1963 (9) TMI 2 - HC - Central Excise

Summary

Issues Involved:
1. Whether eucalyptus oil repacked and sold by the petitioner falls under the purview of Item 14-E of the First Schedule to the Central Excises and Salt Act, 1944.
2. Validity of the amended definition of 'manufacture' in Section 2(f) of the Central Excises and Salt Act, 1944.
3. Whether the imposition of excise duty on repacked eucalyptus oil is justified.

Issue-wise Detailed Analysis:

1. Whether eucalyptus oil repacked and sold by the petitioner falls under the purview of Item 14-E of the First Schedule to the Central Excises and Salt Act, 1944:
The petitioner argued that eucalyptus oil marketed by him does not fall within the purview of Item 14-E, which pertains to "Patent or Proprietary medicines not containing alcohol, opium, Indian Hemp, or other Narcotic drugs or other Narcotics other than those medicine which are exclusively Ayurvedic, Unani, Sidha or Homoeopathic." The explanation provided under this item defines "Patent or Proprietary medicines" as any drug or medicinal preparation for use in the treatment of human beings or animals, which bears a name not specified in a monograph in a pharmacopoeia or is a brand name or a registered trade mark. The court examined whether eucalyptus oil could be considered a drug or medicinal preparation and if it bore any name or mark as described in the explanation. It was found that eucalyptus oil is specified in one of the notified publications and does not bear a brand name or registered trade mark. The court concluded that the mere mention of the dealer's name on the label does not establish a connection in the course of trade as required by the explanation.

2. Validity of the amended definition of 'manufacture' in Section 2(f) of the Central Excises and Salt Act, 1944:
The petitioner challenged the validity of the amended definition of 'manufacture' which includes repacking from bulk into retail packets. The Collector of Central Excise argued that the amendment is within Entry 84 of List I in the seventh schedule and its validity cannot be attacked. The court did not find sufficient grounds to invalidate the amended definition, indicating that the legislative power to prescribe the point at which excise duty becomes leviable is justified.

3. Whether the imposition of excise duty on repacked eucalyptus oil is justified:
The Collector of Central Excise contended that the petitioner is a manufacturer with a Central Excise licence authorizing him to pack eucalyptus oil, and that the duty is leviable at the point of packing or repacking. The court examined the labels on the bottles and the cardboard containers to determine if they bore any marks that would establish a connection in the course of trade. It was found that the labels only mentioned the name of the petitioner, the quantity, the price, and the words "pure eucalyptus oil," which do not amount to a symbol, monogram, label, signature, or invented words used in relation to the medicine. The court concluded that the use of the dealer's name does not establish the required connection in the course of trade, and therefore, the explanation to Item 14-E does not apply.

Conclusion:
The court allowed the petition, ruling that eucalyptus oil repacked and sold by the petitioner does not fall within the purview of Item 14-E of the First Schedule to the Central Excises and Salt Act, 1944, and the imposition of excise duty on the repacked eucalyptus oil is not justified. The rule was made absolute, with no order as to costs.