IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 228 OF  2003

Godrej Industries Ltd. ..Appellant

Vs.

D.G. Ahire Assistant Collector Of Central Excise & Another    ...Respondents

J U D G M E N T

ALTAMAS KABIR,J.

1. The appellant is a public limited company which manufactures a variety of cosmetics

and  toilet  preparations,  including  hair

dyes.  The appellant is manufacturing such

“liquid hair dyes” since May, 1974, when

there  was  no  specific  entry  relating  to

“hair  dyes”  under  the  Central  Excise

Tariff.   However,  “hair  lotion”  is

specified  under  Tariff  Item  14F.   Since

May, 1974, till 13th July, 1982, the Excise

Department  did  not  raise  any  claim  in

regard to “liquid hair dyes” under Tariff

Item 14F and no excise duty was demanded

in respect of the said item.

2. With  effect  from 1st March, 1975, Tariff Item  68  was  introduced  as  a  residuary

entry  in  the  Central  Excise  Tariff

relating to “all other goods not elsewhere

specified”.  As a result, all goods became

excisable.   Inasmuch  as,  it  had  been

accepted  by  the  Excise  Department  that

“liquid  hair  dye”  did  not  fall  under

Tariff  Item  14F,  the  appellant  started

paying  duty  on  the  said  product  under

Tariff Item 68 with effect from 1st March,

1975.   Apparently,  the  classification

list,  which  was  submitted  by  the

appellant,  classifying  the  aforesaid

product  under  Tariff  Item  68,  was  also

duly approved.

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3. In relation to the aforesaid product, for the first time, the respondent No.1 issued

a  general  show-cause  notice  to  the

appellant  on  13th July, 1982, asking the

appellant  to  show-cause  as  to  why  its

“liquid hair dye” should not be classified

under  Tariff  Item  14F  and  charged  with

duty  accordingly.   The  notice,  however,

stated that pending determination of the

question raised, the classification of the

aforesaid  product  would  continue  to  be

under  Tariff  Item  68  on  a  provisional

basis and that the appellant would have to

execute a bond for provisional assessment

under Rule 98.  The appellant responded to

the  notice  and  filed  its  written

submissions.   Despite  the  above,  four

specific demand notices dated 2nd August,

1982,  11th October,  1982,  27th December,

1982 and 17th February, 1983, were issued

to the appellant.  The demand notice dated

11th October,  1982,  was  subsequently

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dropped.  The  remaining  three  notices

covered the period from January, 1982 to

December, 1982.   

4. The defence taken by the appellant in its

reply to the show cause notice relied, to

a  large  extent,  upon  a  judgment  of  a

learned  Single  Judge  of  the  Bombay  High

Court in the case of Subhash Chandarnishat

vs. Union of India, reported in [1979 ELT

(J) 212].  The said matter involved two

products known as “Vasmol Emulsified Hair

Oil” and “Vasmol Pomade”.  The case made

out by the appellant in that case was that

both the aforesaid products were hair dyes

meant  for  the  purpose  of  darkening  hair

and  could  not,  therefore,  be  classified

under Tariff Item 14F.  On a consideration

of  the  material  placed  before  him,  the

learned Judge held that “Vasmol Emulsified

Hair Oil” and “Vasmol Pomade” did not fall

under Tariff Item 14F.

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5. The appellant’s submission was rejected by the respondent No.1 by his order dated 24th

May,  1983,  by  which  he  held  that  the

appellant  was  liable  to  pay  the  excise

duty  as  claimed  under  the  three  notices

referred  to  above.   Consequent  to  such

determination,  a  show-cause-cum-demand

notice  dated  2nd June,  1983,  was  also

served  on  the  appellant  demanding  the

excise duty for the subsequent period from

January, 1983 to March, 1983.

6. Being  aggrieved  by  the  said  two  notices and the demand notice, the appellant moved

the  High  Court  in  its  writ  jurisdiction

challenging the said two notices dated 24th

May,  1983  and  2nnd  June,  1983  and  also

prayed for appropriate interim orders with

regard  to  the  demand  notice.   The  said

writ  petition  was  admitted  and  interim

orders were passed thereon.

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7. Elaborate submissions were made on behalf

of  the  parties  before  the  High  Court

regarding  the  classification  of  the

appellant’s  product  as  a  “hair  lotion”

which would bring it within the ambit of

Tariff Item 14F.  Apart from the nature

and character of the product in relation

to  the  expression  “hair  dye”  used  in

Tariff Item 14F, it was also submitted on

behalf  of  the  excise  authorities  that

while  excise  duty  in  respect  of  items

classified  under  Tariff  Item  68  was

payable at the rate of 8%, the excise duty

payable for items classified under Tariff

Item 14F was 105%.

8. It was also urged that commensurate with

the  sharp  difference  between  the  excise

duty  payable  under  Tariff  Item  68  and

Tariff Item 14F, the appellant company had

raised  the  price  of  its  product  to  the

same  extent  to  include  the  increase  in

excise  duty  payable.   It  was  submitted

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that the appellant had, in fact, collected

from the customer the excise duty, which

was payable under Tariff Item 14F though

camouflaging  the  same  by  increasing  the

price of the product.  On behalf of the

Excise  Department,  it  was,  therefore,

submitted  by  way  of  an  alternate

submission  that  even  if  the  appellant’s

product was covered under Tariff Item 68,

even then the appellant company would be

liable to pay duty at the rate of 105%,

since the same had been collected from the

consumer  under  the  guise  of  increase  in

price and had not been passed on to the

Excise Department.

9. On  consideration  of  the  detailed

submissions made on behalf of the parties,

the High Court ultimately held that “hair

dye”  manufactured  by  the  appellant  was

covered  under  Tariff  Item  14F  of  the

Central Excise Act, 1940, as was existing

at the relevant time and that even if the

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item was not covered under Tariff Item 14F

but Entry No. 68, the appellant   

Company would still have to pay excise duty at

the  rate  of  105%  since  the  same  had  been

collected from the consumers but had not passed

on to the respondents.

10. On the basis of the said reasoning and/or

finding, the High Court dismissed the writ

petition  filed  by  the  appellant  and

vacated  the  interim  order  which  had

continued during the pendency of the writ

petition.  A  consequential  direction  was

also  given  that  respondent  would  be

entitled  to  recover  the  excise  duty  for

the  relevant  period  in  terms  of  the

impugned order and demand notices.

11. While disposing of the writ petition, on

the prayer made on behalf of the counsel

for the appellant herein, the High Court

continued the interim orders passed for a

period of eight weeks and directed that no

recovery would be made on the basis of the

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impugned notices and on the basis of the

judgment of the High Court for a period of

eight weeks.

12. This  appeal  has  been  filed  against  the

said decision of the Bombay High Court.

13. As  will  be  apparent  from  what  has  been stated hereinabove, the only issue which

falls for decision in this appeal is with

regard  to  the  classification  of  the

appellant’s product sold in the market as

a “hair dye” in relation to the entries

under the Central Excise Tariff.   While

deciding the said issue, it will have to

be  borne  in  mind  that  at  the  relevant

point  of  time,  namely,  during  January,

1982,  to  December,  1982,  there  was  no

specific  entry  under  the  Central  Excise

Tariff  regarding  “hair  dyes”,  although,

“hair lotion” was specified under Tariff

Item 14F and that only with effect from 1st

March,  1975,  a  residuary  entry,  namely,

Tariff  Item  68,  was  introduced,  whereby

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goods  which  had  not  been  specifically

included  under  any  of  the  other  Tariff

Items, were made exigible, though at the

rate of 8% only.

14. Appearing for the appellant company, Mr.

Ashok  Desai,  learned  senior  advocate,

submitted  that  the  relevant  period

involving the demand for payment of excise

duty on “hair dye” treating the same to be

covered by Tariff Item 14F, was for the

period  from  January,  1982  to  December,

1982.   He  also  pointed  out  that  by  the

Finance  Act,  1961,  Tariff  Item  14F  was

introduced to cover Cosmetics and Toilet

Preparations as indicated hereinbelow:-

“14F  –  Cosmetic  and  Toilet Preparations not containing alcohol or Opium  India  Hemp  or  other  Narcotic Drugs or Narcotics, namely: (i) Face Cream and Snow; (ii) Face Powder; (iii) Talcum Powder;  (iv) Hair Lotion, Cream and Pomade.”

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15. Mr. Desai submitted that in view of the

above,  only  those  products,  which  fell

within  the  categories  indicated  in  14F

became taxable for the first time in 1961.

16.  In May, 1974, Godrej Soaps introduced a

new product known as “Godrej – Permanent

Hair  Dye”   (Liquid  Hair  Dye)  in  the

market.  The said product was comprised of

two components; one being a darkener and

the  other  being  a  developer,  which  were

required to be mixed in equal proportion

to  apply  on  hair  for  the  purposes  of

darkening gray hair.  Mr. Desai submitted

that  since  the  said  substance  was

poisonous  in  nature,  very  elaborate

instructions had been provided along with

the product for its application.  At that

point of time, no excise duty was levied

on the said product under Tariff Item 14F.

17. It was then submitted that on 1st March, 1975,  Finance  Act,  1975,  introduced  a

residuary entry, namely, Tariff Item 68,

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in  the  First  Schedule  to  the  Central

Excise and Salt Act, 1944 which reads as

follows:-

“68  –  All  other  Goods,  not  elsewhere specified.”

Mr. Desai submitted that by virtue of such

entry, all goods, including the liquid hair dye

manufactured by the appellant became, exigible

at the rate of 8%.

18. As submitted by Mr. Desai, the appellant’s aforesaid  product  appears  to  have  been

sent  for  analysis  to  the  Deputy  Chief

Chemist and by his letter dated 3rd March

1975, the Superintendent of Central Excise

Range  IV,  Division  VII,  informed  the

appellant company as follows:-  

“No.C.E (Samples)/75/540   B’bay 3/3/75

M/s. Godrej Soaps (P) Ltd. Bombay

Gentlemen,

Sub: Sample of Godrej Permanent Hair Dye.

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Deputy  Chief  Chemist  has  opined  that samples  of  “Godrej  Permanent  Hair  Dye”- Brown and Black” sent to him for analysis, do  not  fall  under  Tariff  Item  14F(II). This is for your information.

Yours faithfully,

Sd/- 3.3.75 Supdt. Of Central Excise   Range IV, Division VII”

19. Mr.  Desai  submitted  that  from  the  said

letter  it  would  be  clear  that  even  the

Department was alive to the fact that the

appellant’s product “liquid hair dye’ did

not  fall  under  Tariff  Item  14F,  which

necessarily implied that it did not answer

to  the  description  of  “hair  lotion”  or

“pomade” as included in Item No. (iv) of

14F introduced by the Finance Act of 1961

in  the  First  Schedule  to  the  Central

Excise and Salt Act, 1944.  According to

Mr.  Desai,  after  introduction  of  Tariff

Item 68 by the Finance Act of 1975, the

appellant’s  aforesaid  product  became

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exigible  under  the  said  entry  for  which

excise duty was being duly paid.  

20. Mr. Desai then submitted that an identical

question,  which  has  been  posed  in  this

appeal, had been raised before the Bombay

High  Court  in  the  case  of  Chimanlal

Beliram Mehta vs. M.G. Vaidya, reported in

[2000  (124)  E.L.T.  40  (Bom)],  where  the

plea that hair dye should not be exigible

to duty as “hair lotion” was not accepted

and it was held that the same came within

the definition of hair lotion and was thus

exigible.   Mr.  Desai  submitted  that  the

said  decision  had  been  rendered  by  the

Division Bench mainly on the basis of the

analysis of the components of the product.

Subsequently, however, while dealing with

the  same  question  relating  to  “Vasmol

Emulsified Hair Oil” and ”Vasmol Pomade”

the  learned  Single  Judge  of  the  Bombay

High  Court  in  the  case  of  Subhash

Chandarnishat vs. Union of India (supra)

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had distinguished the decision on applying

the  principle  of  “common  parlance”  in

describing  the  product.   Mr.  Desai

referred to the classic  example on the

concept of common parlance in The King vs.

Planter  Nut  and  Chocolate  Company  (1951

Canada  Law  Reports  –  Exchequer  Court  p.

122)  referred  to  by  the  learned  Single

Judge. The question involved in the said

decision  was  whether  salted  peanuts  and

cashew  nuts  could  be  considered  to  be

“fruit” or “vegetable” within the meaning

of the Excise Tax Act.  Cameron J., who

delivered the judgment, posed the test as

follows :

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

21. It  was  then  submitted  that  various

affidavits affirmed by customers regarding

what they felt was meant by “hair lotion”

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and “hair dye” had been placed before the

departmental authorities, but had not been

given  due  importance  in  classifying  the

products in question.  Taking note of the

above, the learned Single Judge went on to

observe as follows:   

“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  and commerce 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 No2 clearly showed that the aforesaid products

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could  not  be  fairly  regarded  as  “hair dressing” or “hair pomade” at all.  If one were to pose the question 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 wanted 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”  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.”

22. Mr. Desai submitted that the learned Judge

went  on  to  hold  that  “Vasmol  Emulsified

Hair  Oil”  and  “Vasmol  Pomade”  were  not

covered by Item 14F of the First Schedule

to the Act and were not exigible to excise

duty under that item.   

23.  Mr. Desai also referred to a decision in

Godrej  Soaps  Ltd  vs.  State  of  Andhra

Pradesh, reported in [1983 (53) STC 376],

relating to the very same product, namely,

“Godrej Permanent Hair Dye”.  In the said

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case, the Court was called upon to decide

whether  “hair  dye”  is  a  “hair  lotion”

which  is  one  of  the  items  mentioned  in

Entry  36  of  the  First  Schedule  to  the

Andhra  Pradesh  General  Sales  Tax  Act,

1957.  On considering the meaning of the

expression  “lotion”  in  detail,  the  High

Court came to the conclusion that hair dye

is  a  colouring  material  and  is  used  to

blacken gray hair.  It was not used as a

medicinal preparation to cleanse the hair

or  for  skin  disorder  and  was  not,

therefore,  a  hair  lotion,  within  the

meaning of entry 36 of the Andhra Pradesh

General  Sales  Act,  1957  and  was,

therefore, taxable under the said Act.   

24. It  was  submitted  that  as  required  under

the  Rules,  the  appellant  company  as

assessee filed Classification List No. 484

of 1979 classifying “Godrej Permanent Hair

Dye” (Liquid Hair Dye) under Tariff Item

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68 and it had been duly approved by the

Department.

25. Despite the above, on 13th July, 1982, the respondent issued a show-cause notice to

the  appellant  as  to  why  the  said  “hair

dye” should not be classified under Tariff

Item No.14F.  It was also mentioned that

while the matter was pending determination

the  classification  of  the  said  product

would continue under Tariff Item 68 on a

provisional basis under Rule 9D.  On 2nd

August,  1982,  a  show  cause-cum-demand

notice  was  issued  by  the  Department

alleging  short  payment  of  duty  under

Tariff  Item  14F  for  the  period  from

January,  1982  to  June  1982.   The  said

notice  was  followed  by  two  other  show-

cause-cum-demand notices, for the periods

from  July  to  September,  1982  and  from

October  to  December,  1982.   Mr.  Desai

submitted  that  before  the  Adjudicating

Authority  several  affidavits  sworn  by

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various dealers, retailers and consumers,

were  filed  to  show  that  in  commercial

parlance, people who dealt with “hair dye”

and  “hair  lotion”  considered  them  to  be

separate  and  distinct  products.   The

Assistant Collector by his order dated 24th

May, 1983, rejected the explanation given

by the appellant company and confirmed the

demand  made  by  the  Department  by  the

several  show-  cause-cum-demand  notices

dated 13th July, 1982, 2nd August, 1982, 27th

December 1982 and 17th February, 1983.   

26. It was submitted that being aggrieved by the said order of the Assistant Collector,

the appellant filed Writ Petition No. 1460

of  1983  in  the  Bombay  High  Court

challenging  the  said  order  of  the

Assistant Collector dated 24th May, 1983,

together with the various show-cause-cum-

demand notices issued from time to time.

By  its  judgment  and  order  dated  17th

September, 1982, the High Court dismissed

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the writ petition and upheld the order of

the Assistant Collector and directed that

the demand be paid.

27. This  appeal  has  been  filed  against  the

judgment  and  order  of  the  High  Court

dismissing the writ petition filed by the

appellant herein.

28. Relying  heavily  on  the  decision  of  the learned  Single  Judge  of  the  Bombay  High

Court  in  Subhash  Chandarnishat’s  case

(supra), Mr. Desai urged that the Division

Bench of the Bombay High Court had wrongly

arrived  at  the  conclusion  that  the

appellant’s “hair dye” was in fact “hair

lotion”.  Elaborating on his submissions

with  regard  to  the  application  of  the

commercial  parlance  test  to  determine

classification  of  a  product  Mr.  Desai

besides referring to the Planters Nut case

also referred to the case of Dunlop India

Limited  Vs.  Union  of  India,  reported  in

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[1976 (2) SCC 241], in which this Court

while dealing with VP Latex and referring

to  the  Planters  Nut  case  with  approval,

held that in interpreting the meaning of

words in a taxing statute, the acceptance

of a particular word by the traders and

its popular meaning should commend itself

to  the  authority.   It  also  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 the

usual course.

29. Reference was also made to the decision of

this  Court  in  the  case  of  Ram  Avtar

Bhudiaprasad  vs.  Assistant  Sales  Tax

Officer  reported  in  [1962  (1)  SCR  279]

wherein while dealing with the meaning of

the word “vegetable“ occurring in C.P. and

Berar Sales Tax Act 1947, this Court held

as follows:-

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“This  word must be construed not in any  technical  sense  nor  from  the botanical  point  of  view  but  as understood in common parlance.  It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning ‘that  sense  which  people  conversant with the subject-matter with which the statute is dealing would attribute to it’.   It  is  to  be  construed  as understood in common language.”

31.  The decision of this Court in Commissioner

of Sales Tax, Madhya Pradesh, Indore vs. M/s

Jaswant Singh Charan Singh, reported in [1967

(2) SCR 720], where this Court was dealing with

the  word  ‘charcoal’,  reiterated  the  same

sentiments  as  were  expressed  in  Ramavtar

Budhiaprasad’s case (supra).

32.  Mr. Desai also submitted that this Court

has repeatedly held that affidavits cannot be

disregarded, if no evidence to the contrary was

produced.   

33. It was lastly submitted by Mr. Desai that

the  use  of  the  word  “namely”  in  Tariff

Item 14F would have to be interpreted as

exhaustive  and  confined  only  to  those

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products  specifically  mentioned  therein

against  items  (i)  to  (iv).   The  said

expression  had  been  held  in  various

decisions  as  an  equivalent  of  the

expression  ‘that  is  to  say’.   Also

referring to the various internet extracts

produced  on  behalf  of  the  appellant

company,  Mr.  Desai  concluded  by  urging

that  both  the  Department  and  the  High

Court had erred in law in disregarding the

well  established  common  parlance  test,

particularly  when  the  product  of  the

appellant is a counter article available

on demand.  Mr. Desai submitted that the

ordinary consumer does not depend on the

text-book  concept  of  “hair  lotion”  or

“hair  product”  but  on  the  common  man’s

understanding of the product.  Mr. Desai

submitted that the judgment and order of

the  High  Court,  as  also  that  of  the

Assistant  Collector  of  Central  Excise,

holding  that  the  appellant’s  product  –

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“liquid  hair  dye”  was  “hair  lotion”  and

including the same in Tariff Item 14F, in

place  of  Tariff  Item  68  of  the  First

Schedule  to  the  Central  Excise  and  Sale

Act, 1944, was erroneous and liable to be

set aside.    

34. Replying to the submissions made on behalf of the appellant, the learned Additional

Solicitor  General,  Mr.  M.  Chandra

Shekharan,  submitted  when  the  Division

Bench had found that “hair dye” was, in

fact, a “hair lotion”, the view expressed

by  the  learned  Single  Judge  in  Subhash

Chandarnishat’s case, could not be given

undue  importance  as  has  been  done  on

behalf of the appellant.  Referring to the

Chambers  20th Century  Dictionary,  the

learned  Additional  Solicitor  General

submitted  that  in  the  said  Dictionary

‘Pomade’  has  been  defined  to  be  an

ointment for the hair, whereas a lotion is

a liquid preparation, either medicinal or

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of a cosmetic nature.  It was submitted

that  “Vasmol  Pomade”  was  different  from

the  appellant’s  product  in  that  it

contains  a  small  amount  of  lead  acetate

and sulphur precipitator and the rest of

the material is basically herbal jelly to

which herbs and perfumes are added.  As to

the  affidavit  filed  before  the  learned

Single  Judge,  it  was  submitted  that  the

same  had  been  affirmed  by  persons  who

claimed  to  be  either  dealers  of  “Vasmol

Products”  or  consumers  of  the  same  and

that they have merely stated that the said

product was sold and purchased mainly as

“hair dye”

35. It  was  submitted  that  the  expression

“namely” used in Tariff Item No. 14F had

been used in an illustrative and not in a

restrictive sense and that the use of the

expression “namely” in the Tariff Item did

not  mean  that  only  the  items  specified

therein would fall within its ambit.  It

26

was  submitted  that  the  learned  Single

Judge had incorrectly held that items or

entries  in  taxing  statutes  have  to  be

understood according to the meaning given

by people in trade and commerce, who were

conversant  with  the  subject  and  that

technical and scientific tests offer only

guidance  within  limits.  The  learned

Additional  Solicitor  General  submitted

that  the  affidavits  filed  before  the

learned Single Judge were from traders who

stated  that  “Vasmol  Products”  were  hair

darkeners and were not sold as cosmetics.

Affidavits  filed  by  users  stated  that

“Vasmol” was being used by them as “hair

dye”  and  not  as  “hair  lotion”  or  “hair

cream”.   Accordingly  the  learned  Single

Judge  held  that  the  concerned  Vasmol

products  were  “hair  dyes”  and  not  “hair

lotions”.  

36. The  learned  Additional  Solicitor  General

submitted that the Division Bench had held

27

that  the  report  of  the  Deputy  Chief

Chemist,  Mumbai  and  the  Chief  Chemist,

Central  Revenue,  New  Delhi  and  several

books  and  periodicals,  which  had  been

relied upon by the petitioners during the

hearing of the appeal, had been considered

by  the  authorities  before  coming  to  the

conclusion  that  the  product  in  question

was a “hair lotion”. It was submitted that

the  Division  Bench  had,  on  placing

reliance on standard text-books on which

the appellants had relied, indicated that

the  two  expressions  “Hair  Lotion”  and

“Hair Dye” could be used interchangeably

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.  The

use  of  the  product  as  a  hair  darkener,

though a relevant factor, would not be a

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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.   

37. 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

29

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

appellant’s  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

30

the appellant’s 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 appellant’s company

was  informed  that  its  above-mentioned

product  did  not  fall  under  Tariff  Item

No.14F.

38. 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  appellant’s  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

31

which would stand covered by Tariff Item 14F of

the First Schedule to the Act.   

39. The  Division  Bench  of  the  Bomaby  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

Chandernishant’s case(supra) wherein a learned

Single Judge distinguished the decision of the

Division  Bench  in  Chimanlal  Beliram  Mehta’s

case  (supra)  relying  on  classification  of  a

32

product by virtue of the doctrine of common

parlance.   

40. 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 appellant’s 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 one’s hair.

From the chemical analysis of the appellant’s

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.

33

41. Apart  from  the  above,  even  in  common

parlance or trader’s 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

appellant’s 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.   

42. Mr. Desai laid great emphasis on the fact

that the appellant’s 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

34

lotion to be used either as a scalp or hair

nourisher or for medicinal purposes.   

43. 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.

44. We,  accordingly,  allow  the  appeal,  set

aside the order of the High Court impugned in

the appeal and quash the demand Notices dated

2nd August, 1982, 27th December, 1982 and 17th

February,  1983  covering  the  period  from

January,  1982  to  December,  1982  demanding

payment of excise duty under Tariff Item 14F of

the First Schedule to the Central Excise and

Sal Act, 1944.

35

45. Having regard to the facts of the case,

the parties will bear their own costs.  

………………………………………J. (ALTAMAS KABIR)

………………………………………J. (V.S.SIRPURKAR)

New Delhi Dated: 9th July, 2008

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