COLFAX LABORATORIES (INDIA) LTD Vs. STATE OF GOA

JUDGEMENT

(1.) The 1st petitioner is a company registered under the Companies Act, 1956 ('the Company' for short). The Company is having a factory at Curti, Ponda, Goa, where it manufactures After Shave Lotions, which are liable to excise duty under the Medical and Toilet Preparations (Excise Duty) Act, 1955 ('the Act' for short). Until around 1984 the Company classified the After Shave Lotions manufactured by it as toilet preparations under Item 4 of the Schedule to the Act. By a letter dated January 14, 1985, the Company applied to the Commissioner of State Excise, Government of Goa for re-classification of its product "Old Spice After Shave Lotion" as medicinal preparation under the Act. The said application was entertained by the then Commissioner of State Excise who vide her order dated March 23, 1985 re-classified Old Spice After Shave Lotion as medicinal preparation for levy of excise duty under the Act. By another order dated June 12, 1985, the Commissioner of State Excise further classified Old Spice After Shave Lotion under Item 1(i)(b) of the Schedule to the Act.

(2.) In 1989 another company by name M/s. PJM Pharmaceuticals Private Limited ('M/s. PJM', for short) made an application to the Commissioner of State Excise dated February 2, 1989 to manufacture, inter alia, its product "Blue Stratos After Shave Lotion" under Loan Licence of the company. The said M/s. PJM intimated to the Commissioner of State Excise that the duty payable shall be under Item 1(i)(b) of the Schedule.

(3.) By a demand dated March 13, 1991, issued under Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1965 ('the Rules' for short), the company was called upon to make payment of an alleged short levy of Rs. 92,43,684.08 in respect of Blue Stratos After Shave Lotion cleared between April 1989 to March 11, 1991. Similarly, by a demand dated May 15, 1991, the company was called upon to pay Rs. 17,73,18,361.20 ps. in respect of Old Spice After Shave Lotion cleared between April 1, 1985 to May 15, 1991. The said demand notices appear to have been issued on the basis that After Shave Lotions are toilet preparations and as such duty payable is 100% ad valorem and not under Item 1(i)(b) of the Schedule. However, these were ex parte demands without prior show cause notices or an opportunity of hearing. The company challenged the said demand notices by two separate Writ Petitions bearing Nos. 101 of 1991 and 351 of 1991 in this Court. By orders dated August 22, 1991 and September 23, 1991, this Court, inter alia, directed the Excise Commissioner to treat the said demand notices dated March 13, 1991 and May 15, 1991, as show cause notices and to supplement the same by any additional ground or materials if he chose to do so and to thereafter serve a supplementary memorandum and also to take final decision in the matter after giving an opportunity of hearing to the company.