COLFAX LABORATORIES Vs. STATE OF GOA

JUDGEMENT

(1.) THE first petitioner, M/s. Colfax Laboratories (India) Limited, is a Company registered under the Companies Act, 1956. The second petitioner, Mr. Eric Menezes is the Managing Director and Shareholder therein. The petitioners applied for licence to manufacture cosmetics, namely shaving cream, body talcum, hair cream, cologne for men and after shave lotion under trademark, "old Spice", on 14th February, 1968, in terms of Drugs and Cosmetics Act, 1940. The licence to manufacture the said cosmetics was granted on 15th April, 1968, by the Licensing Authority under the Drugs and Cosmetics Act, 1940. The petitioners also applied for licence under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (hereinafter referred to as "the said Act" ). The Licensing Authority, Commissioner of Excise, granted licence in Form L-1 on 1st April, 1969, for manufacture of "old Spice" after shave lotion and "old Spice" cologne for men, which were shown under "toilet preparations". In column 10 to the table attached to the application filed by the petitioners for licence, it was stated that the petitioners hold licence under the Drugs and Cosmetics Act, 1940, for manufacture of toiletries. From the inception till the year 1984, the petitioners paid excise duty on "old Spice" after shave lotions on the basis that it was "toilet preparation". However, on 14th January, 1985 the petitioners filed an application before the Commissioner of Excise, Government of Goa, for re-classification of "old Spice" after shave lotion as "medicinal preparation", falling under Tariff Item No. 1 (i) (b) of the Schedule to the said Act for the purpose of excise duty. In this application the composition of "old Spice" after shave lotion was specified and it was urged that the said product had antiseptic/astringent and antibacterial properties on account of which it was required to be classified as "medicinal preparation" under the said Act, for the purpose of excise duty. The Commissioner of Excise vide Notice dated 24th January, 1985 directed the petitioners to show cause as to why the said application for re-classification be not rejected. The petitioners filed detailed reply on 25th January, 1985, claiming that the product was not a "toilet preparation" but "medicinal preparation", for the purpose of levying excise duty under the said Act. Alongwith this reply formulation of "old Spice" after shave lotion and "old Spice" cologne for men were annexed. In support of the reply, literature on the subject and affidavits were also annexed. The Excise Commissioner, vide order dated 23rd March, 1985 held that the product after shave lotion has to be classified as "medicinal preparation" and not as "toilet preparation", under the said Act. The order was made effective from the date of issue. Subsequently, vide order dated 12th June, 1985 the Excise Commissioner classified the said product "old Spice" after shave lotion as falling within the ambit of Item No. 1 (i) (b) of the Schedule to the said Act. Thereafter, the petitioners made application for refund of excess duty paid after the said order dated 23rd March, 1985 and the Commissioner of Excise ordered refund of excess duty paid by the petitioners, vide orders dated 26th August, 1985, 27th November, 1985 and 27th December, 1985.

(2.) THE petitioners case is that till the year 1984 they had paid excise duty on the product in question under Tariff Item No. 4 of the Schedule to the said Act under mistake of law on the basis of licence obtained from the Drugs Controller as "toilet preparation". However, once they came to know about the judgment of the Apex Court in (Chimanlal Jagjivandas Sheth v. State of Maharashtra), A. I. R. 1963 S. C. 665, they applied for re-classification of the product in question as "medicinal preparation".

(3.) ON 14th January, 1989, M/s. P. J. M. Pharmaceuticals Pvt. Ltd. , filed an application before the Drugs Controller, Government of Goa, for manufacture of following cosmetic products under Loan Licence with M/s. Colfax Laboratories (India) Limited, Ponda, Goa :--