while 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 7 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

covered under Tariff Item 14F of the

Central Excise Act, 1940, as was existing

at the relevant time and that even if the 8 item was not covered under Tariff Item 14F

but Entry No. 68, the appellant

Company would still have to pay excise duty at

the rate of 105% since the same had been

collected from the consumers but had not passed

on to the respondents.

10. On the basis of the said reasoning and/or

finding, the High Court dismissed the writ

petition filed by the appellant and

vacated the interim order which had

continued during the pendency of the writ

petition. A consequential direction was

also given that respondent would be

entitled to recover the excise duty for

the relevant period in terms of the

impugned order and demand notices.

11. While disposing of the writ petition, on

the prayer made on behalf of the counsel

for the appellant herein, the High Court

continued the interim orders passed for a

period of eight weeks and directed that no

recovery would be made on the basis of the 9 impugned notices and on the basis of the

judgment of the High Court for a period of

eight weeks.

12. This appeal has been filed against the

said decision of the Bombay High Court.

13. As will be apparent from what has been

stated hereinabove, the only issue which

falls for decision in this appeal is with

regard to the classification of the

appellant's product sold in the market as

a "hair dye" in relation to the entries

under the Central Excise Tariff. While

deciding the said issue, it will have to

be borne in mind that at the relevant

point of time, namely, during January,

1982, to December, 1982, there was no

specific entry under the Central Excise

Tariff regarding "hair dyes", although,

"hair lotion" was specified under Tariff

Item 14F and that only with effect from 1st

March, 1975, a residuary entry, namely,

Tariff Item 68, was introduced, whereby 10 goods which had not been specifically

included under any of the other Tariff

Items, were made exigible, though at the

rate of 8% only.

14. Appearing for the appellant company, Mr.

Ashok Desai, learned senior advocate,

submitted that the relevant period

involving the demand for payment of excise

duty on "hair dye" treating the same to be

covered by Tariff Item 14F, was for the

period from January, 1982 to December,

1982. He also pointed out that by the

Finance Act, 1961, Tariff Item 14F was

introduced to cover Cosmetics 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." 11

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, 12 in the First Schedule to the Central

Excise and Salt Act, 1944 which reads as

follows:-

"68 - All other Goods, not elsewhere specified."

Mr. Desai submitted that by virtue of such

entry, all goods, including the liquid hair dye

manufactured by the appellant became, exigible

at the rate of 8%.

18. As submitted by Mr. Desai, the appellant's

aforesaid product appears to have been

sent for analysis to the Deputy Chief

Chemist and by his letter dated 3rd March

1975, the Superintendent of Central Excise

Range IV, Division VII, informed the

appellant company as follows:-

"No.C.E (Samples)/75/540 B'bay 3/3/75

M/s. Godrej Soaps (P) Ltd.

Bombay

Gentlemen,

Sub: Sample of Godrej Permanent Hair Dye. 13 Deputy Chief Chemist has opined that samples of "Godrej Permanent Hair Dye"- Brown and Black" sent to him for analysis, do not fall under Tariff Item 14F(II). This is for your information.

Yours faithfully,

Sd/- 3.3.75 Supdt. Of Central Excise Range IV, Division VII"

19. Mr. Desai submitted that from the said

letter it would be clear that even the

Department was alive to the fact that the

appellant's product "liquid hair dye' did

not fall under Tariff Item 14F, which

necessarily implied that it did not answer

to the description of "hair lotion" or

"pomade" as included in Item No. (iv) of

14F introduced by the Finance Act of 1961

in the First Schedule to the Central

Excise and Salt Act, 1944. According to

Mr. Desai, after introduction of Tariff

Item 68 by the Finance Act of 1975, the

appellant's aforesaid product became 14 exigible under the said entry for which

excise duty was being duly paid.

20. Mr. Desai then submitted that an identical

question, which has been posed in this

appeal, had been raised before the Bombay

High Court in the case of Chimanlal

Beliram Mehta vs. M.G. Vaidya, reported in

[2000 (124) E.L.T. 40 (Bom)], where the

plea that hair dye should not be exigible

to duty as "hair lotion" was not accepted

and it was held that the same came within

the definition of hair lotion and was thus

exigible. Mr. Desai submitted that the

said decision had been rendered by the

Division Bench mainly on the basis of the

analysis of the components of the product.

Subsequently, however, while dealing with

the same question relating to "Vasmol

Emulsified Hair Oil" and "Vasmol Pomade"

the learned Single Judge of the Bombay

High Court in the case of Subhash

Chandarnishat vs. Union of India (supra) 15 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" 16

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 has not really applied his mind to the aforesaid affidavits at all. Although he has noticed them, he has not considered properly the effect of these affidavits. These affidavits were relevant pieces of evidence showing as to how the aforesaid products were regarded in trade and commerce parlance. Instead of giving due weight to these affidavits and considering their effect, respondent No.2 has chosen to place undue reliance on the chemical composition of the said products and to some extent on the advertisements, which, I have already pointed out, have moreover been misconstrued by him. He has further failed to take into account the effect of the cautionary statements, which I have already referred to earlier. In my opinion, respondent No.2, has in effect, ignored the relevant material before him, namely, the said affidavits and has adopted a wholly erroneous approach in making the impugned order. This is clearly not a case where on the material before him two views were possible or reasonably open to respondent No.2 and he has chosen to adopt one of them. The evidence on record before respondent No2 clearly showed that the aforesaid products 17 could not be fairly regarded as "hair dressing" or "hair pomade" at all. If one were to pose the question in a somewhat similar form to the question posed by the Exchequer Court of Canada in The King v. Planters Nut and Chocolate Co. Ltd. (1951 Canada Law Reports 122) the question could be framed thus "Supposing a householder who wanted to darken his hair were to ask his son to go to the provision store and get a bottle of hair pomade or hair dressing, would he expect his son to come back with "Vasmol Emulsified Hair" or "Vasmol Pomade". The answer to that question in my opinion, would be clearly in the negative on the evidence on record in this petition. In my view, therefore, the decision of respondent No.2 is liable to be quashed."

22. Mr. Desai submitted that the learned Judge

went on to hold that "Vasmol Emulsified

Hair Oil" and "Vasmol Pomade" were not

covered by Item 14F of the First Schedule

to the Act and were not exigible to excise

duty under that item.

23. Mr. Desai also referred to a decision in

Godrej Soaps Ltd vs. State of Andhra

Pradesh, reported in [1983 (53) STC 376],

relating to the very same product, namely,

"Godrej Permanent Hair Dye". In the said 18 case, the Court was called upon to decide

whether "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 19 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 Rule 9D. On 2nd

August, 1982, a show cause-cum-demand

notice was issued by the Department

alleging short payment of duty under

Tariff Item 14F for the period from

January, 1982 to June 1982. The said

notice was followed by two other show-

cause-cum-demand notices, for the periods

from July to September, 1982 and from

October to December, 1982. Mr. Desai

submitted that before the Adjudicating

Authority several affidavits sworn by 20 various dealers, retailers and consumers,

were filed to show that in commercial

parlance, people who dealt with "hair dye"

and "hair lotion" considered them to be

separate and distinct products. The

Assistant Collector by his order dated 24th

May, 1983, rejected the explanation given

by the appellant company and confirmed the

demand made by the Department by the

several show- cause-cum-demand notices

dated 13th July, 1982, 2nd August, 1982, 27th

December 1982 and 17th February, 1983.

26. It was submitted that being aggrieved by

the said order of the Assistant Collector,

the appellant filed Writ Petition No. 1460

of 1983 in the Bombay High Court

challenging the said order of the

Assistant Collector dated 24th May, 1983,

together with the various show-cause-cum-

demand notices issued from time to time.

By its judgment and order dated 17th

September, 1982, the High Court dismissed 21 the writ petition and upheld the order of

the Assistant Collector and directed that

the demand be paid.

27. This appeal has been filed against the

judgment and order of the High Court

dismissing the writ petition filed by the

appellant herein.

28. Relying heavily on the decision of the

learned Single Judge of the Bombay High

Court in Subhash Chandarnishat's case

(supra), Mr. Desai urged that the Division

Bench of the Bombay High Court had wrongly

arrived at the conclusion that the

appellant's "hair dye" was in fact "hair

lotion". Elaborating on his submissions

with regard to the application of the

commercial parlance test to determine

classification of a product Mr. Desai

besides referring to the Planters Nut case

also referred to the case of Dunlop India

Limited Vs. Union of India, reported in 22 [1976 (2) SCC 241], in which this Court

while dealing with VP Latex and referring

to the Planters Nut case with approval,

held that in interpreting the meaning of

words in a taxing statute, the acceptance

of a particular word by the traders and

its popular meaning 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:-

23

"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

sentiments as were expressed in Ramavtar

Budhiaprasad's case (supra).

32. Mr. Desai also submitted that this Court

has repeatedly held that affidavits cannot be

disregarded, if no evidence to the contrary was

produced.

33. It was lastly submitted by Mr. Desai that

the use of the word "namely" in Tariff

Item 14F would have to be interpreted as

exhaustive and confined only to those 24 products specifically mentioned therein

against items (i) to (iv). The said

expression had been held in various

decisions as an equivalent of the

expression `that is to say'. Also

referring to the various internet extracts

produced on behalf of the appellant

company, Mr. Desai concluded by urging

that both the Department and the High

Court had erred in law in disregarding the

well established common parlance test,

particularly when the product of the

appellant is a counter article available

on demand. Mr. Desai submitted that the

ordinary consumer does not depend on the

text-book concept of "hair lotion" or

"hair product" but on the common man's

understanding of the product. Mr. Desai

submitted that the judgment and order of

the High Court, as also that of the

Assistant Collector of Central Excise,

holding that the appellant's product - 25

"liquid hair dye" was "hair lotion" and

including the same in Tariff Item 14F, in

place of Tariff Item 68 of the First

Schedule to the Central Excise and Sale

Act, 1944, was erroneous and liable to be

set aside.

34. Replying to the submissions made on behalf

of the appellant, the learned Additional

Solicitor General, Mr. M. Chandra

Shekharan, submitted when the Division

Bench had found that "hair dye" was, in

fact, a "hair lotion", the view expressed

by the learned Single Judge in Subhash

Chandarnishat's case, could not be given

undue importance as has been done on

behalf of the appellant. Referring to the

Chambers 20th Century Dictionary, the

learned Additional Solicitor General

submitted that in the said Dictionary

`Pomade' has been defined to be an

ointment for the hair, whereas a lotion is

a liquid preparation, either medicinal or 26 of a cosmetic nature. It was submitted

that "Vasmol Pomade" was different from

the appellant's product in that it

contains a small amount of lead acetate

and sulphur precipitator and the rest of

the material is basically herbal jelly to

which herbs and perfumes are added. As to

the affidavit filed before the learned

Single 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 27 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 learned Single

Judge held that the concerned Vasmol

products were "hair dyes" and not "hair

lotions".

36. The learned Additional Solicitor General

submitted that the Division Bench had held 28 that the report of the Deputy Chief

Chemist, Mumbai and the Chief Chemist,

Central Revenue, New Delhi and several

books and periodicals, which had been

relied upon by the petitioners during the

hearing of the appeal, had been considered

by the authorities before coming to the

conclusion that the product in question

was a "hair lotion". It was submitted that

the Division Bench had, on placing

reliance on standard text-books on which

the appellants had relied, indicated that

the two expressions "Hair Lotion" and

"Hair Dye" could be used interchangeably

in the commercial world and that several

such products which are nothing but dye,

usually with lead base have been known as

"Hair Restorers" which were expected to

achieve what a "Hair Lotion" or "Hair

Tonic" was also expected to achieve. The

use of the product as a hair darkener,

though a relevant factor, would not be a 29 deciding factor in the matter. The

learned Additional Solicitor General

submitted that the learned Single Judge

had deviated from the Rule of precedent

and having regard to the decision of this

Court in Bharat Sanchar Nigam Ltd. Vs.

Union of India [2006 (3) SCC 1] could not

have taken a view different from that of

the Division Bench.

37. From the submissions made on behalf of the

respective parties and the materials on

record, it is clear that the product of

the appellant company is undoubtedly, a

hair darkener. Whether it also acts as a

hair lotion, is the question which calls

for decision in order to establish whether

the said product would fall under Tariff

Item 14F. Extensive arguments were

advanced by Counsel for both the parties

regarding the chemical composition and the

common parlance understanding of the

product. The aforesaid product of the 30 appellant company also appears to have

been sent for analysis to the Deputy Chief

Chemist and his decision was conveyed by

the Superintendent of Central Excise Range

IV, Division VII, to the appellant company

to the effect that the said product did

not fall under Tariff Item 14F. Apart

from the above, when cosmetics and toilet

preparations were made taxable by virtue

of the Finance Act, 1961, whereby Tariff

Item 14F was introduced to cover such

preparations, 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 31 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 the conclusion that the said

product was merely a colouring material used

for blackening gray hair and not a hair lotion 32 which would stand covered by Tariff Item 14F of

the First Schedule to the Act.

39. The Division Bench of the Bomaby High

Court in the case of Chimanlal Beliram, had no

doubt, come to the conclusion that the product

in question was a hair lotion. While doing so,

the Division Bench had relied on the standard

text-books which indicated that the expressions

"hair lotion" and "hair dye" could be used

interchangeable in the commercial world and

that several such products which are nothing

but dye usually with lead base have been known

as "hair restorers" which were expected to

achieve what a hair lotion or hair tonic was

also expected to achieve. A good deal of

argument was also advanced by learned counsel

for the parties with regard to Subhash

Chandernishant's case(supra) wherein a learned

Single Judge distinguished the decision of the

Division Bench in Chimanlal Beliram Mehta's

case (supra) relying on classification of a 33 product by virtue of the doctrine of common

parlance.

40. The expression "lotion" has been described

in Collins English Dictionary as "a liquid

preparation having a soothing, cleansing or

antiseptic action applied to the skin, eyes

etc.". It has also been indicated that the

word "lotion" had been derived from the Latin

word "lotio" meaning - a washing. Nothing has

been disclosed from any of the technical

information gleaned from standard text-books

that the appellant's product was anything more

than a hair colouring agent or that it was or

could be used to have a soothing cleansing or

antiseptic action while washing out one's hair.

From the chemical analysis of the appellant's

product nothing has also been shown as to

whether the same could be applied to the scalp

for restoration or nourishment of hair, which

could bring it within the definition of

"lotion" as a medicinal product. 34

41. Apart from the above, even in common

parlance or trader's jargon a hair dye, unless

it had other properties besides the capacity to

darken hair, could not be equated with hair

lotion. Although, not much weight has been

given to the affidavits filed on behalf of the

appellant's company, the same cannot be brushed

aside in determining what a common man or a

trader would understand by the expressions

"hair lotion" and "hair dye". While in a

generic 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 35 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 Item 14F of

the First Schedule to the Central Excise and

Sal Act, 1944.

36

45. Having regard to the facts of the case,

the parties will bear their own costs.

.............................................J. (ALTAMAS KABIR)

.............................................J. (V.S.SIRPURKAR) New Delhi Dated: 9th July, 2008