Subhash Chandarnishat v. Union of India and Another

1979 (4) E.L.T. (J 212)(Bom.)

IN THE HIGH COURT OF BOMBAY

Kania, J.

SUBHASH CHANDARNISHAT

Versus

UNION OF INDIA AND ANOTHER

Misc. Petition No. 69 of 1972, decided on 21-7-1977

Emulsified Hair Oil and Pomade - Whether Cosmetics and Toilet preparations ? -Item 14F.

- Since, the advertisements and literature submitted by the petitioners clearly showed that emphasis has been given by the petitioner to the hair darkening qualities of the Vasmol products and not to the other qualities similar to those of an ordinary hair dressing, therefore, they will not be covered by the expression ‘Cosmetics and Toilet preparations’ falling under item 14F of the Central Excise Tariff. The contention that the petitioner had declared the Vasmol products as hair lotions before the Sales Tax authorities will not change the position as the petitioner has throughout contended before the Central Excise authorities that the aforesaid Vasmol products were not hair lotions or hair pomades covered by Item 14F of the Central Excise Tariff. [paras 10 and 12]

Classification of goods on the basis of catalogues, advertisements and literature.

- It is usual for an advertiser of a product to claim all possible virtues for his products, but it would be erroneous to rely on all these claims to determine the trade use of the products. [para l0]

Affidavits - Validity in evidence.

- Where affidavits are filed before an officer it would not be proper for him to arbitrarily reject them as incorrect. Normally speaking, if the officer desires to challenge the correctness of such affidavits he should call the deponents for being cross-examined or test the averments by any other means open to him. [para 10]

Tariff entry - Criteria for interpretation.

- The correct principle of the interpretation of the items or entries occurring in the First Schedule to the Central Excises Act would be that these items or entries should be construed not in the sense in which it is understood in technical matters or scientific laboratories, but in the sense which the people dealing in, or commercially conversant with the items would attribute to them. Therefore, the meaning suggested technical and scientific tests can never be preferred to the meaning gathered from the common parlance of the people in trade and commerce conversant with the subject matter. [paras 6 and 7]

`Namely’ used Tariff in Item 14F - Connotation of.

- The very fact that “perfumed hair oil” had to be specifically included in Item 14F by way of amendment shows that the word “namely” was used in the said Item not in an illustrative sense but in restrictive sense. [para 5]

Writ jurisdiction - Circumstances under which High Court can interfere under Art. 226.

- It is undoubtedly true that where two views are reasonably possible regarding the scope and applicability of an Item in an Excise Act or Customs Act and one of these views is taken by the authorities concerned, the Court cannot interfere with the same. But the Court is entitled to interfere if the finding given by an Excise Officer regarding classification of Tariff item is patently and obviously erroneous or when the conclusions arrived at are totally unreasonable or the decision given is on the basis of erroneous construction of a tariff entry or is arrived at on the basis of irrelevant facts and irrelevant consideration or is the result of ignoring of relevant facts and relevant material available on record. [para 9]

Remand of the Case - Critarion for.

- If the evidence on record makes it clear that the relevant products would not fall within a particular Tariff Item on the basis of trade practice and commercial parlance, there is no need for the High Court to remand the case to the lower authority for further consideration and deciding the case according to law. [para 14]

Tariff Item and entry in Government of India Act, 1935 - Distinction and Scope.

- It is an undisputed principle of construction that an entry in the Schedule 7 to the Government of India Act, 1935 being a legislative entry has to be construed in the widest possible manner and the same principle of construction cannot be applied to the construction of entries in an excise tariff, which have to be interpreted in their own context. [para 5]

[Judgment per : Kania, J.]. - This is a petition under article 226 of the Constitution of India seeking to impugn an order dated 22nd October, 1971 passed by respondent No. 2 holding that the two products manufactured by the petitioner and known as 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 (hereinafter referred to as “the said Act”), which entry was inserted in the said Act by the Finance Act, 1961.

2. The Petitioner carries on business in Bombay in the name and style of “Hygienic Research Institute” as the sole proprietor thereof and inter alia manufactures emulsified hair oil and pomade known as “Vasmol” in the trade. Both these products contain a small amount of lead acetate B.P. and sulphur precipitated B.P. viz. about 20% of lead acetate B.P and 2% of sulphur precipitated B.P. In the case of Vasmol Pomade the rest of the material is basically petroleum jelly to which are added some herbs and perfumes and in the case of Vasmol Emulsified Hair Oil, the rest of the contents consists mainly of mineral Oil to which emulsifying agents are added and also a small amount of herbs and perfumes, I may mention at this stage that although there is some difference as regards the exact amount of lead acetate and sulphur precipitated in these products, it is common ground that these two products contain about 1.5% to 2% of lead acetate and about 1.5% to 2% of sulphur precipitated and that the rest of the contents thereof are such as would be found in an ordinary pomade or an ordinary emulsified Hair Oil.

3. The Finance Act, 1961 (Act No. 14 of 1961) came into effect in 1961 and by reason of Section 13 of that Act the First Schedule of the said Act was amended, inter alia, by the insertion of Item No. 14F therein. I shall come to the contents of this item in some detail a little latter. lt may be mentioned here, however, that by reason of this item, hair lotions, creams and pomades were included in the ambit of Item 14F. On 6th March, 1961 the Collector of Central Excise, Bombay issued a Trade Notice, which, inter alia, stated that under the tariff only face cream and snow, face powder, talcum powder, hair lotions creams and pomades were liable to duty and that the other products coming under Cosmetics and Toilet preparations would not be liable to duty". The Superintendent of Central Excise called upon the Petitioner to declare the stocks as on the midnight of 28th February/1st March, 1961. In response to this notice, the Petitioner submitted a declaration on 8th March, 1961. By his letter dated 23rd March, 1961 addressed to the Collector of Central Excise Petitioner set out the reasons why according to him the aforesaid Vasmol products were not subject to taxation under item 14F of the First Schedule to the said Act. The Assistant Collector by his letter dated 18th April, 1961 intimated to the Petitioner, inter alia, that the aforesaid Vasmol products were liable to be taxed at the rate of 25% ad valorem under the said Item No. 14F. The Petitioner preferred an appeal against this decision. In support of the appeal the Petitioner forwarded an opinion obtained by the Petitioner from the Victoria Jubilee Technical Institute. By his order dated 20th December, 1961, the Collector of Central Excise rejected the said appeal. The Collector rejected the contention of the Petitioner that Vasmol was a hair dye meant solely for the purpose of darkening hair and was not covered by Item 14F of the First Schedule to the said Act. He further rejected the contention of the Petitioner that Vasmol Emulsified Hair Oil and Vasmol Pomade were used only by such persons who wanted to change the colour of their hair. The Collector observed that these two products contained the ingredients of a hair cream and hair pomade and they could be classified as such even though they had an additional property of darkening hair. The Collector relied on the advertisements issued by the Petitioner claiming that these products had the qualities of a hair darkener and a hair tonic. The Petitioner then filed a Writ Petition in the Court being Special Civil Application No. 145 of 1962 challenging the aforesaid decision of the Collector. On 11th July, 1962 this Petition was withdrawn and the Petitioner was directed to exhaust the remedy by way of revision. The Petitioner thereafter filed a revisional application on 16th June, 1962 before respondent No. 1. One B.N. Banerji the Additional Secretary to the Government of India by his order dated 10th December, 1964 rejected the said revisional application without giving any grounds or reasons. The Petitioner then filed another petition under article 226 of the Constitution of India being Miscellaneous Petition No. 355 of 1965. Along with this petition the Petitioner also filed certain affidavits to which I shall have occasion to refer a little later. By his judgment and order dated 14th September, 1970 in that petition by learned brother S.K. Desai, J. questioned the said order dated 10th December, 1964 on the ground that it was not a speaking order and remanded the case back to the Central Government for disposal according to law. The Petitioner by his Attorney’s letter dated 24th July, 1971 requested respondent No. 1 to take up the revision petition. Along with the said letter the Petitioner forwarded to respondent No. 1 nine affidavits, copies whereof are annexed to the present Petition and marked Exh. “A” (Colly) to this Petition. These affidavits are of persons who claim to be either dealers in Vasmol Products or consumers of the same, and, briefly, are to the effect that the said products are sold and purchased merely as hair dyes. The revisional application was disposed of by respondent No. 2 who gave a personal hearing to the Petitioner on 31st August, 1971. By his order dated 22nd October, 1971 respondent No. 2 rejected the laid revisional application of the Petitioner. In his aforesaid Order, which propose to refer hereinafter as “the impugned Order” respondent No. 2 has noted that the Petitioner had forwarded four affidavits purporting to be from traders selling the said Vasmol products to the effect that they had supplied Vasmol as a hair darkener and that Vasmol was not sold as a Cosmetic. Respondent No. 2 has also set out that the Petitioner had filed two affidavits of persons who claimed to be the users of Vasmol products stating that they used the same as a hair dye and not as a hair cream or a hair pomade. Respondent No. 2 has pointed out that the basic ingredients of the said Vasmol products are the same as those of normal pomades and hair creams, the only difference being that the said Vasmol products contained in addition lead acetate and sulphur and a couple of herbal extracts. Respondent No. 2 has referred to the opinion regarding the aforesaid Vasmol products given by the Victoria Jubilee Technical Institute, Italab Private Limited and the affidavit of Dr. H.R. Nanji, Managing Director of Italab Private Limited. Respondent No. 2 has pointed out that the question before him was whether the aforesaid two products were covered by the term “Hair lotion, cream and pomade”. After considering the chemical composition of the aforesaid products respondent No. 2 came to the conclusion that they fell within the broad category of hair cream and hair pomades. He observed that the bulk of the contents of these two products were the same as those of an ordinary hair cream or hair pomade and that the addition of a portion of lead acetate and sulphur as darkening agents in what was basically a hair cream or hair pomade could not impair, nullify the utility of the rest of the ingredients contained in these products. Respondent No. 2 conceded that it was true that person whose hair is already black would not normally need a hair dressing preparation which contains hair dyeing ingredients such as lead acetate and sulphur. He has, however, observed that merely because a restricted section of the public is likely to buy these Vasmol products this would not take out these products from the purview of Item 14F of the First Schedule to the said Act, because the wording of the said item is wide enough to include all hair creams and hair pomades even if they contain some ingredients which will make them useful only to certain sections of the public. Respondent No. 2 placed reliance on the advertisements issued by the Petitioner which were tendered before him and in which the petitioner claimed for the aforesaid products the qualities of “Hair Darkener”, “Hair Tonic” and “Hair Dressing”. On the basis of these advertisements respondent No. 2 observed that the petitioner had claimed all the hair dressing virtues for the said Vasmol products which could be claimed for ordinary hair creams and hair pomades in addition to the quality of a hair darkener. Respondent No. 2 came to the conclusion that the aforesaid Vasmol products were covered by the said item 14F of the First Schedule to the said Act and were exigible to excise duty under the said item. It is this order which is sought to be impugned in this Petition, which has been filed on 1st February, 1972.

4. Very briefly the contention of Mr. Desai the learned Advocate for the Petitioner, is that in all matters of taxation it is how a product is known or regarded in the trade by the consumers and sellers that is relevant for considering as to whether it falls within a particular item rendering it liable to tax under a fiscal statute and that a product is exigible only if it is known in trade in terms of the relevant tariff item, It was submitted by him that Respondent No. 2 has really not applied this test at all nor considered the affidavit evidence tendered by the Petitioner which was the most material evidence on this issue, but has proceeded to decide the matter merely on the basis of chemical composition which is of no relevance. As against this, the submission of Mr. Bhabha, the learned Advocate for the Respondents, was that chemical composition could not be said to be irrelevant for the purpose of deciding whether a particular commodity falls within a particular item rendering it liable to the payment of excise duty. It was submitted by Mr. Bhabha that it could not be said that respondent No. 2 had ignored the question as to how the aforesaid products were known in trade parlance. It was also urged by Mr. Bhabha that in any event it could not be said impugned order was a perverse order or an order which no reasonable person could pass on the basis of the material on record before him, and hence it was not liable to be interfered within a Court of Law. It is these submissions which l shall have to analyse in some detail.

5. As the arguments turn, to some extent, on the construction of item 14F of the First Schedule of the said Act, it may not be out of place to take note of the same at this stage. Section 3 of the said Act provides for levying and collecting duties of excise on all excisable goods produced or manufactured in India at the rates set forth in the First Schedule. The descriptive part of Item 14F of the First Schedule at the relevant time read thus :-

“Cosmetics and Toilet Preparations not containing Alcohol or Opium, Hemp or Other Narcotic Drugs or Narcotics, namely :-

(i) Face cream and shown.

(ii) Face Powder.

(iii) Talcum Powder.

(iv) Hair lotion, cream and Pomade."

It was submitted by Mr. Bhabha that on a proper construction of this item, it covered all cosmetics and toilet preparations and that the word “namely” used in the said item, before the description of the sub-items which followed, was merely illustrative and not restrictive of the general words “Cosmetics and Toilet preparations” used earlier. It was urged by him that the said Vasmol products manufactured by the Petitioner would certainly fall within the connection of the terms “Cosmetics” or “Toilet preparations”. It was submitted by him that the said word “namely” was used herein the same sense as the expression “that is to say” and that both these expressions are often used in statutes merely in an illustrative sense. In support of this submission Mr. Bhabha relied on the decision of Federal Court in Bhola Prasad v. Emperor (AIR 1942 E.C. 17) where it was held that the words “that is to say the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs” in Schedule No. 7 List 2, item 31 of the Government of India Act, 1935, explain or illustrate and do not amplify or limit the words “intoxicating liquors and narcotic drugs” immediately preceding them. Mr. Bhabha also relied on the decision of my learned brother Tulzapurkar J. in Miscellaneous Petition No. 491 of 1964 decided on 30th April, 1970 where it was observed that the use of the expression “namely” or the expression “the following, namely” in Item 15A in the First Schedule to the said Act as amended with effect from 29th February, 1964 is equivalent to “that is to say” and the latter expression has been held to be explanatory or illustrative and not of amplification or limitation or (vide 1942 Federal Court Reports 17 at page 25). In my view, these two decisions are of little assistance to Mr. Bhabha in the present case. It is an undisputed principle of construction that the words in a tariff item or tariff entry are to be interpreted in their own context. In Bhola Prasad v. Emperor (A.l.R. 1942 F.C. 17) the Entry in question was entry No. 31 of List 2 in Schedule 7 to the Government of India Act, 1935. In the first place, the said entry being a legislative entry had to be construed in the widest possible manner and the same principle of construction cannot be applied to the construction of entries in an excise tariff, moreover, the aforesaid Entry 31 of List 2 in Schedule 7 was in very wide terms, as pointed out in the judgment, which was delivered by Gwyer C.J. it was in the aforesaid context that the expression “that is to say” was interpreted as illustrative and not restrictive. As far as the aforementioned decision of Tulzapurkar J. is concerned, the opening part of Item 15A (1) of the First Schedule to the said Act ran thus :-

“Artificial or synthetic resins and plastic materials in any form, whether solid, liquid or pasty, or as powder, granules or flakes, or in the form of mounding powders, the following, namely :-”

The expression “in any form” used earlier in the said item makes it clear that the said item had to be construed in the widest possible manner and it was in this context that the expression “namely” was held to be illustrative and not restrictive. Apart from this, there is one clear indication that the legislature, in the present case, has used the expression “namely” not in an illustrative sense but in the restrictive sense and this can be gathered from the manner in which this item 14F has been altered from time to time. I have already set out above as to how this item stood at the relevant time viz. in 1961.

By the Finance Act, 1965, the said item was amended and the descriptive part of the said item in 1965 read thus :-

“Cosmetics and Toilet preparations not containing Alcohol or Opium, Indian Hemp or Other Narcotic Drugs or Narcotics, namely :-

(i)  Preparations for the care of the skin including beauty creams, vanishing creams, cold creams, make up creams, cleaning creams, skin foods and tonics, face powders, baby powders, toilet powders, and talcum powders.

(ii)  Hair lotion, creams and pomade."

By the Finance Act, 1975 the descriptive part of the said item was amended, inter alia, to cover, in express terms, perfumed hair oils, shampoos whether or not containing soap or detergent and shaving creams. If the expression “namely” had been used in the said item merely as illustrative, then perfumed hair oil would have been always included within the connotation of the word “Cosmetics” or the expression “Toilet preparations” hence there would have been no need to include the same in the descriptive part of the item by amendment of the statute. The same is the position regarding shampoos and shaving creams, skin foods and tonics. The very fact that these goods had to be specifically included in the said item by way of amendments shows that the word “namely” was used in the said item not in an illustrative sense but in a restrictive sense. The aforesaid submission of Mr. Bhabha must, therefore, be rejected.

6. This brings to the question as to how the aforesaid Item 14F has to be interpreted. It is common ground that the question which really arises in this connection is whether the aforesaid Vasmol products can be said to be covered by sub-item (iv) of Item 14F viz., whether they can be said to be a hair lotions, creams or pomades. In this regard the submission of Mr. Desai is that the said Act is not an Act applied to any particular science or art but in general Act whose object is to raise revenue and for that purpose to classify substance according the general use and known denomination of the trade and hence the correct principle of interpretation of the items or entries occurring in the First Schedule to the said Act would be that these items, or entries should be construed not in the sense in which they would be understood in technical matters or scientific laboratories but in the sense which the people dealing in or commercially coversant with the items would attribute to them. In support of this submission Mr. Desai has cited a number of authorities. As can be presently seen from the few authorities which I propose to cite, the principle enunciated by Mr. Desai seems to have been unequivocally accepted. In view of this, I do not propose to discuss. all the authorities cited in this connection before me, because such a discussion would serve only as a display of erudition. Some of the authorities could, however, be usefully referred to, because they set out the manner in which items or entries in similar legislation have been construed. In The King v. Planters Nut and Chocolate Company Ltd. (1951 Canada Law Reports-Exchequer Court p. 122), a leading case on this point, the question was whether salted peanuts and cashew nuts could be considered to be “fruits” or “vegetables” within the meaning of the Excise Tax Act, R.S.C. 1927. In that case, the Exchequer Court of Canada has held that Parliament in enacting the Excise Tax Act, Part XIII and Schedule III was not using words which were applied to any particular science or art and therefore the words used are to be construed as they are understood in common language. It was further held that what constitutes a “fruit” or “vegetable” within the meaning of the Excise Tax Act is what would ordinarily in matters of commerce in Canada be included therein and not what would be a botanist’s conception of the subject matter. The Court observed that it could be asserted that in Canada both the peanut and cashew nut were considered by almost everyone (except possibly by botanists) as falling within the category of “nuts” and that the words “fruit” and “vegetables” used in their obvious and popular meaning would not include “nuts of any sort”, or the peanuts, salted peanuts or cashew nuts sold by the defendant. Cameron J., who delivered the judgment, posed the test as follows (page 129)

“......Would a householder when asked to bring home fruit or vegetables for the evening meal bring home salted peanuts, cashew nuts or nuts of any sort ? The answer is obviously `no’”.

In S.B. Sugar Mills v. Union of India (A.1.R. 1968 S.C. 922) = 1978 E L.T. (J 336), the question related to the interpretation of Item 14H of the First Schedule to the very Act which is under consideration before me viz., the Central Excises and Salt Act, 1944. The observations in paragraph 16 of the said report make it clear that the interpretation of the item which commended itself to the Court was according to the sense in which the commodity was known to the commercial community. Tulzapurkar J. in his judgment delivered on 30th April, 1970 in Miscellaneous Petition No. 491 of 1964 in this Court (Nirlon Synthetic Fibres and Chemicals Ltd v. R.K. Audim and Ors.) held that the said Act is not an Act applied to any particular science or art but is a general statute, whose object is to raise revenue and for this purpose to classify substances according to general usage and known denomination of trade and, therefore, the proper rule of construction applicable in respect of the items or entries occurring in Schedule I to the said Act would be that these items or entries inclusive of the words and expressions comprised in sub-clauses thereof will have to be construed not in the scientific or technical or laboratory sense but in the sense which a person dealing with or commercially conversant with those items or sub-items would attribute to them. In Commissioner of Sales Tax v. Associated D. & M Supply Co. (37 S.T.C. 336) a Division Bench of this Court has held that the meaning of terms describing goods in the entries in the Schedules to the Sales Tax Act prescribing rates at which commercial articles have to be taxed has to be gathered from the trade parlance or the common parlance in trade. The question as to what is meaning given to a term used to an entry in common parlance is a question of fact to be determined on evidence and, in the absence of such evidence, the entries could be construed according to their dictionary meaning. In Sales Tax Commissioner, U.P. v. S.N. Bros. (AIR 1973 S.C. 78), the Supreme Court has held that the words “Dyes and colours” used in entry No. 10 in a Notification issued under Section 3A of the U.P. Sales Tax Act, 1948, and the words “scents and perfumes” used in entry No. 37 therein have to be construed in their own context and in the sense as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. The Supreme Court has further held that the words “food colours” and “syrup essences” which are descriptive of a class of goods the sales of which were to be taxed under the U.P. Sales Tax Act, 1948, have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them. In Dunlop India Ltd. v. Union of India (AIR 1977 S.C. 597) the, Supreme Court has held that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in usual course. But once an article is classified and put under a distinct entry, the basis of classification is not open to question. Technical and scientific tests offer guidance only within limits. In Union of India v. G.W.F. Mills (AIR 1977 S.C. 1548) the Supreme Court has held that the well-known rule in interpreting items in statutes like the Central Excises and Salt Act, 1944, is that “report should be had not to the scientific or the technical meaning of such terms but to their popular meaning or attached to them by those dealing in them, that is to say, their commercial sense”.

7. As against this, Mr. Bhabha placed strong reliance on certain observations in Dunlop India Ltd. v. Union of India referred to by me earlier. It was submitted by Mr. Bhabha that in that case the Supreme Court in its judgment had taken note of the chemical composition of the product in question before the Court and had held that scientific and technical tests are material in the interpretation of items in fiscal statutes. It was urged by him that by the expression “popular meaning” was meant not the sense a layman might understand an expression used in describing an item to be taxed under a fiscal statute, but the sense in which a person who is conversant with such an item in trade and commerce would understand the same. As far as the latter submission of Mr. Bhabha is concerned, there can be no controversy about it. The expressions used in a fiscal statute describing the article to be taxed are to be interpreted not in the sense in which a layman having nothing to do with those articles might understand these expressions, but in the sense in which persons conversant with such articles in the course of trade and commerce might understand the same. As far as the question of technical an scientific tests are concerned, however, I am afraid that the decision is at all helpful to Mr. Bhabha. The decision nowhere lays down or even suggests that the meaning suggested by technical and scientific tests can ever be preferred to the meaning gathered from the common parlance of the people in trade and commerce conversant with the subject matter. In fact, the emphasis in the judgment is on the principle that technical and scientific tests offer guidance only within limits. The observations in the judgment make it quite clear that technical and scientific tests are treated as being of only marginal importance as far as the interpretation of items in fiscal statutes are concerned. It is true that chemical position of the product in question has been noted by the Supreme Court in that case. This, however, makes no difference, because generally speaking, in discussing facts all Courts do note the chemical composition of the products in question before them. This does not mean that the Supreme Court has relied on the chemical composition of the product to determine the article in the fiscal statute under which it should fall.

8. Mr. Bhabha next placed strong reliance on the decision of a Division Bench of this Court in O.S. Appeal No. 12 of 1967 in Miscellaneous Petition No. 465 of 1966 (Chemanlal B. Mehta and Anr. v. M.G. Vaidya and Ors.) decided on 23rd/24th January, 1973. In this case, the two petitioners manufactured a product known as “Encola Cone”. This product was manufactured in the form of two liquids which had to be mixed in equal quantities and the mixture applied to the hair externally to give the hair a black colour. The said product was undoubtedly a hair darkener. The excise authorities held that the said product was liable to Central excise duty as falling under item 14F(iv) in the First Schedule to the said Act, which is the very item in question before me. The petitioners came to this Court by way of Miscellaneous Petition No. 465 of 1966, but this petition was summarily rejected by K.K. Desai, J. (as he then was). The Petitioners then went in appeal. The appeal Court took the view that by reason of the composition and ingredients of the said product manufactured by the petitioners it would not be possible to accept the contentions of the petitioners’ Counsel that the said product should not be regarded as a hair lotion and also took the view that the use of the product as a hair darkener, though a relevant factor, would not be determinative of the matter. In coming to this conclusion the Court has relied undoubtedly on the chemicals composition of the said product. It was urged by Mr. Bhabha that in view of this decision, the question before me was practically concluded against the Petitioner. I am afraid, on a closer scrutiny, this Judgment is of no assistance to Mr. Bhabha at all. A perusal of the judgment shows that the Collector of Central Excise in that case had before him the report of the Deputy Chief Chemist, Bombay, as well as the report of the Chief Chemist, Central Revenue, New Delhi and several books and treatises. The Division Bench took it as a well-settled principle that when a Court in dealing with entries appearing in the statutes like the Central Excise Act or the Sales Tax Act etc., the entries appearing in such statutes are to be understood not in their technical or scientific or laboratory sense, but they are to be understood in the commercial sense, that is, in the sense in which the persons dealing with those items in the market understand them. The Court has stated in categorical terms that no material whatsoever was placed by the petitioners there either before the Central Excise authorities or before the Central Government or before the trial Court when they preferred their petition. The petitioners themselves had recourse to special works on pharmaceutical formulas or on commation. In other words, as observed by them Division Bench, no attempt was made to place before the concerned authorities any material to establish the commercial sense in which the persons in the trade understood the term “Hair Lotion”, but the petitioners themselves resorted to scientific or technological works to show the meaning of the term “Hair Lotion”, and even in the appeal it was only this material which was relied on by the Petitioners. All that had happened in that case was that the petitioners sought to challenge the decision of the excise authorities merely on the ground of chemical composition, of the product and the technical or scientific meaning attributed the term “Hair Lotion” and that the challenge was negatived. In the present case, in my view, there is ample evidence regarding the meaning attributed by persons in trade and commerce to the words used in clause (iv) of Item 14F of the First Schedule and hence this decision has no application to the case before me.

9. The next submission of Mr. Bhabha was that interference by this Court with the impugned order passed by respondent No. 2 should be made only if it was found that respondent No. 2 had taken a view which was perverse or which no reasonable man could take. lt was submitted by him that when two views were reasonable possible it was open to the excise authorities to take any one of them and the Court should not interfere with the same. In this regard, Mr. Bhabha relied on the decision of the Supreme Court in V.V. Iyer v. Jasjit Singh (AIR 1973 S.C. 194). It has been held in this case that where two alternative interpretations are possible of the scope and applicability of item 74(vi) of Part V of Schedule I to Imports (Control) Order, 1955 made under section 3(1) of Imports and Exports (Central) Act, 1947, and Customs authorities adopt a reasonable view relating thereto which is favourable to Revenue, such finding of the authorities cannot be interfered with by the High Court under article 226 of the Constitution of India, even though another view contrary to the one adopted is in favour of the subject. The Supreme Court observed that there was nothing in the decision of the Collector, which was the impugned decision, which could warrant its condemnation as perverse or unreasonable. It is undoubtedly true that where two views are reasonably possible regarding the scope and applicability of an item in an Excise Act or Customs Act and one of these views is taken by the authorities concerned the Court cannot interfere with the same. It cannot, however, be said that unless the decision is totally perverse or such as no reasonable person could ever take, the Court is not entitled to interefere with it at all. The correct principle in this regard has, with respect, been laid down by the Supreme Court in Union of India v. Tarachand Gupta and Bros. (AIR 1971 S.C. 1558). This principle is set out in paragraph 71 of the aforesaid report. There the Supreme Court has set out with approval the statement of Lord Reid in Anisminic Ltd. v. The Foreign Compensation Commission [(1969) 1 Ali. E.R. 208] which lays down that if a tribunal having jurisdiction has refused to take into account something which it was required to take into account or based its decision on some matter which, under the provisions setting it up, it had no right to take into account, the Court would be entitled to interfere with the decision of the Tribunal. The principle on which interference can be made has been, with respect, correctly laid down by Deshmukh J. in O.S. Miscellaneous Petition No. 530 of 1969 (with Miscellaneous Petitions Nos. 631 to 635 and 668 of 1969). Deshmukh J. has taken the view that interference by the Court is called for when the finding given by an excise officer as to whether particular goods are covered by a particular item in the excise tariff is patently and obviously erroneous. Interference is also called for when the conclusions arrived at are totally unreasonable. Another case of interference would be where the decision is given on the basis of erroneous construction of the entry concerned or is arrived at on the basis of irrelevant facts and irrelevant considerations or is the result of ignoring relevant facts and relevant material though available on record. It is keeping the aforesaid principles in mind that the challenge to the impugned order will have to be considered.

22nd July, 1977

10. It must be borne in mind, at this stage, in the present case that although the arguments, to some extent, proceeded on the question whether the aforesaid two products viz. Vasmol Emulsified Hair Oil and Vasmol Pomade, should be regarded as hair lotions or pomades, on the one hand, or, on the other hand, these products should be regarded as hair dyes, there is no specific item in the First Schedule of the said Act in respect of hair dyes as such, and hence really speaking, the question I have to consider is whether these products could be fairly regarded as hair lotions or hair pomades. If they could be so regarded, they are exigible under the said item 14F of the First Schedule, but if they cannot be so regarded, they cannot be held liable for payment of excise duty under that item Coming to the question as to how these products were known in trade or commerce parlance, in my view, the most important evidence is furnished by the affidavits produced by the petitioner before respondent No. 2. The petitioner has also produced certain opinions before respondent No. 2 which will have to be taken into account. I may make it clear that although the petitioner has also sought before me to rely on certain further opinions and as alleged classification by the Indian Standard Institute, which have been obtained by the petitioner after the decision of respondent No. 2, in my view, it is not necessary for the disposal of this petition to go into these opinions and the said classification by the Indian Standard Institute, with the result that I am not concerned with the question as to whether the petitioner is entitled to rely on the said opinions or the said classification in this matter. As far as the aforesaid affidavits are concerned, some to these affidavits were annexed to the Miscellaneous Petition No. 355 of 1965 filed by the petitioner in this Court as aforesaid. A copy of the said petition along with the copies of the said affidavits was forwarded by the petitioner to respondent No. 1 with his letter dated 24th July, 1971. Certain other affidavits have been forwarded with the said letter to respondent No. 1. I propose to refer first to the affidavits filed by persons who are dealers in or concerned in selling the aforesaid products. The first of these affidavits is of Akhtar Faqruddin Shamsi, who states that he is a Manager in Akbarally’s Department Stores at Veer Nariman Road, Bombay, which is a well-known departmental store. In the said affidavit it has been stated that M/s. Akbarally Ebrahimji are distributors of Vasmol hair dye for the last about ten years. Akbarally’s Department Store sells Vasmol hair dye as also other preparations for the hair such as hair creams, hair lotions and hair pomades and other commotion. Akhtar Shamsi has stated that if a customer comes to the counter and asks for a hair cream or hair lotion or hair pomade, he would never be given the product Vasmol, and the said product is only sold as a hair dye and only to those customers who ask for a hair dye or a hair darkener. The next affidavit, which is on similar lines, is that of one C.K. Mirchandani, a dealer in pharmaceuticals, provisions, toilet preparations and general merchandise, carrying on business as a partner in the firm of Messrs. Sorabji Hormusji Co., at 22m Mangaldas Road, Bombay. The next such affidavit is of one S.C. Sheth, who is the proprietor of a concern distributing Vasmol Products as well as other hair dyes, hair creams and hair pomades at Bangalore, the said affidavit is also to the effect that Vasmol is sold solely as hair darkener and not as hair cream, hair lotion or hair pomade. Another dealer in Bangalore, S.A. Meera Sahib, has filed an affidavit to the same effect as S.C. Sheth. V.S. Fernando, a counter salesman in a firm dealing in cosmetics, consumer goods and perfumes at Madras, has filed an affidavit stating, inter alia, that Vasmol is a hair darkener and a hair dye and is sold to such customers as ask for a hair dye or hair darkener. He has further stated that if a customer merely asks for hair cream, lotion or pomade, he would never be given Vasmol products. One A. Mudaliar, who is a proprietor of a firm distributing Vasmol products at Madras, has also made an affidavit to the same effect. Govindji C. Sunderji of Bombay has made an affidavit stating that he has been using the product “Vasmol” for about four years purely as a hair dye. Affidavits have also been filed by one K. Kade Mohideen of Bangalore and one P.V. Gopala-krishnan of Madras to the same effect. As against these affidavits the Excise authorities had not filed any affidavits before the respondent No. 2 at all. Even as far as the present petition is concerned, the respondents have not filed any affidavit of any dealer or consumer of the aforesaid Vasmol products. As far as the impugned order is concerned, I find that respondent No. 2 has referred to four affidavits from traders selling Vasmol products to the effect that they have supplied Vasmol as a hair darkener and that Vasmol is not sold as a cosmetic, and he has also noted that two affidavits have been filed by persons using Vasmol saying that they use it as a hair dye and not as a hair lotion or hair cream. The question which I have really to consider is whether the effect of these affidavits has been considered by respondent No. 2. Respondent No. 2 in his order has stated that the Counsel for the Petitioner drew his attention to the said affidavits from consumers and sellers of Vasmol products, but respondent No. 2 has thereafter gone to state that it was pointed out to the petitioner’s counsel that the basic ingredients of the Vasmol products were the same as those of all normal creams and pomades except that the Vasmol products contained in addition lead acetate and sulphur and a couple of herbal extracts. In paragraph 11 of the impugned order respondent No. 2 has in terms admitted that it is true that persons whose hair is already black will not normally need a hair dressing preparation which contains hair darkening ingredients such as lead acetate and sulphur, and has gone on to state that merely because a restricted section of the public is likely to buy these Vasmol products that does not take them out of the purview of Item 14F of the First Schedule of the Central Excise Tariff. There is no further discussion in the impugned order regarding these affidavits at all. There is no finding that the correctness of these affidavits has not been accepted by respondent No. 2. It appears very doubtful as to whether respondent No. 2 could have rejected these affidavits without calling upon the Petitioners to produce the deponents for being cross examined or without the correctness of the affidavits being tested in some other manner. In this regard it may be pointed out that a somewhat similar question arose in M. Parikh & Co. v. I.T. Commissioner (AIR 1956 S.C. 554). The observations of the Supreme Court in paragraph 13 of the aforesaid report clearly suggest that where affidavits are filed before an officer, normally speaking, if he desires to challenge the correctness of the averments made in these affidavits, he should call the deponents for being cross-examined or test the correctness of the averments by any other means open to him, and it would not be proper for the said Officer to arbitrarily reject these affidavits as incorrect. In the present case, however, this question does not arise because it appears to me that respondent No. 2 has not rejected these affidavits. Mr. Bhabha strongly contended that respondent No. 2 had rejected these affidavits placing reliance on the advertisements in respect of the said products and the labels on the cartons produced by the Petitioner before him. In paragraph 13 of the impugned order, respondent No. 2 has observed that most of the information regarding a product that a consumer gets is from advertisements and, of course, from how much of it he is prepared to believe. Respondent No. 2 has pointed out that the labels on the cartons and bottles of Vasmol Emulsified Hair Oil and Vasmol Pomade described these products as “Hair Darkener, Hair Tonic, Hair Dressing”. He has pointed out that the advertisements also claimed that Vasmol helps remove dandruff, relieves itching scalp and checks falling hair. He has relied on the following statement appearing in the advertisements :

“Use `Vasmol’ as you would any hair dressing; rub it thoroughly down to the hair roots and then brush or comb the hair. `Vasmol’ can be used more than once a day according to individual dressing requirements. `Vasmol’ is an ideal hair darkener, hair dressing and hair tonic combined in one formula.”

Respondent No. 2 has pointed out that in the advertisements all the hair dressing virtues are claimed for the Vasmol products such as to be claimed for ordinary hair creams and pomades, besides claiming a hair darkening effect. On the basis of the advertisements, respondent No. 2 has observed that Vasmol products can, therefore, really be bought and sold as hair cream-cum-hair darkener/hair pomade-cum-hair darkener and not purely as a hair dye. This discussion shows that respondent No. 2 has placed reliance on these advertisements to come to the conclusion that Vasmol products could have been sold as hair creams or hair pomades. But these observations do not indicate that respondent No. 2 has rejected the evidence tendered by the petitioner on affidavits. Moreover, I find that the reliance placed by respondent No. 2 on the advertisements is somewhat misplaced. As far as the advertisements referred to are concerned, they have been tendered in Court and have been taken on record as Exh. ‘C’ (Colly). These advertisements and literature, on a fair reading, clearly show that emphasis has been given by the petitioner to the hair darkening qualities of the Vasmol products, and not to the other qualities similar to those of an ordinary hair dressing which are claimed for the said products. The hair dakening qualities are printed in much bolder letters and the visual impact of the advertisements clearly emphasizes these qualities and not the qualities claimed as an ordinary hair dressing or pomade. It is usual for an advertiser of products to claim all possible virtues for his products, but it would be erroneous to rely on all these claims to determine the trade use of the products. I may refer here to a carton of Vasmol which has been tendered as Exh. “B”. The Original of the carton tendered by the Petitioner before respondents No. 2 must be with the Excise authorities, but the respondents have failed to produce it although it was stated in Court was that they would attempt to trace the same and produce it in Court. The Petitioner was then called upon to produce a carton used for packing Vasmol in 1961. The Petitioner has produced such a carton used for packing Vasmol Emulsified Hair Oil and it is this carton which is on record as Exh. “B”. It is true that on this carton it is claimed that Vasmol is a ‘Hair Darkener’. ‘Hair Tonic’ and `Hair Dressing’. But a look at this carton shows that the emphasis is clearly on the hair darkening quality of the said product. In view of this, merely on the basis of these advertisements no person could reasonably come to the conclusion that the averments contained in the aforesaid affidavits made by dealers and users of the said Vasmol products were incorrect.

11. There is one other factor also which has to be acted in this connection. From the impugned order it appears that the Drugs Controller, Bombay, stated in his letter dated 16th December, 1958 addressed to the Petitioner that on perusal of the formulas of the products Vasmol Emulsified Hair Oil and Vasmol Pomade, it was observed that both these preparations contained 1% of lead acetate. However lead and its salts were considered to be cumulative poisons. In these circumstances, the Drugs Controller requested the petitioner to forward to his office scientific data to show that lead acetate would not be injurious to health if used continuously in the said Vasmol preparations. By a subsequent letter dated 26th October, 1961, the Director, Drugs Control Administration, Maharastra State, informed the petitioner that there should be a caution statement to the effect that the said Vasmol products were for external use only and use thereof should be avoided on unintact asking or by mouth. This caution statement appears on the bottles of the aforesaid Vasmol products. In connection with this caution statement respondent No. 2 has observed that such a caution statement, cannot take the said products out of the category of hair creams or pomades included in Item 14F of the First Schedule to the said Act. This is, in a sense, of course, correct. But, it appears to me that respondent No. 2 has not appreciated the real effect of this caution statement at all. What he really had to consider was whether any person, wanting to use a hair dressing or a hair pomade as such and not a hair darkener, would go out and purchase a hair dressing or a hair pomade which contained lead acetate which might be injurious to health or which could not be used on broken skin. Even from a common sense point of view, it does appear to me that a person merely desiring a hair dressing or hair pomade as such would not go to the market and purchase a product which would alter the colour of his hair or which contained a caution statement such as aforesaid.

12. There is one other aspect emphasized by Mr. Bhabha which also Call be dealt with at this stage. lt was pointed out by Mr. Bhabha that the impugned order shows that before the Sales Tax authorities the petitioner had contended that Vasmol Emulsified Hair Oil was not a hair dye but merely a hair oil. This contention of the petitioner was rejected by the Sales Tax Officer. Mr. Bhabha however, says that this conduct of the petitioner would show that he had then regarded Vasmol Emulsified Hair Oil as a hair dressing and not as a hair dye, and hence no credence should be paid to his present claim that the said products are not hair dressings or pomades. In this regard, Mr. Bhabha relied on the decision of Deshmukh J. in Miscellaneous Petition No. 630 of 1969 (with Misc. Petitions Nos. 631 to 635 and 668 of 1969) referred to earlier. In those cases, the question was whether certain dumpers should be classified for the purpose of import duty under the Customs Act under item 75 of the Indian Customs Tariff, as had been done by the Customs authorities or under item 72(18) or 72(b) of the Indian Customs Tariff. In brief, the contention to the petitioner there was that the said dumpers should be regarded as mining machinery falling under item 72(18) of the said Tariff and not as conveyances under item 75. Deshmukh J. has pointed out that in the Bill of Entry these dumpers were classified by the petitioners themselves as conveyances under item 75 and certain exemptions were claimed. The claim to exemption was rejected by the Customs Department. Against this decision, the petitioners appealed to the Appellate Collector. In their written reply to the Assistant Collector it was not stated by the petitioners that these dumpers were mining machinery.

But the petitioners contended before the Appellate Collector, for the first time, that the correct classification of the said dumpers would be as mining machinery falling under item 72(18) of the Indian Customs Tariff. It was in these circumstances that Deshmukh J. rejected certain affidavits which were filed by the petitioners alleging that classification of the said dumpers as conveyances under item 75 was erroneous. It is significant that some of these affidavits were never presented before the Appellate Collector. Deshmukh J. has also referred to the fact that although, if the said dumpers were classified as mining machinery falling under item 72(18), they would have invited a much lower customs duty than if they were classified as conveyances falling under item 75, yet the petitioners there had classified them as conveyances. It was in these circumstances that the conduct of the petitioners was regarded as negativing the correctness of the advantage as contained in the affidavits filed on behalf of the petitioners. In the present case, such a consideration does rot apply at all, because it is apparent that the contention taken by the ‘petitioner before the Sales Tax authorities was merely with a view to save some sales tax, and as far as the Indian authorities are concerned, the contention of the petitioner has throughout been that the aforesaid Vasmol products are not hair dressings or hair pomades covered by Item 14F of the First Schedule to the said Act.

13. In my view, the impugned order of the respondent No. 2 shows that he has not really applied his mind to the aforesaid affidavits at all. Although he has noticed them, he has not considered properly the effect of these affidavits. These affidavits were relevant pieces of evidence showing as to how the aforesaid products were regarded in trade or commercial parlance. Instead of giving due weight to these affidavits and considering their effect, respondent No. 2 has chosen to place undue reliance on the chemical composition of the said products and to some extent on the advertisements, which, I have already pointed out, have moreover been misconstrued by him. He has further failed to take into account the effect of the cautionary statements which I have already referred to earlier. In my opinion, respondent No. 2, has in effect, ignored the relevant material before him, namely, the said affidavits and has adopted a wholly erroneous approach in making the impugned order. This is clearly not a case where on the material before him two views were possible or reasonably open to respondent No. 2 and he has chosen to adopt one of them. The evidence on record before respondent No. 2 clearly showed that the aforesaid products could not be fairly regarded as “hair dressing” or “hair pomade” at all. If one were to pose the question were in a somewhat similar form to the question posed by the Exchequer Court of Canada in The King v. Planters Nut and Chocolate Co. Ltd. (1951 Canada Law Reports 122) the question could be framed thus: “Supposing a householder who did not to darken his hair were to ask his son to go to the provision store and get a bottle of hair pomade or hair dressing, would he expect his son to come back with Vasmol Emulsified Hair Oil or Vasmol Pomade”. The answer to that question, in my opinion, would be clearly in the negative on the evidence on record in this petition. In my view, therefore, the decision of respondent No. 2 is liable to be quashed.

14. The next question which arises is as to whether in view of the decision of respondent No. 2 being quashed, the matter should be remanded for consideration by respondent No. 1 or whether I should proceed to decide it myself. In this connection, it must be noted that this matter has a somewhat chequered history. The Petitioner has gone through the full gamut of hearing before the Excise authorities. In the aforesaid Miscellaneous Petition No. 355 of 1965 my brother Desai J. had quashed the decision of the Central Government, and directed the case to be remanded to the Central Government with a direction that it should be disposed of in accordance with law. It is on such remand that respondent No. 2 has passed the impugned order. In view of this, it appears to me that it would be unduly harsh to the petitioner to remand the case and direct him to go back to the revisional authority viz. respondent No. 1. Notwithstanding this I would have remanded the matter, if I had come to the conclusion that although the order of respondent No. 2 was bad in law on the relevant material before him, it was open to him to have come to one of the two conclusions, that is, if the relevant evidence on record was such that the officer deciding the revision could take one view or the other. In the present case, however, as I have already pointed out, I am of the view that the evidence on record makes it clear that the aforesaid products were not regarded in trade or commercial parlance as hair dressings or hair pomades at all with the result that the same would clearly not fall within the ambit of Item 14F of the First Schedule of the said Act. In view of this, it appears to me that there is no need for me the remand the matter but that I should decide the same on the relevant material on record. I find that a similar course has been followed in a number of cases. In Union of India v. Delhi Cloth and General Mills [AIR 1963 S.C. 791 = 1977 E.L.T. (J 199)], three petitions were filed by three different companies manufacturing vegetable products known as “Vanaspati” and they challenged the legality of the imposition of excise duty on what was called by the taxing authorities as the “manufacture” of “refined oil” from raw oil. Affidavits were filed on both sides. The petitioners succeeded before the High Court and the Union of India appealed to the Supreme Court. The observations in paragraph 13 of the said report shows that the Supreme Court took into account all the material on record and came to the conclusion that the case of the said companies that the oil purchased by them for the purpose of manufacture of Vanaspati did not become at any stage “refined oil” as known to the consumers and the commercial community was correct and proceeded to dispose of the appeals on that footing. A similar course was followed by the Supreme Court in S. B. Sugar Mills v. Union of India (AIR 1968 S.C. 922 see observations at paragraph 16).

15. The submission of Mr. Bhabha, however, was that even if I find that the order of respondent No. 2 is bad in law, it is not open to me to dispose of the matter myself, but the matter should be remanded to respondent No. 1 for being disposed of in accordance with law. In support of this contention, Mr. Bhabha relied on the decision of the Supreme Court in M. Naina Mahammed v. K.A. Natarajan (AIR 1975 S.C 1867). It was held in this case that when in a writ petition against decision of the State Transport Appellate Tribunal in respect of the grant of a permit to ply a bus on a particular route, a single Judge of the High Court undertook an evaluation of the merits on his own, that was beyond his jurisdiction. It was held that even if there were errors of law vitiating the Tribunal’s finding, the question about the grant of the permit could not be finally decided by the High Court itself and the case must go back to the Tribunal for fresh consideration as a matter of law and in the interests of justice. This decision relates to a grant of permit where there is a certain amount of discretion involved and considerations are altogether different from those which might prevail in the question of construction of an item in an excise Tariff. Moreover, this decision does not in any manner weaken the authority of the aforesaid two decisions referred to by me. In fact, in a more recent case viz. Health ways Dairy Products Co. v. Union of India [1978 E.L.T. (J 457) = AIR 1976 S.C. 2221] the Supreme Court took into account the evidence on record and came to the conclusion on that condensed skimmed milk prepared from skimmed milk could not be considered to be condensed milk within the meaning of the said term in item 13 in the Schedule annexed to the Notification No. G.S.R. 339, dated 1st March, 1970. In my view on the evidence on record in the present case it must be held that the aforesaid product viz. Vasmol Emulsified Hair Oil and Vasmol Pomade are not covered by Item 14F of the First Schedule to the said Act and are not exigible to excise duty under that item.

16. In the result, the rule is made absolute and the impugned order dated 22nd October, 1971 is set aside. There will be a further order restraining the respondents from acting in pursuance or furtherance of the said impugned order and directing them to refund to the Petitioner the amount which might have been recovered from the Petitioner pursuant to the said impugned order. As the Petitioner has succeeded in the Petition, the Bank Guarantees given by him from time to time must be discharged.

17. In order to enable the respondents to appeal from this judgment, if so advised, the operation of this Order so far as the refund of the amount recovered from the Petitioner and the discharge of the Bank Guarantees are concerned is stayed for a period of six weeks from the date of signing of judgment. The respondents to pay to the Petitioner the costs of this Petition fixed at Rs. 300/-.