1973 (1) TMI 28 - HC - Central Excise

Summary

Issues Involved:
1. Classification of 'Ensola Conc' under Tariff Item No. 14F (iv) of the Central Excises and Salt Act, 1944.
2. Whether the Central Government's order dated 10th January 1966 was a speaking order.

Detailed Analysis:

1. Classification of 'Ensola Conc' under Tariff Item No. 14F (iv):

The primary issue in the appeal was whether the petitioners' product 'Ensola Conc' should be classified under Tariff Item No. 14F (iv) of the First Schedule to the Central Excises and Salt Act, 1944, which pertains to "Hair Lotion, Cream and Pomade." The petitioners contended that their product, due to its composition and intended use as a hair darkener, should be classified as a hair dye and not be subject to excise duty under the said tariff item.

The Excise authorities, including the Assistant Collector and the Collector of Central Excise, had classified 'Ensola Conc' as a hair lotion, thereby subjecting it to excise duty. This classification was based on the reports of the Deputy Chief Chemist, Bombay, and the Chief Chemist, Central Revenues, New Delhi, as well as several pharmaceutical and cosmetic treatises. The Collector of Central Excise, in his detailed order, reasoned that 'Ensola Conc' contained 90% water and other ingredients like lead acetate and sodium thiosulphate, which are typical of hair lotions. He concluded that despite its use as a hair darkener, 'Ensola Conc' met the definition of a hair lotion.

The Court upheld this classification, emphasizing that statutory entries in acts like the Central Excise Act should be understood in their commercial sense rather than their technical or scientific sense. The Court noted that the petitioners had failed to provide any commercial evidence to support their claim that 'Ensola Conc' was not considered a hair lotion in the market. Instead, the petitioners had relied on scientific and technological texts, which indicated that products with ingredients like lead acetate and sodium thiosulphate could be classified as hair lotions.

The Court also referred to several passages from standard books on cosmetics and pharmaceutical formulas, which showed that hair dyes and hair lotions could be used interchangeably in the commercial world. The Court concluded that even from a scientific and technological perspective, 'Ensola Conc' could be classified as a hair lotion.

2. Whether the Central Government's order dated 10th January 1966 was a speaking order:

The petitioners argued that the Central Government's order dated 10th January 1966, which upheld the classification of 'Ensola Conc' as a hair lotion, was not a speaking order as it did not provide reasons for its decision. However, the petitioners did not press this point seriously and instead focused on the merits of the classification issue.

The Court noted that the petitioners' counsel, Mr. Joshi, had clarified that he wanted a decision on the merits of the classification issue rather than on the procedural aspect of whether the Central Government's order was a speaking order. Consequently, the Court did not delve into this issue in detail and focused on the substantive question of classification.

Conclusion:

The Court dismissed the appeal, upholding the classification of 'Ensola Conc' as a hair lotion under Tariff Item No. 14F (iv) and confirming the orders of the Excise authorities and the Central Government. The Court also upheld the order of Justice K.K. Desai, who had dismissed the petitioners' writ petition. The appeal was dismissed with costs, and the respondents' attorneys were granted liberty to withdraw Rs. 500 deposited by the appellants towards the cost of the petition.