Case: The State Of Goa  Vs. M/S.Colfax Laboratories (I) Ltd.

in entertaining an application from Colfax for reclassifying its products, issuing a notice to it to show cause why its request should not be rejected and thereafter passing an order on 23.3.1985 classifying the ASL as a medicinal preparation and not as a toilet preparation under the Act. There was no requirement in law to issue a show cause notice before rejecting such an application. There being no provision for a prior classification of product under the Medicinal and Toilet Preparations (Excise Duties) Act and the Rules made thereunder the entire proceedings commenced on the basis of the application given by Colfax and culminating with the order of the Commissioner of Excise are wholly without jurisdiction. The order passed by the Commissioner of Excise on 23.3.1985 being without jurisdiction is a nullity in the eyes of law and is liable to be ignored. 18. Rule 11 of the Rules will apply when duties or charge have been short levied through inadvertence, error, collusion or misconstruction on the part of an excise officer or through misstatement as to the quantity or description of such goods on the part of the owner. After the order dated 23.3.1985 had been passed by the Commissioner of Excise, Goa, the concerned Excise Officer who made the relevant entries in Form A.R.-2 submitted by Colfax could not have taken a different view and had to proceed on the footing that ASL was a medicinal preparation. Being a subordinate officer he was fully bound by the order of the highest excise authority of the State. Thereafter, till 1991 when notices were issued and the matter was finally decided by the Excise Commissioner, he had to proceed treating the ASL as medicinal preparation. In the fact situation, the concerned Excise Officer who made entries in Form AR-12 will be the Excise Officer for the purposes of Rule 11 and 12 as the matter was not dealt with by any other authority. In such circumstances it cannot be held that the duties or charge had been short levied through inadvertence, error, collusion or misconstruction on the part of the concerned Excise Officer or through misstatement as to the quantity or description of such goods on the part of the owner. Collusion means a secret agreement for a fraudulent purpose or a secret or dishonest arrangement in fraud of the rights of another. It is a deceitful agreement between two or more persons for some evil purpose, such as to defraud a third person of his rights. The concerned Excise officer who made the relevant entries in Form A.R.-2 and cleared the goods at the spot being a subordinate officer had absolutely no option but to act in accordance with the order dated 23.3.1985 of the Commissioner of Excise. In these circumstances Rule 11 of the Rules can have no application to the facts of the case. Rule 12 confers residuary powers for recovery of sums due to Government. It provides that where the Rules do not make any specific provision for the collection of any duty or of any deficiency in duty, if the duty has, for any reason, been short levied or of any other sum of any kind payable to the collecting Government under the Act or the Rules, such duty, deficiency in duty or sum shall, on written demand made by the appropriate officer be paid to such person and at such time and place as the proper officer may specify. There being no specific provision for a case like the present one for collection f duty which has been short levied, the provisions of Rule 12 of the Rules will be applicable. There is no period of limitation prescribed under Rule 12. In view of the fact that the order dated 23.3.1985 of the Commissioner of Excise was an order passed wholly without jurisdiction and consequently was a nullity, the Government is entitled to recover the deficiency in duty w.e.f. the said date. The ratio of Collector of Central Excise vs. Cotspun Ltd., 1997 (7) SCC 633, reliance on which was placed by Shri Desai, can have no application here as the said case turned on the interpretation of Rules 10, 173-B and 173-C of Central Excise Rules, 1944, whereunder the whole scheme is different as discussed earlier. The view taken by the Excise Commissioner on this point in his order dated 12.8.1998 is, therefore, perfectly correct. The High Court clearly erred in setting aside the order of the Excise Commissioner and in directing that the notices be treated to have been issued under Rule 11 of the Rules. The order passed by the High Court in this regard is, therefore, liable to be set aside. 19. The third point relates to the quantification of duties done by the Excise Commissioner. The learned senior counsel for Colfax has submitted that in case of a product which ahs a cum-duty price, the assessment is required to be done on the basis of wholesale price less excise duty payable, as provided under Section 4(4)(d)(ii) of the Central Excise Act, 1944. Learned Additional Solicitor and learned Advocate General for the State of Goa have urged tha the charge annexed to the show cause notices takes into account the prices indicated by the manufacturer after excluding the duty and its on this price that the excise duty has to be worked out. The High Court has placed reliance upon a decision of this Court in Govt. of India vs. Madras Rubber Factory, 1975 (77) ELT 433 for computation of assessable value in a cum-duty price. It has held that the phrase ad valorem appearing in the column rate of duty in the Schedule appended to the Act refers to the value of the excisable goods and, therefore, it will have to be worked out by applying the formula as laid down in Section 4(4)(d) of Central Excise Act. We are of the opinion that the view taken by the High Court is perfectly correct and calls for no interference.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The process of shaving does not cause any kind of impairment of the normal state of a person. it does not in any manner interrupt or modify the performance of any vital functions of the human body. Many people have been shaving regularly every day for 40-50 years but no one has ever suffered any kind of a disease. If the process of shaving would have resulted in some kind of a disease, the best preventive measure to be adopted was not a shave. The number of persons who shave every day and have been shaving for years would run into crores even in our own country and except for a very insignificant percentage thereof, who belong to affluent class, no one uses any after shave lotion. But they have not suffered any disease. Therefore, on a plain interpretation of the statutory provisions an after shave lotion cannot come within the the ambit of a medicinal preparation as defined in Section 2(g) of the Act.The Excise Commissioner, Goa, after a detailed consideration of scientific and technical material, has recorded a finding that ASLs manufactured by Colfax are toilet preparations within the meaning of Section 2(k) of the Act. The High Court has also examined the matter threadbare and has arrived at the same finding. We find absolutely no reason to disagree with the view taken by the Excise Commissioner, who is an expert in the field. Therefore, the contention raised by learned counsel for Colfax that Old Spice and Blue Stratos ASLs are medicinal preparations and not toilet preparations, has no substance and has to beview of the fact that the order dated 23.3.1985 of the Commissioner of Excise was an order passed wholly without jurisdiction and consequently was a nullity, the Government is entitled to recover the deficiency in duty w.e.f. the said date. Theview taken by the Excise Commissioner on this point in his order dated 12.8.1998 is, therefore, perfectly correct. The High Court clearly erred in setting aside the order of the Excise Commissioner and in directing that the notices be treated to have been issued under Rule 11 of the Rules. The order passed by the High Court in this regard is, therefore, liable to be setbeing no provision for a prior classification of product under the Medicinal and Toilet Preparations (Excise Duties) Act and the Rules made thereunder the entire proceedings commenced on the basis of the application given by Colfax and culminating with the order of the Commissioner of Excise are wholly without jurisdiction. The order passed by the Commissioner of Excise on 23.3.1985 being without jurisdiction is a nullity in the eyes of law and is liable to beHigh Court has placed reliance upon a decision of this Court in Govt. of India vs. Madras Rubber Factory, 1975 (77) ELT 433 for computation of assessable value in a cum-duty price. It has held that the phrase ad valorem appearing in the column rate of duty in the Schedule appended to the Act refers to the value of the excisable goods and, therefore, it will have to be worked out by applying the formula as laid down in Section 4(4)(d) of Central Excise Act. We are of the opinion that the view taken by the High Court is perfectly correct and calls for no