Case: Godrej Industries Ltd Vs. D.G. Ahire Assistant Collector of Central Excise &amp; Another

product as a hair darkener, though a relevant factor, would not be a 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.36. 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 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 appellants 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 the appellants 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 appellants company was informed that its above-mentioned product did not fall under Tariff Item No.14F. 37. 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 appellants 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 which would stand covered by Tariff Item 14F of the First Schedule to the Act. 38. The Division Bench of the Bombay 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 Chandernishants case (supra) wherein a learned Single Judge distinguished the decision of the Division Bench in Chimanlal Beliram Mehtas case (supra) relying on classification of a product by virtue of the doctrine of common parlance. 39. 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 appellants 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 ones hair. From the chemical analysis of the appellants 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. 40. Apart from the above, even in common parlance or traders 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 appellants 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.41. Mr. Desai laid great emphasis on the fact that the appellants 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 lotion to be used either as a scalp or hair nourisher or for medicinal purposes. 42. 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.

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

Explanation:
1[ds]40. Apart from the above, even in common parlance or traders 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 appellants 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.