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M.M. Khambhatwala Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Appln. No. 554 of 1989
Judge
Reported in1996(56)ECC12
ActsCentral Excise Act
AppellantM.M. Khambhatwala
RespondentUnion of India and ors.
Appellant Advocate Manisha Lavkumar and; K.H. Kazi, Ld. Advs.
Respondent Advocate B.B. Nayak, Ld. Counsel
Cases ReferredCommissioner Sales Tax v. Chawla Stores
Excerpt:
.....announced by government for year 1978-79 - scheme extended - one category of items covered by scheme 'toiletries and perfumes' - petitioners claiming benefit in respect of hair oil and allowed benefit by authorities for period from 1.4.1978 to 31.3.1979 - circular dated tl.3.1984 listing items of cosmetics and toiletries covered under scheme - hair oil not finding place in list - petitioner claiming cash compensatory support in respect of export of hair oil for period from 28.3.1981 to 25.9.1982 and for period from 4.1.1983 to january-march 1984 by letter dated 23.10.1985 addressed to third respondent - petitioner asked to approach first respondent - claim of petitioner pending on file of first respondent - petitioner filing writ petition seeking payment of cash compensatory support..........by the petitioner, viz., hair oil and incense sticks, were eligible for the benefit of the said scheme. hair oil being not specifically excluded under the general heading 'toiletries' and 'perfumes', the petitioner claimed benefit of the scheme for the period from 1.4.1978 to 31.3.1979 and has also in fact received benefit under the scheme. government continued the scheme for the year 1979-80 and also decided to revise the rates of the scheme. vide annexure 'a(1)', the petitioner has produced a copy of the letter written by the export commissioner along with annexures. entry no. 6 of the annexure to the letter provides for benefit of the scheme on 'cosmetics and toiletries, not specified elsewhere (excluding lipstick and shampoo) at the revised rate of 12.5%' for the next three.....
Judgment:

B.C. Patel, J.

1. The petitioner has filed this petition praying to issue appropriate writ, order or direction under Article 226 of the Constitution of India, directing the respondents to pay Rs. 7,32,411.81 (Rupees seven lakhs thirty two thousand four hundred eleven and paise eighty one only) with interest at 15% per annum from the date of petitioner's application till the date of actual payment.

2. Facts succinctly stated leading to the filing of this petition are as under :-

The petitioner is a partnership firm engaged in the manufacture of hair oils, perfumes, agarbatties (incense sticks) etc. Government of India announced a scheme for the year 1978-79 known as 'Cash Compensatory Support' (hereinafter referred to as the Scheme) on the export of certain products manufactured by Indian manufacturers.Two of the products manufactured by the petitioner, viz., hair oil and incense sticks, were eligible for the benefit of the said scheme. Hair oil being not specifically excluded under the general heading 'Toiletries' and 'Perfumes', the petitioner claimed benefit of the scheme for the period from 1.4.1978 to 31.3.1979 and has also in fact received benefit under the scheme.

Government continued the scheme for the year 1979-80 and also decided to revise the rates of the scheme. Vide Annexure 'A(1)', the petitioner has produced a copy of the letter written by the Export Commissioner along with annexures. Entry No. 6 of the annexure to the letter provides for benefit of the scheme on 'Cosmetics and Toiletries, not specified elsewhere (excluding lipstick and shampoo) at the revised rate of 12.5%' for the next three years, i.e. 1979-80, 1980-81, and 1981-82. Similarly, Entry No. 19 provides for the benefit of the scheme on Agarbatties (incense sticks) att 10%. As averred in the petition, the petitioner was also granted benefit of the scheme accordingly.

It appears that the Government of India, by letter No. 12(36)/79-EAC dated 1st April, 1980, continued the said scheme. Entry No. 6 provides for 12.5% cash support on Cosmetics and Toiletries not specified elsewhere and Entry No. 19 provides for 10% support on incense sticks. It is averred in the petition that the petitioner was accordingly granted the benefit.

The petitioner, at Annexure B(1) and B(2) (at pages 25 to 28), has given details about its letter number and date of forwarding application for cash assistance to Joint Chief Controller of Imports & Exports, Ahmedabad, indicating file number allotted by the Joint Chief Controller of Imports & Exports, Ahmedabad, against such application. In column No. 4, against each such application, date of export is given. In column No. 5, net value of perfumed Hair Oil after deducting commission if any, is indicated and in the last column, against each application, amount of cash assistance receivable is indicated. Pages 25 and 26 covers the export from 28.3.1981 to 25.9.1982 (both days inclusive) for which applications were made on different dates and amount claimed is Rs. 2,69,110.44 (Rupees two lakhs sixty nine thousand one hundred ten and paise forty four only). For these claims, a letter is forwarded on 23.10.1985 (Exh. D(1) along with the judgment delivered by the Bombay High Court. For the exports from 4.1.1983 to January-March 1984 (Exch. B(2), (at pages 27 and 28), with all details referred to earlier, claim is for cash assistance for Rs. 4,63,301.37 (Rupees four lakhs sixty three thousand three hundred one and paise thirty seven only). Total, thus comes to Rs. 7,32,411.84 (Rupees seven lakhs thirty two thousand four hundred eleven and paise eighty four only).

By Circular No. 12(43)/82/EAC dated 30th September, 1982, the rate of the benefit available under the scheme was revised. At Entry No. 6 of the annexure to the said circular, 13% support was provided for 'Cosmetics and Toiletries not specified elsewhere'. However, in the remarks column, it was stated that 'the list of items to be covered under this entry will be issued separately'. Thus, Cosmetics and Toiletries not specified elsewhere were included at entry No. 6 and revised rate was 13% as provided for, effective from 1st October, 1982 upto 31st March, 1985, as can be seen from the annexure to the said circular at Annexure A(3) to the petition. Thereafter, List of items covered under the head 'Cosmetics and Toiletries' at entry No. 6 of the list dated 30th September 1982 came to be notified by Circular No. 12(43)/82-EAC dated 31st March, 1984, but hair oil was not included in the said list. The petitioner's grievance is that as indicated in Exh.B/1-2, on different dates, applications were forwarded for the benefit of the Scheme but the benefit is not extended to the petitioner. At Exh. B/1-2, the petitioner has produced lists showing file numbers allotted by the Joint Chief Controller of Import and Export, Ahmedabad, date of export, net value of perfumed hair oil after deducting commission if any, and the amount of Cash Assistance receivable as per the application. The petitioner has also made a grievance that though in entry No. 6 of notification dated 31.3.1984 it has been specifically stated that the rates of Cash Compensatory Scheme will be applicable to exports effected on or after 1.4.1984 till 31.3.1985, the petitioner's applications are not allowed by the respondents. The petitioner has specifically stated in paragraph 16 that the petitioner was informed in March, 1988 by the 3rd respondent that it should approach the 2nd respondent. The petitioner was informed thereafter that the 2nd respondent has rejected its claim and the petitioner should approach the 1st respondent. In May, 1988, the petitioner did approach the 1st respondent and the applications are still pending and no action is taken by the concerned respondent. The petitioner has further contended that the case of the petitioner is supported by a decision of the Bombay High Court in a Writ Petition No. 1117 of 1980 dated 13.7.1984 in the case of Tata Oil Mills Company Limited v. Union of India and others. It is pointed out by the petitioner that the judgment delivered by the Bombay High Court in the aforesaid case was brought to the notice of the Department, by forwarding a copy thereof along with a letter dated 23.10.1985 written by the petitioner to the 3rd respondent, vide Annexure D(1). The petitioner has also informed the Ministry of Commerce, New Delhi about the decision of the Bombay High Court in the aforesaid case, vide its letter dated 9.5.1988.

It is contended by the petitioner that applications which were forwarded on different dates were kept pending. The petitioner was not informed about either rejection or acceptance of the said applications. Therefore, the petitioner, from time to time, reminded the authorities. However, as stated in paragraph 16, the petitioner was informed only in March, 1988 by the 3rd respondent that it should approach the 2nd respondent, who in turn, in the year 1988, rejected the petitioner's applications and directed that the petitioner should approach the 1st respondent and the applications are still pending before the 1st respondent and till this date, the same are not decided.

3. Mr. Nayak, learned counsel for the respondents contended that hair oil is not included in the entry of 'cosmetics and toiletries' and merely because under a mistaken belief the benefit was given in the past, it does not mean that the petitioner is entitled to get the benefit. It is the contention of the respondents that as hair oil is not included in the entry of 'cosmetics and toiletries', the therefore, the benefit under the scheme cannot be given.

It was contended that applications are pending before 1st respondent, and, hence, the petition should be rejected.

4. It is not in dispute that the petitioner was given the benefit till 23.4.1981 and the petitioner has restricted its claim to 31.3.1984, the date on which Exh. A/4 (circular) was published specifically indicating the items covered at entry No. 6, 'Cosmetics and toiletries' wherein hair oil is not included. It is only on 31.3.1984 that a circular was published wherein hair oil was not incorporated in the list of Cosmetics & Toiletries. There was no separate exclusion of hair oil in the entry of Cosmetics and toiletries in the previous lists, and in fact, even the petitioner was given the benefit for export of hair oil till 23.4.1981. The questions therefore, are, whether hair oil is to be included in 'cosmetics and toiletries' and whether the petitioners are entitled to the benefit of the scheme from 23.4.1981 to 31.3.1984. In this context, it is required to be noted that the list was published for the first time only on 31.3.1984 wherein hair oil is not included.

5. On behalf of the petitioner, it is canvassed that hair oil is included in cosmetics and toiletries and for this purpose, reliance is placed on various judgments.

6. Tata Oil Mills which manufactures perfumed hair oils and shampoo forwarded an application claiming benefit of the scheme and the application was rejected on the ground that the exported product, perfumed hair oil, is not covered under cosmetics and toiletries. In the judgment of this case, Bombay High Court has observed that perfumed hair oil was already in the earlier scheme as a product entitled to cash assistance, being items No. B.27-8 under the general heading Toiletries and perfumeries. In the subsequent schemes, perfumed hair oil was not expressly or separately specified but there was item No. 6 to the effect that Cosmetics and Toiletries, not specified elsewhere (excluding lipstick and shampoo) are entitled to the benefit of the scheme, and perfumed hair oil is not specified anywhere else. If it was specified elsewhere, the matter would be different and it is required to be noted that lipstick and shampoo have been explicitly excluded. Therefore, the question is : whether perfumed hair oil is included in the list of cosmetics and toiletries or not In this context, if Exh. A(4) is perused, it becomes clear that for the first time, items to be covered were specified and it includes lipstick in retail pack and shampoo, but hair oil does not find its place in cosmetics and toiletries. Therefore, if the intention of the rule maker was to see that the item is not to be included, then the same should have been notified specifically. In paragraph 6, the Bombay High Court has held that in the absence of any definition, the relevant terms must be construed not in a technical sense but as understood in common parlance. The Court has held that :-

There can be no dispute that Hair Oils perfumed is in common parlance accepted as being a cosmetic as also covered by the terms toiletries. And what is more, this common understanding also accords with the dictionary definition of cosmetics. Webster's International Dictionary defines Cosmetics as an external application intended to beautify and improve the complexion, skin or hair. The Oxford English Dictionary defines the terms as a preparation intended to beautify the hair, skin or complexion. Then again, as per Encyclopaedia Britannica, cosmetics are substances especially prepared to improve, beautify and generally increase the attractiveness of the person. Thus, without multiplying definitions, it can be safely concluded that cosmetics would cover and include perfumed hair oils, which, as we all know, help beautify the hair and assist its grooming for better appearance.

7. Ld. Advocate has also placed reliance on the decision of the Apex Court in the case of State of Gujarat v. Prakash Trading Co. reported in 30 STC 348. The Court considered the dictionary meaning of the word 'cosmetic' etc., and held as under :-

'Reference in this connection was made to the dictionary meaning of the words 'cosmetic', 'toilet' and 'toiletry'. 'Cosmetics' according to Webster's International Dictionary, is 'a preparation to beautify or alter appearance of the body or for cleansing, colouring, conditioning or protecting skin, hair, nails, eyes or teeth'. The same dictionary gives the meaning of the expression 'toilet' as 'an act or process of dressing especially formerly of dressing hair and now usually cleansing and grooming of one's person.' 'Toiletry', according to the dictionary, is 'an article or preparation used in making one's toilet such as soap, lotion, cosmetic, tooth-paste, shaving cream, cologne etc.'.

8. Ld. Advocate for the petitioner has also placed reliance on the decision rendered by Delhi High Court in the case of Sialkot Trading Co. v. Asstt. Commissioner reported in 45 STC 245, wherein the Court held that cosmetics would include hair oil. The Court further held that 'cosmetics' is a general term which would include all articles intended to beautify, adorn, protect or improve the skin, the human body or any part thereof. Hair oil is used not only to beautify but also to preserve hair which preservation and grooming is necessary for good appearance.' The Court further held that 'toiletry and cosmetics would be synonymous terms. What are commonly called toilet articles can be regarded as cosmetics and in the age in which we are living many cosmetics would, for a good section of the people, be regarded as essential items of toilet'.

9. Ld. Advocate for the petitioner also placed reliance on the judgment of the Allahabad High Court in the case of Commissioner Sales Tax v. Chawla Stores reported in 40 STC 57. The question in that case was 'whether perfumed hair oil appertains to the class of 'cosmetics and toilet requisites'. The Court held that 'keeping the classification in view, it would be more appropriate to treat perfumed hair oil as cosmetic requisite. It is an item which is generally used by persons in the middle class and higher strata of society.

10. Thus, in view of the settled position of law, it is clear that if the words 'cosmetics' and 'toiletries' are used, hair oil will be included in the item, and it is open for the rule makers to delete that item from giving a particular benefit even though it is a cosmetic and toiletry. In the instant case, by issuance of a circular on 31st March, 1984, items are specified in the list of cosmetics and toiletries and by not specifying hair oil, the same is not included in the items for 'cosmetics and toiletries' and the items which are listed include shampoo and lipsticks in retail pack, which were specifically excluded in earlier circulars. Thus, it is clear that the petitioner is entitled to get the benefit of the scheme till 30th March, 1984.

11. On behalf of the petitioner, it is also prayed that interest may by awarded on the amount due, Mr. Nayak objected to it stating that this Court should not award interest. In the instant case, the petitioner's applications were not disposed of and were kept pending inspite of the fact that the decision rendered by the Bombay High Court was pointed out to the authorities. Yet, the authorities sat tight over it. Not only that, Joint Chief Controller of Import & Exports, Ahmedabad wrote a letter to the petitioner on 21.5.1987 pointing out that the decision given by the Bombay High Court would apply only to Tata Oil Mills and not to the petitioner. It is further stated in that letter that if the petitioner feels that the rule in this judgment should be made applicable to similar cases including that of the petitioner, it should take up the matter with the Chief Controller of Imports & Exports, Delhi for a decision. Accordingly, the petitioner did approach. Under the circumstances, we feel that it is a fit case where interest should be awarded.

12. Ld. Counsel for the respondents raised a contention that as the matter is pending before the 1st respondent, the petition be rejected. We would have considered such a request if the petition is at a stage of admission. On 30.1.1989, the Court issued a notice returnable on 20.2.1989. Rule is issued on 2.5.1989, returnable on 30.6.1989. After issuance of notice, no reply is filed by respondents. Till this date, respondent No. 1 has not taken a decision in the matter. Respondent No. 1 was specifically conveyed about the judgment rendered by the Bombay High Court in the case of Tata Oil Mills Ltd. It is also pointed out that the case is similar to that of Tata Oil Mill's which has been considered and petitioner's case be also considered. Matter is pending since May, 1988 before the 1st respondent. When the case is covered by a judgment, why the authority should not dispose of the same within a reasonable period If there is any reason for not deciding, what has prevented from placing the reason before the Court As for a pretty long period matter is not decided by the authority, it would not be appropriate to relegate the petitioner to Respondent No. 1.

13. In the result, we hold that the petitioner is entitled to benefit of the scheme on the export of perfumed hair oil till 30th March, 1984. The respondents are directed to pay the amount of cash compensatory support of Rs. 7,32,411,81/- (Rupees seven lakhs thirty two thousand four hundred eleven and paise eighty one only) to the petitioners within six months from today, and also 15% interest thereon from the date of filing of the petition till the date of actual payment. About the amount, no dispute is raised and no reply is filed indicating that the amount calculated is incorrect and, therefore, the petitioner is not entitled to claim the same. In view of this, no useful purpose would be served by directing the authority to compute the cash assistance in question. Rule made absolute accordingly with no order as to costs.


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