DABUR INDIA LIMITED DABUR INDIA LIMITED SHARDABO IRON LABORATORIES LIMITED SHARDA BOIRON LABORATORIES LIMITED Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) The challenge in these writ petitions and special leave petitions is basically to the order dated 18th January, 1989, passed by the District Excise Officer, Ghaziabad, seeking to recover duties of excise on Homeodent under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (hereinafter called 'the 1955 Act'), even though the product was classifiable under the Central Excises and Salt Act, 1944 (hereinafter called 'the 1944 Act') and was, in fact, assessed to duty under the said Act between 1985 and 1988. Necessarily, the question arises as to whether, in the facts and circumstances of the case, the 1944 Act would apply or the 1955 Act would apply. The factual dispute is whether in the facts that have happened, as enumerated hereinafter,, alcohol was present in Homeodent and further whether Homeodent was Homeopathic medicine or toilet preparation and further whether the same was dutiable under the 1944 Act. We must recapitulate the basic facts in the several matters involved herein.

(2.) M/s. Dabur India Limited which is the petitioner in Special Leave Petition No. 1610/89 arising out of judgment and order dated 20th December, 1988 in Civil Miscellaneous Writ Petn. No. Nil of 1988 connected with Civil Miscellaneous Writ Petition No. Nil of 1988 of the High Court of Allahabad, and also the petitioner in Writ Petn. No. 426/ 89, is a public limited company engaged in manufacture of Ayurvedic medicaments and Alopathic medicaments along with cosmetics. It had agreed to manufacture for and on behalf of M/s. Sharda Boiron Laboratories Ltd. (hereinafter called 'the company') - being the petitioner in Special Leave Petns. Nos. 135-36/89, used to manufacture and/or produce a Homeopathic tooth paste called 'Homeodent' out of the raw materials supplied by the company on job work basis. The petitioner states that it accordingly manufactured Homeodent during 1985 to 1988, duly paying duties of excise on Homeodent under the 1944 Act at appropriate leviable rates and recovered the same from the company. According to the petitioner, Homeodent did not contain alcohol but contained ingredients "mother tinctures" containing alcohol. It ii s stated that alcohol, due to various reasons, has a tendency to evaporate during the process of manufacture of Homeodent.

(3.) It is further the case of the petitioner company that during the period from 1979 to 1988 it also manufactured certain other medicinal products containing alcohol which were classifiable under the 1955 Act. The petitioner-company held at all material times licence as required under the 1955 Act to manufacture these products. The State Excise authorities enforcing the provisions of the Act had permanently posted an Inspector as also a peon in the factory of the petitioner where these dutiable products were manufactured. The bonded manufactory in which these products were manufactured was under lock and key of the said officers, according to the petitioner. The activities of the petitioner, the petitioner asserts, were clearly within the knowledge of the State Excise authorities for over a considerably long period. During the period from 1985-88, the company supplied to the petitioner amongst other ingredients "mother tinctures" under BM-9 forms, stating clearly that such mother tinctures were in tended to be used in manufacture of Homeodent in the factory of the petitioner. These BM-9 forms, according to the petitioner, were filed with the State Excise authorities regularly. Therefore, the petitioner asserts that the State Excise authorities were aware of the manufacture of Homeodent by the petitioner and the activity of the company in getting the same manufactured in the factory of the petitioner out of mother tinctures. However, the State Excise authorities did not object to the same nor did they call upon either the petitioner or the company to pay duty under the 1955 Act.