1977 (7) TMI 53 - HC - Central Excise

Emulsified Hair Oil and Pomade - Affidavits - Validity in evidence - Tariff entry - Criteria for interpretation - Connotation of - Writ jurisdiction - Remand of the Case - Critarion for - - Distinction and Scope

Issues Involved:
1. Whether Vasmol Emulsified Hair Oil and Vasmol Pomade are exigible to duty under Item 14F of the First Schedule to the Central Excises and Salt Act, 1944.
2. Interpretation of Item 14F of the First Schedule of the said Act.
3. Consideration of trade parlance versus chemical composition in determining taxability.
4. Validity of the impugned order passed by respondent No. 2.
5. Appropriate relief and remedy for the petitioner.

Detailed Analysis:

1. Whether Vasmol Emulsified Hair Oil and Vasmol Pomade are exigible to duty under Item 14F of the First Schedule to the Central Excises and Salt Act, 1944:
The petitioner challenged the order dated 22nd October 1971, which held that Vasmol Emulsified Hair Oil and Vasmol Pomade were subject to duty under Item 14F. The products contained lead acetate and sulphur, and the rest of the contents were typical of ordinary hair oils and pomades. The petitioner argued that these products were hair dyes, not covered by Item 14F, which included hair lotions, creams, and pomades.

2. Interpretation of Item 14F of the First Schedule of the said Act:
Item 14F at the relevant time read: "Cosmetics and Toilet Preparations not containing Alcohol or Opium, 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." The court considered whether the term "namely" was restrictive or illustrative. It was concluded that the term was used restrictively, as evidenced by subsequent amendments to the item which added specific products like perfumed hair oils and shampoos.

3. Consideration of trade parlance versus chemical composition in determining taxability:
The court emphasized that the correct principle for interpreting items in the First Schedule of the Act was how the products were known in trade parlance, not by their chemical composition. This principle was supported by several precedents, including The King v. Planters Nut and Chocolate Company Ltd., S.B. Sugar Mills v. Union of India, and Dunlop India Ltd. v. Union of India. Affidavits from dealers and consumers indicated that Vasmol products were known and sold as hair dyes, not as hair lotions or pomades.

4. Validity of the impugned order passed by respondent No. 2:
The court found that respondent No. 2 had not applied the correct test of trade parlance and had placed undue reliance on the chemical composition of the products. The affidavits provided by the petitioner, which were not contested by the respondents, clearly showed that the products were regarded as hair dyes in trade. The court also noted that the advertisements emphasized the hair-darkening qualities of the products, which further supported the petitioner's claim.

5. Appropriate relief and remedy for the petitioner:
Given the evidence and the improper approach of respondent No. 2, the court decided not to remand the matter but to quash the impugned order. The court held that Vasmol Emulsified Hair Oil and Vasmol Pomade were not covered by Item 14F and were not exigible to excise duty under that item. The respondents were directed to refund any amount recovered from the petitioner pursuant to the impugned order and to discharge the bank guarantees provided by the petitioner.

Conclusion:
The rule was made absolute, and the impugned order dated 22nd October 1971 was set aside. The respondents were restrained from acting further on the impugned order and directed to refund the amounts recovered from the petitioner. The operation of the order concerning the refund and discharge of bank guarantees was stayed for six weeks to allow the respondents to appeal. The respondents were also ordered to pay the costs of the petition fixed at Rs. 300/-.

This comprehensive analysis ensures that all relevant issues and legal terminology are preserved, providing a thorough understanding of the judgment.

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