Calcutta High Court
Union Of India (Uoi) vs G.D. Pharmaceuticals Ltd. on 5 December, 1996
Equivalent citations: 1998(59)ECC120, 1998(100)ELT24(CAL)
Author: U.C. Banerjee
Bench: U.C. Banerjee
JUDGMENT U.C. Banerjee, J.
1. This appeal is directed against an order of the learned Trial Judge whereby the learned Trial Judge has been pleased to allow the writ application. The contextual facts reveal that for some time past disputes and differences were raised as regards classification of a product named 'Boroline'. Dispute started as early as 1961 and continued right upto this date from time to time. The learned Trial Judge relying upon a judgment of Allahabad High Court (Abdul Mohammed and Ors. v. The State) reported in 1977 Cri. L.J. 1325, came to the conclusion that 'Boroline' is essentially a drug and the newly introduced explanation to the Tariff Item 14F cannot have any bearing on the question as to whether Boroline is a drug or cosmetic product. In terms of the aforesaid Judgment, the learned Trial Judge was pleased to record that the question has been gone into in great length by and between the parties before the departmental authorities and also before this Court and strong reliance was placed and the terms of the settlement as filed in Matter No. 358 of 1962 [G.D. Pharmaceuticals (P) Ltd. v. Collector of Central Excise, Calcutta, Orissa and Ors.]. The terms of settlement as noted above filed on 18th January, 1983 whereby it was held that Boroline was to be assessed as patent and proprietary medicine under the Tariff Item 14E and facts depict that the Central Excise authority has levied, assessed and collected excise duty on Boroline on the basis of such classification under Tariff Item 14E.
2. Mr. Roy Chowdhury, appearing for the appellants, however, strongly contended that in view of the changed statutory provisions as introduced by the Tariff Act of 1985, effected from 1st February, 1986 the question of invocation of Tariff Item 14E for the product 'Boroline' does not and cannot arise. Mr. Roy Chowdhury placed strong reliance on the Chapter Notes and contended that the learned Trial Judge has not placed any reliance whatsoever on the abovenoted Chapter Notes and has gone wrong in the process. Mr. Roy Chowdhury submitted that Chapter Notes are completely different from that of the Tariff Items, be it 14E or 14F. Be it noted that Tariff Item No. 14E has introduced in Tariff Act, 1985, under Heading No. 30.03 and 14F under 33.04. Mr. Roy Chowdhury, however, has placed in details both the Items, but on a perusal of the same, we do not find any such change warranting a different conclusion on the matter. Basically Item No. 14E deals with patent or proprietary medicines not containing alcohol, opium, Indian hemp or other narcotic drugs or other narcotic other than those medicines which are exclusively Ayurvedic, Unani, Sidha or Homeopathic and the explanation categorically records that it includes any drug or medicinal preparation, in whatever form for use in the internal or external treatment of or for the prevention of ailments in human being or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a Pharmacopoeia. Item 14F, as it stood there, has dealt with Cosmetics and Toilet preparations for the care of skin, beauty or make-up preparations, such as beauty creams, vanishing creams, cold creams, make-up creams, cleansing creams, skin foods, skin tonics, etc. to give protection against skin irritants. Mr. Roy Chowdhury relying on this explanation submitted that Boroline is basically being used for protection against skin irritants. Mr. Roy Chowdhury further relied upon Chapter 33.04 and submitted that the situation has changed by reason of the introduction of Tariff Act, 1985 and more so by reason of the inclusion of Chapter Notes, as noted above. The difference between the two being the Tariff Item No. 14F and the present Chapter 33.04 cannot be termed to be a difference, as such, warranting a different view as was taken earlier.
3. In that view of the matter, we are unable to record our concurrence with the submissions of Mr. Roy Chowdhury that by reason of introduction of , Chapter Notes, the situation warrants different classification with regard to Tariff Item No. 14E corresponding 30.03.
4. Mr. Roy Chowdhury contended that 'Boroline' cannot be termed to be a medicine but it is a cosmetic preparation. The tube containing the cream itself records "A protective and soothing emilients for chapped skins, cracked nipples, cuts and dry skin diseases, FOR EXTERNAL USE ONLY".
5. The learned Trial Judge while dealing with the matter recorded that 'Boroline' is an Antiseptic Boric ointment and the chemical composition is as follows:
"Boric Acid 1P 1% Zinc Oxide 1P 3% White Petroleum Jelly 1P & Lanoline Anhydrous 1P QS".
6. The reference to the judgment of the Allahabad High Court by the learned Trial Judge, unmistakably depicts that it is a drug. Be it noted that the case was decided under the Drugs and Cosmetics Act, 1940. In that view of the matter, we are not able to lend our concurrence to the submission of Mr. Roy Chowdhury that it is not a medicine but a cosmetic preparation.
7. Lastly Mr. Roy Chowdhury contended that as a matter of fact, the writ petitioner/respondent has, in fact, availed of the exemption notification dated 1st October, 1985 and cannot thus claim that Boroline is an item falling under 30.03 and not 33.04. For convenience sake, the relevant extract of the exemption notification is set out hereinbelow :
"In exercise of the power conferred by Sub-rule 1 of Rule 8 of the Central Excise Rules, 1944, Central Government hereby exempt Antiseptic perfumed creams, falling under sub-item 1 of Item No. 14F of the 1st Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) from so much of the duty of excise leviable herein under the said Act at the rate specified in the said first schedule as in excess of the amount calculated @ 13% in ad valorem provided that the exemption contained in the Notice shall apply to only such Antiseptic perfume creams which are manufactured under Drug Licence issued under the Drugs and Cosmetic Act, 1940 (23 of 1940)".
8. At the first blush, this submission of Mr. Roy Chowdhury seemed to be rather attractive since the manufacturer cannot possibly be allowed to take advantage to the exemption notification and contend the other way round that the product does not come within the category as mentioned in the notification. Mr. Gupta, appearing for the respondent/writ petitioner, on this score, referred to an order of the Appellate Court and submitted that availing of the exemption was in terms of the order of the Appellate Court dated 5th March 1993 whereby the Appellate Court directed that the writ petitioners/ respondents' goods, being the subject matter herein, be cleared under the sub-heading No. 33.04 of Chapter 33 of the Central Excise Tariff Act, 1985, till the disposal of the appeal, or unit further orders, without prejudice to the rights and contentions of the parties. The Appellate Court, however was categorical in recording that whatever appropriate notifications there may be under that sub-heading, the respondents will be entitled to get the benefit thereof. It is in terms of the Appellate Court's order that the goods were cleared under Tariff Item No. 14F corresponding to 33.04 of the Central Excise Tariff Act, 1985, and as such if the goods are cleared under a particular Tariff Item, the question of not having any benefit of any exemption as is allowable by the Excise Authority, does not and cannot arise. This acceptance in our view not commit to any waiver of any contention of the party that Boroline does not come under Item 33.04 and come under 30.03. In the event of payment of duty in terms of the Appellate Court's order upon classification of the same under 33.04, the question of any classification of the same under 33.04, the question of any waiver or estoppel does not and cannot arise.
9. Strong reliance was placed by Mr. Roy Chowdhury on a decision of the Customs, Excise and Gold (Control) Appellate Tribunal in the matter of Sunny Industries (Private) Ltd. v. Collector of Central Excise, Calcutta While relying on the aforesaid judgment, Mr. Roy Chowdhury, however, contended that an appeal is pending before the Supreme Court against the aforesaid order, but since reliance was placed, we deem it a part of our judicial ethics to deal with the point. Reliance on the aforesaid judgment by Mr. Roy Chowdhury is to the effect that "an erroneous classification once done does not achieve inviolable permanence, never to be tampered with." Mr. Roy Chowdhury contended that while it is true that earlier there was a term of settlement, but that by itself cannot preclude neither can possibly be termed to be an waiver on the part of the Excise authority but contended that the Item in question falls under a different heading. There cannot possibly be any waiver or estoppel against the statute but the fact remains, approver the judgment of the Tribunal, of an erroneous classification does not and cannot arise in the facts and circumstances of the matter in issue. The writ petition was pending before this Court and subsequently there was a term of settlement which was filed before this Court directing that the product in question ought to be classified under Tariff Item 14F presently under the Act of 1985. Chapter 30.03 there is no question of erroneous approach neither there is any question of misleading information or not being able to appreciate properly. It was done at the highest level. In any event, the factual score distinguishes the judgment from the facts of the matter under consideration. In this context, the conclusion, however, ought to be noted. In the concluding part of judgment, the Tribunal recorded :
"To conclude, we hold that the product in question is clearly a massage oil, intended for care of the skin, but possibly having some marginal medicinal properties. We, therefore, hold that the lower authorities committed no error in coming to the conclusion about the classification of the product."
10. Be that as it may, by reason of the factual position, the judgment has no manner of application apart from this fact, as noted above, that an appeal is pending before the Supreme Court. Mr. Roy Chowdhury also placed reliance on another judgment of the Supreme Court (Shree Baidyanath Ayurved Bhavan Ltd. v. Collector of Central Excise, Nagpur) reported in 1996 (12) CXLT (S.C.) CE-143 wherein the Supreme Court was pleased to record that in interpreting statutes like Excise Act, resort should not be made to scientific and technical meaning of the terms and expressions used but to their popular meaning that is meaning attached to them by those who are using the product and on the contextual fact came to the conclusion that the appellant was not entitled to the benefit of the exemption notification. Be it recorded that the Tribunal rejected the claim of the appellant holding that ordinarily a medicine is prescribed by a Medical practitioner and it is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes. Contextual fact reveals that the product in question contains Boric Acid with Zinc Oxide, which cannot possibly be termed to be a cosmetic item. In any event, the learned Trial Judge has gone into the matter very carefully and detailed out the reasons for his conclusion that Boroline cannot but be termed to be a medicine and not a cosmetic product.
11. In that view of the matter, we do not find any reason to interfere with the order of the learned Trial Judge. The order of the learned Trial Judge is therefore sustained. The appeal, therefore, fails and is, accordingly, dismissed without any order as to costs.
12. Be it recorded that as regards the excess quantum of excise duty paid, would not be referred to be writ petitioner/respondent herein and the same be dealt with in accordance with Section 11B of the Central Excises and Salt Act.
Prayer for stay of operation of the order made but the same is refused.