Sections 409, 467, 468, 471, 120-B and 420 IPC and under Section 13(2) of the Prevention of Corruption Act. - During the course of investigation, specimen signatures of the witnesses PW-5 (Nathu Ram) and PW-7 (Kirpu) were obtained before the executive magistrate, Arki and sent to the handwriting expert and fingerprint bureau. On comparison of the specimen signatures of the witnesses with the disputed signatures and also the admitted signatures of the appellant-Sukh Ram, in his report (Ex.PW20/C-1 to Ex.PW20/C-3), PW-20 opined that the disputed signatures in the loan application and other documents were not that of witnesses (PW-5 Nathu Ram and PW-7 Kirpu) but they tallied with the signature of appellant-Sukh Ram. Trial court discarded the opinion evidence of PW-20 on the ground that the executive magistrate was not the competent authority before whom the fingerprint and handwriting of the witnesses could be taken as no proceeding was pending before the executive magistrate.= During the relevant point of time i.e. 1983-1986, there was a government scheme for providing loans at the cheaper interest rates to poor persons living below the poverty line to enable them to purchase sheeps, buffalos, horses and for running small businesses and for development of land etc. Upon recommendation of the Block Development Officer (BDO), the bank disbursed these loans to the beneficiaries. Appellant-Sukh Ram was a Gram Sewak, Navgaon under Arki Sub-Division during said period, 1983 to 1986. It is the case of the prosecution that appellant-Sukh Ram, Gram Sewak, while submitting applications on behalf of the villagers for these loans, was involved in misappropriation of loan amounts by forging their signatures and thumb impressions on the applications and acknowledgement receipts. = 311-A Cr.P.C. reads as under:- “Section 311A. Power of Magistrate to order person to give specimen signatures or handwriting.-If a Magistrate of the first class is satisfied that, for the purposes of any investigation or proceeding under this Code, it is expedient to direct any person, including an accused person, to give specimen signatures or handwriting, he may make an order to that effect and in that case the person to whom the order relates shall be produced or shall attend at the time and place specified in such order and shall give his specimen signatures or handwriting: Provided that no order shall be made under this section unless the person has at some time been arrested in connection with such investigation or proceeding.” The said amendment is prospective in nature and not retrospective. Similarly, in Criminal Appeal Nos.2292-2293 of 2014, Gurditu Ram-PW-2, Sohan Lal-PW-3, Badri Ram-PW-4, Mast Ram-PW-5 deposed that their signatures were obtained on some papers by the accused-Sukh Ram on the pretext that loan would be distributed to them as well as subsidy, but they did not get the entire amount, they were promised. While Smt. Savitri Devi- PW-8 deposed that she did not sign on any of the documents as she is illiterate and Smt. Vidya Devi-PW-1 deposed that she did not apply for any loan and did not sign on any of the documents. 21. In Criminal Appeal Nos. 2290-2291 of 2014, Gandhi Ram-PW-1, Mahanto-PW-2, Shankroo Devi-PW-4, Sant Ram-PW-5, Chhote Ram-PW-6 and Paras Ram-PW-10 deposed that they neither applied for any loan nor signed on any document. Upon consideration of evidence adduced by prosecution, in our view, High Court righty reversed the judgment of acquittal. The conviction of appellant in all the criminal appeals is confirmed.- In the present case, the occurrence was of the year 1983-1986 and, therefore, the authority of the Executive Magistrate to take specimen signatures of PW-5 and PW-7 during the course of investigation cannot be disputed. In any event, even dehors opinion evidence of handwriting expert, there is clear oral evidence of PW-5 and PW-7 denying their signatures in the loan application and other documents. Affirming the evidence of PWs 5 and 7 and analysis of evidence, the High Court has rightly reversed the judgment of acquittal and found the appellant guilty of the offences under Sections 468 and 471 IPC. Learned counsel for the appellant submitted that the appellant is more than 75 years of age and is suffering from severe ailments; he has prayed for reduction of sentence of imprisonment. Considering the facts and circumstances of the case and that the innocence of the villagers has been misused to siphon the public money, we are not inclined to reduce the sentence of imprisonment of the appellant. In the result, all the appeals are dismissed.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO. 224 OF 2012

SUKH RAM                                              ..Appellant

                                   Versus

STATE OF HIMACHAL PRADESH                               ..Respondent

                                    WITH

         CRIMINAL APPEALS  NO. 2290-2291 of 2014 & 2292-2293 of 2014



                               J U D G M E N T



R. BANUMATHI, J.



            Present batch of appeals arise out of three  separate  judgments
of the High Court of Himachal Pradesh passed in Criminal Appeals No. 418  of
2007, 419 of 2007 and 420 of 2007 in and by which the  High  Court  reversed
the  acquittal  of  the  appellant  and  convicted  him  for  the   offences
punishable under Sections 468 and 471 of the Indian Penal Code  and  imposed
six months imprisonment.
2.          Common facts arising  out  of  these  criminal  appeals  are  as
follows:- During the relevant point of time i.e.  1983-1986,  there   was  a
government scheme for providing loans at the cheaper interest rates to  poor
persons living below the poverty line to enable  them  to  purchase  sheeps,
buffalos, horses and for running small businesses  and  for  development  of
land etc.  Upon recommendation of the Block Development Officer  (BDO),  the
bank disbursed these loans to the beneficiaries. Appellant-Sukh  Ram  was  a
Gram  Sewak, Navgaon under Arki Sub-Division during  said  period,  1983  to
1986.
3.          It is the case of the prosecution that appellant-Sukh Ram,  Gram
Sewak, while submitting applications on behalf of the  villagers  for  these
loans, was involved in misappropriation of loan  amounts  by  forging  their
signatures and thumb impressions on  the  applications  and  acknowledgement
receipts.  All three appeals  have  been  heard  together  as  the  offences
committed by the same accused persons appellant-Sukh Ram and others as  also
the modus operandi of committing the forgery and  falsification  of  records
being the same.  Criminal Appeal No.224 of 2012 is taken as the lead case.
4.          On the basis of the preliminary enquiry, it came to  light  that
PW-5 Nathu Ram, PW-7 Kirpu and PW-8 Garja Ram had loans  disbursed  to  them
despite  not  having  applied  for  the  loans.  Consequently,  a  case  was
registered against the appellant–Sukh Ram,  Balbir  Singh-Block  Development
Officer and Arun Kumar Sood, Branch  Manager,  UCO  Bank  Darlaghat.  During
enquiry, it further came  to  light  that  disbursement  of  loans  was  not
actually made to the beneficiaries. An FIR was registered and on  completion
of the investigation and  after  obtaining  sanction  from  the  government,
chargesheet was filed against the  appellant–Sukh  Ram  Gram  Sewak,  Balbir
Singh-Block Development Officer and Arun Kumar  Sood,  Branch  Manager,  UCO
Bank Darlaghat.  Charges were framed against  the  appellant  and  the  said
accused under Sections 409, 467, 468, 471,  120-B  and  420  IPC  and  under
Section 13(2) of the Prevention of Corruption Act.   During  the  course  of
investigation, PW-5 and PW-7 gave their specimen signatures in the  presence
of the executive magistrate and  the  same  were  sent  to  the  handwriting
expert  for  comparison  with  their  disputed  signatures   in   the   loan
application  and  other  documents.   Handwriting  expert  opined  that  the
signatures in the loan application and other documents  did  not  match  the
signatures of Nathu Ram, Kirpu and others but only matched the signature  of
appellant-Sukh Ram.
5.          To substantiate the charges, in  the  trial  court,  prosecution
examined 22 witnesses. The trial court discarded the testimony  and  opinion
of handwriting expert (Ex.PW20/C-1 to Ex.PW20/C-5) on the  ground  that  the
handwritten specimen given by PW-5 and PW-7 were taken before the  executive
magistrate who did not have  the  authority  to  enquire  into  or  try  the
offence.  Trial court came  to  this  conclusion  that  charge  against  the
accused was not proved by placing reliance on the decision of this Court  in
Sukhvinder Singh & Ors. vs. State of Punjab, (1994) 5 SCC 152.  Trial  court
held that the appellant–Sukh  Ram’s  (Gram  Sewak)  task  was  to  take  the
applications for loan as well as subsidy and accused  Balbir  Singh’s  (BDO)
task was to sanction the loan and subsidy and issue letters to the bank  and
Arun Kumar Sood’s (Branch Manager, UCO Bank) task was to  release  the  loan
and subsidy after securing the requisite documents to  that  effect.   Trial
court held that in the absence of legal evidence that appellant  and  others
have forged the loan documents, it cannot be concluded that the accused  had
entered into conspiracy of committing  forgery  and  cheating  etc.  and  on
those findings, the trial court acquitted appellant-Sukh Ram and others.
6.          Aggrieved by  the  judgment  of  acquittal,  State  of  Himachal
Pradesh preferred appeal before the High Court assailing the correctness  of
the decision of the trial court.  The High Court  differentiated  the  cases
relied upon by the trial court from the case at hand on  facts  as  also  on
law.  The High Court pointed out that even though the  executive  magistrate
before whom the specimen signatures were given did not  have  the  authority
to enquire into or try the  case;  however,  PW-5  and  PW-7  gave  specimen
signatures   voluntarily   during   the   course   of   investigation    and
differentiated the cases relied on by the trial court.   High  Court  relied
on the decision of this Court in Vijay alias Gyan Chand Jain  vs.  State  of
M.P., 1994 SCC (Crl) 1755: (1994) 6 SCC 308 to hold  that  the  exercise  of
power under    Section 73 of the Evidence Act does not apply in cases  where
the investigating officer approaches the executive magistrate  or  tehsildar
for taking specimen signatures or writings or where specimen is admitted  by
the accused or concerned persons.
7.          On the charges of criminal conspiracy, High Court  accepted  the
plea made by Balbir Singh (BDO) that he sanctioned  the  loans  because  the
applications were verified by the appellant.  High  Court  acquitted  Balbir
Singh (BDO) observing that there was lack of evidence suggesting  conspiracy
and held that no criminal conspiracy could be made out.  The  plea  of  Arun
Kumar Sood, Bank Manager, UCO Bank  Darlaghat  that  he  released  the  loan
amounts because the loans were sanctioned  by  Balbir  Singh  (BDO)  and  he
disbursed the amounts when the loanees were identified  before  him  by  the
appellant was also accepted by the High Court  and  Arun  Kumar  Sood,  Bank
Manager, UCO Bank Darlaghat was  acquitted.  The  High  Court  reversed  the
judgment of acquittal  and  found  the  appellant  guilty  of  forging  loan
applications of PW-5 and PW-7 (Ex.PW5/B and Ex.PW7/A)  and  other  documents
and convicted him for the offences punishable under  Sections  468  IPC  and
also  for  the  offence  of  using  said  forged  applications  as   genuine
punishable  under  Section  471  IPC.  On  being  convicted,  the  appellant
appeared before the High Court and he was questioned about the sentence  and
the High Court sentenced the appellant to undergo  simple  imprisonment  for
six months and to pay a fine of Rs.10,000/- for each of the offences for  he
had been convicted.   Being aggrieved, the appellant is before us.
8.          Learned counsel for the  appellant  submitted  that  High  Court
failed  to  appreciate  that  no  case  was  pending  before  the  executive
magistrate and he was not competent to take the specimen signatures  of  the
witnesses; there was no occasion for the police  to  produce  the  witnesses
before him and obtain their  signatures.   It  was  further  submitted  that
while setting aside the acquittal of  the  appellant,  High  Court  has  not
properly construed the provisions of the Evidence Act and erred  in  relying
upon the evidence of handwriting expert to convict the appellant.
9.          Per contra, learned counsel for the respondent   submitted  that
the  prosecution  has  proved  the  guilt  of  the  accused  by  relying  on
convincing evidence, oral testimony of witnesses amply corroborated  by  the
documentary evidence and also the opinion of the handwriting expert. It  was
submitted that since the trial  court  failed  to  appreciate  the  evidence
against the appellant, the trial  court  has  laid  great  emphasis  on  the
alleged lacunae in  the  investigation,  High  Court  rightly  reversed  the
judgment of acquittal and convicted the appellant and the impugned  judgment
warrants no interference.
10.         We have carefully considered the rival contentions, judgment  of
the trial court, impugned judgment of the High Court and  also  material  on
record.
11.         During the relevant time,  admittedly,  appellant-Sukh  Ram  was
posted  as  Gram  Sewak  and  he  was  to  collect  applications  from   the
prospective loanees duly  signed,  thumb  impressions  marked  by  them  and
certain columns of the application were required to be  filled  up  by  him.
After that, the loan papers were presented to BDO–Balbir Singh and BDO  used
to sanction loan and subsidy and then send a letter of sanction to the  Bank
Manager-Arun Kumar Sood, who after opening the account of loanees and  after
following the requisite formalities, used to disburse the loan  and  subsidy
to the beneficiaries.  From the  very  beginning,  the  concerned  officials
were required to scrutinize the papers i.e.  economic  viability,  technical
feasibility and antecedents of  the  beneficiaries  and  after  doing  this,
beneficiaries were asked to execute the  documents  like  application,  term
loan agreement, hypothecation agreement, proforma  bills etc.  In all  these
cases, case of the prosecution is that  neither  the  loan  amount  nor  the
subsidy was actually disbursed to the beneficiaries but was  misappropriated
by the appellant and others.
12.         To substantiate the prosecution case, PW-5 Nathu Ram, PW-6  Sant
Ram and PW-8 Garja Ram were examined who deposed that  they  did  not  apply
for any loan and nor did they put their signatures in  the  documents.  PW-5
Nathu Ram has categorically stated that he did not apply for any  loan  from
the UCO Bank Darlalghat and that application for loan  Exs.PW5/A  and  other
documents, PW5/B and PW5/C were not signed by him.  Likewise, PW-6 Sant  Ram
has also stated that he did not apply for any loan from UCO  Bank  Darlaghat
and specifically denied the execution of the loan  documents  (Exs.PW6/A  to
PW6/G).  PW-7 Kirpu has also deposed that he had  not  signed  any  document
for obtaining loan.  PW-8 Garja Ram, the  alleged  beneficiary,  has  stated
that he is an illiterate and does not sign and only thumb  marks  documents.
 PW-8 has further stated that he has never applied for loan  from  UCO  Bank
Darlaghat and never visited the bank for that purpose and has also not  made
any application for grant of loan.  The statement  of  the  above  witnesses
would clearly show that the documents were forged to avail the loan and  the
loan amount and subsidy amount were misappropriated.
13.         To corroborate the version of the witnesses that they   did  not
sign  on loan documents and receipts and to prove  that  the  signatures  on
the documents are that of the appellant-Sukh Ram and to prove the  guilt  of
the accused that he forged the documents to  misappropriate  the  government
money, prosecution has examined PW-20 Mohinder  Singh  (handwriting  expert)
who opined  that  the disputed signatures of the witnesses PW-5 (Nathu  Ram)
and PW-7 (Kirpu) in  the  loan  applications  were  not  that  of  the  said
witnesses.  During the course of investigation, specimen signatures  of  the
witnesses PW-5 (Nathu  Ram)  and  PW-7  (Kirpu)  were  obtained  before  the
executive  magistrate,  Arki  and  sent  to  the  handwriting   expert   and
fingerprint bureau.   On  comparison  of  the  specimen  signatures  of  the
witnesses with the disputed signatures and also the admitted  signatures  of
the appellant-Sukh Ram, in his report (Ex.PW20/C-1  to  Ex.PW20/C-3),  PW-20
opined that the disputed  signatures  in  the  loan  application  and  other
documents were not that of witnesses (PW-5 Nathu Ram  and  PW-7  Kirpu)  but
they tallied with the signature of appellant-Sukh Ram.
14.         Trial court discarded the  opinion  evidence  of  PW-20  on  the
ground that the executive magistrate was not the competent authority  before
whom the fingerprint and handwriting of the witnesses could be taken  as  no
proceeding was pending before the executive  magistrate.   In  this  regard,
trial court placed reliance upon Sukhvinder Singh’s case and held  that  the
opinion evidence of handwriting expert cannot be used against the accused.
15.         In Sukhvinder Singh’s case,  it  was  held  that  the  direction
given by the Tehsildar-Executive Magistrate  to  the  accused  to  give  his
specimen writing was clearly unwarranted and, therefore, the  said  specimen
writing could not be made  use  of  during  the  trial  and  the  report  of
handwriting expert was rendered of no consequence at all and  could  not  be
used against the accused to connect him with the crime.   It was  held  that
the direction to an accused to give specimen handwriting can only be  issued
by the court holding enquiry under the Criminal Procedure Code or the  Court
conducting the trial of such accused.
16.         High Court differentiated Sukhvider Singh’s case from  the  case
at hand on facts as also on law.  High Court pointed out that in the  matter
at hand, admittedly, the  authority-Executive  Magistrate  before  whom  the
specimen signatures were given did not have the authority  to  enquire  into
or try the case. However, as observed by the High Court, during  the  course
of investigation,   PW-5 and PW-7 gave the  specimen  signatures  willingly.
In Sukhvinder Singh’s case, specimen writing of accused  was  taken  as  per
the direction of the tehsildar; whereas in the present case  PW-5  and  PW-7
were produced before the Executive Magistrate by the police with  a  request
that their signatures be  taken  by  the  Executive  Magistrate.  Sukhvinder
Singh’s case is clearly distinguishable on facts  from  the  case  at  hand.
High Court further relied on another decision rendered in Vijay  alias  Gyan
Chand Jain’s case wherein in the facts and circumstances of the  said  case,
it was held that procurement of specimen  handwriting  of  accused  by  Naib
Tehsildar was not in violation of Section 73 of Evidence Act.
17.         The question  is  whether  the  Judicial  Magistrate/  Executive
Magistrate was authorized to take specimen writing  and  signatures  of  the
said accused during the  investigation  of  the  case  when  no  matter  was
pending  before  either  of  them.   Section  311-A  of  Cr.P.C.  has   been
introduced by Act No.25 of 2005 with effect from 23.06.2006 with respect  to
the  powers  of  the  Magistrate  to  order  the  person  to  give  specimen
signatures or handwriting; but no such powers were there prior to  the  year
2006.  Section 311-A Cr.P.C. has been inserted on  the  suggestions  of  the
Supreme Court in State of Uttar Pradesh v. Ram  Banu  Misra,  (1980)  2  SCC
343: AIR 1980 SC 791, that a  suitable  legislation  be  brought  along  the
lines of Section 5 of Identification of Prisoners Act, 1980, to provide  for
the investiture of Magistrates  with  powers  to  issue  directions  to  any
person  including  an  accused  person  to  give  specimen  signatures   and
handwriting but no such powers existed prior to  such  amendment.  The  said
amendment is prospective in nature and not retrospective.
18.         In State of Uttar Pradesh v. Ram Babu Misra, (1980) 2  SCC  343:
AIR 1980 SC 791, the Supreme Court dealing  with  the  scope  and  ambit  of
Section 73 of the Evidence Act held as under:
“The second paragraph of Section 73  enables  the  Court  to  give  specimen
writings ‘for the purpose of enabling the Court to  compare’  such  writings
with writings alleged to have  been  written  by  such  person.   The  clear
implication of the words ‘for the purpose of enabling the Court to  compare’
is that there is  some  proceeding  before  the  Court  in  which  or  as  a
consequence of which it might be necessary for the  Court  to  compare  such
writings.  The direction is to be given for the  purpose  of  ‘enabling  the
Court to compare’ and not for the purpose of enabling the  investigating  or
other agency ‘to compare’.  If the case is still under  investigation  there
is no present proceeding before the Court in which or as  a  consequence  of
which it might be necessary  to  compare  the  writings.   The  language  of
Section 73 does not permit a Court to give a direction  to  the  accused  to
give specimen  writings  for  anticipated  necessity  for  comparison  in  a
proceeding which may later be instituted in the Court.  Further, Section  73
of the Evidence Act makes  no  distinction  between  a  Civil  Court  and  a
Criminal Court.  Would it be open to a person to seek the assistance of  the
Civil Court for a direction to some other  person  to  give  sample  writing
under section 73 of the Evidence Act on the plea that it would help  him  to
decide whether to institute a civil suit in  which  the  question  would  be
whether certain alleged writings are those  of  the  other  person  or  not?
Obviously  not.   If  not,  why  should  not  make  any  difference  if  the
investigating agency seeks the assistance of the court under Section  73  of
the Evidence Act on the plea that a case  might  be  instituted  before  the
Court where it would be necessary to compare the writings?”

19.         After referring to Section 5 of the Identification of  Prisoners
Act, 1980 in Ram Babu Misra’s case, this Court  suggested  that  a  suitable
legislation  be  made  along  its  lines  to  provide  for  investiture   of
Magistrates with powers to issue  directions  to  any  person  including  an
accused person to give specimen signatures and handwriting.  Accordingly,  a
new Section 311-A was inserted in  the  Criminal  Procedure  Code.   Section
311-A Cr.P.C. reads as under:-
“Section 311A.  Power  of  Magistrate  to  order  person  to  give  specimen
signatures or handwriting.-If a Magistrate of the first class  is  satisfied
that, for the purposes of any investigation or proceeding under  this  Code,
it is expedient to direct any person, including an accused person,  to  give
specimen signatures or handwriting, he may make an order to that effect  and
in that case the person to whom the  order  relates  shall  be  produced  or
shall attend at the time and place specified in such order  and  shall  give
his specimen signatures or handwriting:
Provided that no order shall be made under this section  unless  the  person
has at some time been arrested in  connection  with  such  investigation  or
proceeding.”

The said amendment is prospective in nature and not retrospective.
20.         Similarly, in Criminal Appeal  Nos.2292-2293  of  2014,  Gurditu
Ram-PW-2, Sohan Lal-PW-3, Badri Ram-PW-4, Mast Ram-PW-5 deposed  that  their
signatures were obtained on some papers  by  the  accused-Sukh  Ram  on  the
pretext that loan would be distributed to them as well as subsidy, but  they
did not get the entire amount, they were promised. While Smt. Savitri  Devi-
PW-8 deposed that she did not sign  on  any  of  the  documents  as  she  is
illiterate and Smt. Vidya Devi-PW-1 deposed that she did not apply  for  any
loan and did not sign on any of the documents.
21.         In Criminal Appeal Nos.  2290-2291  of  2014,  Gandhi  Ram-PW-1,
Mahanto-PW-2, Shankroo Devi-PW-4, Sant Ram-PW-5, Chhote Ram-PW-6  and  Paras
Ram-PW-10 deposed that they neither applied for any loan nor signed  on  any
document. Upon consideration of evidence  adduced  by  prosecution,  in  our
view, High Court righty reversed the judgment of acquittal.  The  conviction
of appellant in all the criminal appeals is confirmed.
22.         In the present case, the occurrence was of  the  year  1983-1986
and, therefore, the authority of the Executive Magistrate to  take  specimen
signatures of PW-5 and PW-7 during the course  of  investigation  cannot  be
disputed.  In  any  event,  even  dehors  opinion  evidence  of  handwriting
expert, there is  clear  oral  evidence  of  PW-5  and  PW-7  denying  their
signatures in the  loan  application  and  other  documents.  Affirming  the
evidence of PWs 5 and 7  and  analysis  of  evidence,  the  High  Court  has
rightly reversed the judgment of acquittal and found  the  appellant  guilty
of the offences under Sections 468 and 471 IPC.
23.         Learned counsel for the appellant submitted that  the  appellant
is more than 75 years of age and is suffering from severe ailments;  he  has
prayed for reduction of sentence of  imprisonment.   Considering  the  facts
and circumstances of the case and that the innocence of  the  villagers  has
been misused to siphon the public money, we are not inclined to  reduce  the
sentence of imprisonment of the appellant.
24.         In the result, all the appeals are dismissed.  As   directed  by
the High Court, the sentence of imprisonment imposed on the appellant  shall
run concurrently.  The appellant is on bail and his bail bonds  shall  stand
cancelled. The appellant  shall  be  taken  to  custody  to  serve  out  the
remaining sentence.

                                                              ….……………………..J.
           (V.GOPALA GOWDA)


                                                              .………………………..J.
           (R. BANUMATHI)
New Delhi;
July 25, 2016

“Power to grant exemption from duty. = 1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. 2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable.” Section 25 of the Act delegates power to the Central Government i.e. the executive branch to grant exemption generally from duty whenever it finds that it is necessary to do so in the larger public interest either absolutely or subject to such conditions as may be specified in the notification or by a special order in each case under exceptional circumstances. As per Section 159 of the Act, any notification issued under Section 25 shall be placed before the Parliament and the Parliament may amend or reject the same. This clearly demonstrates that the ultimate law making power is vested with the Legislature. Hence, the allegation of the appellant that the notifications are issued basing on the whims and fancies of the 2nd respondent is misconceived. Whereas, notifications are issued generally in the larger public interest, the Legislature has given the power to exempt duty to the 2nd respondent subject to the amending power.-According to the appellant, the Central Government has issued notifications under Section 25(1) and he is also entitled to such a notification in respect of the commodities falling under the category 2208.10.When the appellant alleges discriminatory action on the part of the respondents, he has to establish that there is no rational basis for making classification between the goods which are notified and the goods of the appellant which are not notified. It is also a firmly established principle that the legislature understands and appreciates the needs of its people. A Taxing Statute can be held to contravene Article 14 of the Constitution if it purports to impose certain duty on the same class of people differently and leads to obvious inequality. Such a material is not placed before us to come to a just conclusion that the action of the respondents is discriminative. Hence, the same is held against the appellant. As far as the interest aspect is concerned, when the appellant is not entitled for the relief, there is no need for us to express any opinion on the interest aspect.

|REPORTABLE     |

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL Nos.4676-4677 OF 2013

AMIN MERCHANT                           ….  APPELLANT
VERSUS
CHAIRMAN, CENTRAL BOARD OF
EXCISE & REVENUE & ORS.                 …. RESONDENTS

                                  JUDGMENT
N.V. RAMANA, J.

1.    These appeals, by  special  leave,  have  been  filed  against  the
impugned judgment and order dated 02.09.2011 in Writ Petition No.1761  of
2009 and order dated 24.11.2011 in Review Petition No.24 of 2011 in  Writ
Petition No.1761 of 2009 respectively, of the High Court of Judicature at
Bombay, by which the High Court has dismissed the Writ Petition filed  by
the appellant herein and also dismissed the Review  Petition  by  holding
that no error apparent on record has been made out.
2.    The facts  leading  to  these  appeals,  in  brief,  are  that  the
appellant imported eight consignments of goods falling under Tariff  Sub-
Heading 2208.10  of  the  Customs  Tariff,  namely,  “Compound  alcoholic
preparations of a kind used for the manufacture of beverages” during  the
financial years 1993-94 and 1994-95.  The  customs  authorities  assessed
the goods imported provisionally and subjected them to a prescribed  rate
of duty of Rs.300/- per liter or 400% whichever is  higher  specified  in
respect of Sub-Heading 2208.10 of the Customs Tariff for 1993-94 and 1994-
95.   The  appellant  claims  to  have  deposited  the  amount  of   duty
provisionally assessed on the assessable  value  declared  in  the  eight
bills of entry.  According to the appellant, he  cleared  the  goods  for
home consumption during financial years 1993-94 and 1994-95.  Between the
years 1994 and 2001 the appellant addressed several communications, inter
alia, to the Central Board of  Excise  and  Customs  and  to  the  Tariff
Research Unit (TRU) of the Union Ministry of Finance.  The  grievance  of
the appellant is that the  rate  which  has  been  prescribed  for  goods
falling  under  Tariff  Sub-Heading  2208.10  is  higher  than  that  was
authorized in the Budget Proposals during  financial  years  1993-94  and
1994-95.   The appellant took recourse to the provisions of the Right  to
Information Act  in  order  to  procure  relevant  information  from  the
concerned authorities.  According to the appellant, the authorities  have
not furnished the relevant information.
3.    Not satisfied with the attitude of the authorities,  the  appellant
preferred a Writ Petition before the High  Court  seeking  the  following
reliefs:   (a)  a  writ  of  Mandamus  directing  the  first  and  second
respondents herein to issue a notification u/s.25(1) of the Customs  Act,
1962 (for short ‘the Act’) in order to exempt goods falling under  Tariff
Sub-Heading 2208.10 so as to give effect to the Budget proposal announced
by the Finance Minister (FM) in Parliament for  financial  years  l993-94
and 1994-95;  (b)  a direction to the Chief Commissioner  of  Customs  to
finalize assessment of the eight bills of entry after a  notification  is
issued by the first and second respondents u/s.25(1) of the Act;   (c)  a
writ of Mandamus directing the second respondent to issue a  notification
u/s.25(2) of the Act for granting exemption from customs duty  for  goods
falling under Tariff Sub-Heading 2208.10 for financial years 1993-94  and
1994-95; (d) an order for refund after assessments are finalized and  (e)
an order for the payment of interest at the  rate  of  12%  p.a.  on  the
refund that is ordered.
4.    The High Court has dismissed the  Writ  Petition  by  the  impugned
judgment and order dated 2.9.2011.  Being dissatisfied with the dismissal
of his writ petition, the appellant preferred a  Review  Petition,  which
was also dismissed by the High Court by the impugned judgment  and  order
dated 24.11.2011.
5.    Heard the  appellant,  appearing  in  person,  and  learned  Senior
Counsel for the respondents.
6.    The appellant, appearing in person,  vehemently  submits  that  the
budget proposals for 1993-94  stipulated,  inter  alia,  a  reduction  in
effective rate of import duty on items which had then attracted a rate of
duty higher than 85%, to 85% advalorem, except on dried grapes,  almonds,
alcoholic beverages, ball and roller bearings and passenger baggage;  the
Budget proposals  for  1994-95  similarly  contemplated  a  reduction  in
effective rates of customs duty on items which  until  then  attracted  a
duty higher than 65%, to 65% except, inter alia, on alcoholic  beverages.
‘CAP of a kind used in the manufacture of beverages’ falling  under  sub-
heading 2208.10 of the Act are not covered by the said exceptions  ‘dried
grapes, almonds,  alcoholic  beverages,  ball  and  roller  bearings  and
passenger baggage’ as  mentioned  in  the  Budge  proposal  appearing  at
Sl.No.B 1.  Hence the  import  duty  on  ‘CAP  of  a  kind  used  in  the
manufacture of beverages’ falling under sub-heading 2208.10  should  have
been read as “85%” for the financial year 1993-1994 in keeping  with  the
Budget Proposal at  Sl.No.B1  duly  passed  by  the  Parliament  for  the
financial year 1993-94 so also for the financial year 1994-95, it  should
have been “65%”.
7.    The appellant would  further  submit  that  all  the  notifications
contained in the Explanatory Memorandum 1993-94 and 1994-95 were to  give
effect to  the  Budget  Proposals  duly  passed  and  legislated  by  the
Parliament and rectify the erroneous tariff rates prescribed by  the  TRU
department in the Customs Tariff Act, Finance Bill and  Finance  Act  for
1993-94 and  1994-95;  Budget  proposals  announced  by  the  FM  in  the
Parliament are duly passed and/or approved by the Parliament, no  person,
executive, bureaucrat or any authority or Court of Law has the  authority
and/or power to alter or amend the same.  If the executives  are  allowed
to prescribe any tariff rates  contrary  to  the  Budget  Proposals  duly
authorized by the Parliament, then the Budget Proposals  duly  passed  by
the Parliament will have no meaning and will  be  rendered  nugatory  and
thus opening the flood gates for ‘corrupt practice’.
8.    He also submits that the goods falling under sub-heading 2208.10 of
the Customs Tariff  Act  are  not  ‘alcoholic  beverages’  but  ‘Compound
alcoholic preparations of a kind used for the manufacture  of  beverages’
falling under sub-heading 2208.10 in the Customs Tariff Act  1993-94  and
1994-95, not being ‘alcoholic beverages’ and not  being  covered  by  the
exceptions mentioned in the said proposal at Sl.No. B1, the rate of  duty
duly passed and legislated by the Parliament should have been  prescribed
as 85% for the year 1993-94  and  as  65%  for  the  year  1994-95.   The
statutory term ‘Compound alcoholic preparations of a kind  used  for  the
manufacture of  beverages’  clearly  explains  that  it  covers  compound
alcoholic preparations for the manufacture of beverages and that it is  a
product that precedes the consumable ‘alcoholic beverage’  and  hence  it
cannot, by any stretch of imagination, be equated to  and  or  termed  as
‘alcoholic beverages’ in itself.  If “Compound alcoholic preparations  of
a kind used for the manufacture of beverages’ are sought to  be  included
in the term ‘spirits, liquors and  other  spirituous  beverages’  and  or
sought to be treated as ‘Alcoholic Beverages’  then  the  statutory  term
‘Compound alcoholic preparations of a kind used for  the  manufacture  of
beverages’ distinctly falling under sub-heading 2208.10 will be redundant
and such a perverse interpretation is not permissible as  it  will  alter
the statutory heading 22.08 and sub-heading 2208.10 in the Customs Tariff
Act,  1975.    He  would  further  submit  that  Harmonized   System   of
Nomenclature (HSN), an International Regulation   evolved in 1986 by  the
Customs Co-operation Council, Brussels, which is adopted by the Govt.  of
India, clearly recognizes that ‘CAP of a kind used in the manufacture  of
beverages’ are distinct and different products from ‘alcoholic  beverage’
which are  intended  for  immediate  consumption  and  in  the  said  HSN
Explanatory Notes dealing with sub-heading 2208 it  is  expressly  stated
that “these preparations are not intended for immediate  consumption  and
thus can be distinguished from the liquors and other spirituous beverages
of this heading”.
9.    In this connection, he places reliance on a Judgment of the  Bombay
High Court in Bussa Overseas and Properties  (Pvt.)  Ltd.  Vs.  Union  of
India, reported in 1991 (53) ELT  65  (Bom.),  wherein  the  Bombay  High
Court, while dealing with classification  has  held  that  goods  falling
under sub-heading 2208.10, namely, ‘CAP of a kind used in the manufacture
of beverages’ are not  consumable  as  such,  have  to  be  sold  to  the
distilleries where they undergo  a  process  and  cannot  be  treated  as
Whisky, Gin or Brandy as known in the trade.  Against the said  decision,
Union of India has preferred S.L.P.(C) Nos.13194-210/1991 in  this  Court
wherein this  Court  has  dismissed  the  aforesaid  SLPs  upholding  the
decision of the Bombay High Court.
10.   He also places reliance on a judgment of the High Court of Delhi in
Seagram Manufacturing  Ltd.  Vs.  Commissioner  of  Customs,  New  Delhi,
reported in 2003 (154) ELT 610 (Tri.Del.),  which  is  affirmed  by  this
Court reported  in  2004  (163)  ELT  A  205  (SC)  wherein  this  Court,
confirming the views of the Tribunal regarding classification, held  that
‘goods’ falling under sub-heading 2208.10 are not intended for  immediate
consumption and are not ‘alcoholic beverages and are  classifiable  under
sub-heading 2208.10 of Customs Tariff’.
11.   He  would  further  submit  that  the  TRU  department  has  issued
notifications for all other erroneous tariff rates prescribed by them  in
the Customs Tariff Act, Finance Bill and Finance Act 1993-94 and  1994-95
to give effect to the Budget proposals duly passed and legislated by  the
Parliament and the respondents cannot discriminate in  the  case  of  the
appellant and refuse to issue notifications.
12.   He further submits that  he  is  seeking  a  suitable  notification
prescribing Customs Tariff of 85% and 65% on  goods  falling  under  sub-
heading 2208.10 to give effect to the budget proposals at Sl.No.B 1  duly
passed and legislated by the Parliament for the years 1993-94 and 1994-95
since collection of tax without authority  of  law  is  in  violation  of
Article 265 of the Constitution and violation of the appellant’s right to
property under Article 300 A of the Constitution and return of the excess
amount of Rs.5,62,46,722/- (Rupees Five core sixty two  lakhs  forty  six
thousand seven hundred and twenty two only) collected  from  him  at  the
time of provisional assessment for imports made during the years  1993-94
and 1994-95 with simple interest @ 12% p.a.  On the point of interest, he
would submit that the respondents are  liable  to  pay  interest  on  the
excess duty unlawfully collected from him since 1993-94 and  1994-95  and
having retained the same since the last 20 years.  In this connection, he
places reliance on Sandvik Asia Ltd.  Vs.  Commissioner  of  Income  Tax,
Pune, reported in [(2006) 150 TAXMAN, 591 (SC)].
13.   He would  further  submit  that  the  Courts  can,  in  exceptional
circumstances like the present one, compel officers of Respondent No.2 to
issue appropriate notification u/s.25(2) of the  Customs  Act,  1962,  in
order to give effect to the Budget Proposals so as to levy  duty  on  the
appellant’s imports only at 85% for the F.Y. 199-94 and 65% for the  F.Y.
1994-95.  In this connection, he places reliance on a  judgment  of  this
Court in Choksi Tube Co. Vs. Union of India reported in 1998(97) ELT  404
SC.
14.    He  would  further  contend  that  the  respondents/revenue   have
illegally collected import tax/import duty without any authority  of  law
and  deprived  the  appellant  of  profits  of   the   said   amount   of
Rs.5,62,46,726/-  since  1993-94  and  1994-95   and   thereby   put   an
unreasonable  restriction  on  the  appellant’s  fundamental   right   as
guaranteed by Article 19(1)(g) of the Constitution, to carry on his trade
and business since 1993-94 and 1994-95.  In support of  this  contention,
he places reliance on a Judgment of this Court in Mohammed Yasin Vs. Town
Area Committee, Jabalpur & Anr.  reported in AIR 1952 SC 115.
15.   Per contra, learned Senior Counsel  for  respondents  would  submit
that the speech of the Finance Minister while  presenting  the  Budgetary
Proposals only highlights the more important  proposals  of  the  Budget;
Budgetary changes are, in fact, enacted by the Parliament as contained in
the Finance  Bill  or  ratified  by  Parliament  or  implemented  through
notifications.  The legal force for charging a particular rate of customs
duty on import of goods, is  derived  from  the  First  Schedule  of  the
Customs Tariff Act, 1975 read with notifications issued u/s.25(1) of  the
Act.  If any changes in the rates were intended by  Parliament  it  would
have been reflected in the respective Finance Bills.
16.   He further submits that there was no error or  discrepancy  between
the budget proposals announced by the Finance Minister  and  the  Finance
Bill.  According to him,  the  High  Court  has  rightly  held  that  the
appellant did not dispute the fact that the goods imported  by  him  fell
within Tariff Heading 2208.10 and the position under the Finance  Act  of
1993 was that the rate of duty prescribed for Tariff sub-heading  2208.10
was Rs.300/- per liter or 400% whichever is higher  and  the  High  Court
thus rightly held that budget proposals and the  speech  of  the  Finance
Minister in Parliament may or may not accept the proposal as held in B.K.
Industries V. Union of India reported in (1993) 65 ELT 465 (SC) and  once
Parliament has duly legislated, and a  rate  of  duty  is  prescribed  in
relation to a particular tariff heading that constitutes the authorities’
expression of the legislative will  of  Parliament;  the  speech  of  the
Finance Minister  and  the  financial/budget  proposals  duly  passed  by
Parliament are two separate and distinct documents; the law as enacted is
what is contained in the Finance Act after it is legislated upon  by  the
Parliament.   Budgetary   proposals   constitute   legislative   material
antecedent to the enactment of law.  The rates of tax are those which are
prescribed by legislation, once it is enacted by Parliament.  It  is  the
law as enacted, which gives expression to legislative will and it is  the
law as enacted which prescribes the rate of tax which Parliament has duly
imposed.  Consequently, as a matter  of  first  principle,  it  would  be
impermissible for the Court to undertake the exercise of entering upon  a
scrutiny of the correctness of the collective expression  of  legislative
will which  finds  expression  in  the  legislation  as  adopted  by  the
Parliament.
17.   In his submission, the Court cannot undertake a scrutiny of whether
there was an error on the  part  of  the  Parliament  in  legislating  to
provide a particular rate of duty.  The power  to  issue  a  notification
u/s. 25(1) of the Act has been  conferred  upon  the  Central  Government
where it is satisfied that it is necessary in the public interest  so  to
do.  Under sub-section (2) of Section 25,  the  Central  Government  may,
where it is satisfied that it is necessary in the public interest  so  to
do, by special order in each case, exempt from the payment of duty, under
circumstances of an exceptional nature to be stated in  such  order,  any
goods on which duty is leviable and this Court has observed in  the  case
of Union of India Vs. Jalyan Udyog reported in [1993(68) ELT 9 (SC)] that
“the Parliament cannot constantly monitor the needs of and  the  emerging
trends in the economy and is in no position to engage itself  in  day-to-
day regulation and adjustment of import-export trade.   Accordingly,  the
power is conferred upon the Central Government to provide  for  exemption
from duty  of  goods,  either  wholly  or  partly  and  with  or  without
conditions, as may be called for in public interest.  We see  no  warrant
for reading any limitation into this power.”
18.   According to him, the Government of India i.e.  the  TRU  is  fully
empowered to decide the quantum of levy of duty on a particular commodity
and to define it.  Therefore, no wrong was committed by the TRU  when  it
held that the commodity imported by the appellant did not enjoy the  peak
duty structure of 70% but fell under the exceptions and  replied  to  the
appellant accordingly.  The Court, therefore, would not be  justified  in
directing the Central Government to issue a notification in this case.
19.   He would further contend that the goods imported by  the  appellant
were cleared provisionally on payment of duty prescribed in  the  Customs
Tariff Act, 1975; the imported compound alcoholic preparation  was  known
as “concentrated extracts”.  Compound Alcoholic Preparations are used  in
the  manufacture  of  various  beverages  and  are  not   for   immediate
consumption.  The claim of the appellant-importer that duty  should  have
been imposed at the rate of 85% for 1993-94 and 65% in  1994-95  and  the
claim that  he  had  paid  excess  duty  of  Rs.5,62,46,726/-  cannot  be
sustained since all these consignments were  assessed  provisionally  and
the goods were classified under Chapter Tariff Heading No.2208.10 of  the
First Schedule to the then Custom Tariff and accordingly, the goods  were
assessed provisionally and cleared on payment of appropriate duties.
20.   According to him, the further contention of the  appellant-importer
that exclusion in peak rate covers alcohol  beverages  but  his  imported
goods  are  “compound  alcoholic  preparation  of   a   kind   used   for
manufacturing of beverages” which is not alcohol beverage and, therefore,
not hit by the exclusion clause, cannot also be sustained.
21.   According to him, the contention of the importer  that  during  the
impugned period, the peak rate of duty was 150% as announced by the FM in
his Budget Speech also cannot be sustained because the proposed  rate  of
maximum 150% was applicable to goods other than alcoholic  beverages  and
passenger baggage.  The speech of the FM in this regard  was  very  clear
and there is no ambiguity in the speech.  Alcohol beverages and passenger
baggage have been taken out of the  cover  of  maximum  150%  rate  duty.
Hence the contention of the appellant-importer that the impugned imported
goods were covered by FM speech for 150% rate duty is  incorrect  and  in
fact this is contrary to what was contemplated in the Customs Tariff Act,
1975 and the HSN Explanatory Notes.
22.   We  have  considered  the  extensive  arguments  submitted  by  the
appellant/party-in-person and gone through the voluminous  record  placed
before us and the respective submissions of the  learned  senior  counsel
for respondents.
23.   Before adverting to the various arguments advanced  by  both  sides
and the findings recorded by the Court below, we deem it  appropriate  to
extract the relevant Tariff Entry 2208.10 under the Customs Tariff  1993-
94 and 1994-95, which reads:
|Heading |Sub-       |Description of       |Rate of duty     |
|No.     |heading    |article              |Stand-           |
|        |No.        |                     |Preferential     |
|        |           |                     |ard       areas  |
|22.08   |2208.10    |Compound alcoholic   |Rs.300 per litre |
|        |           |preparations of a    |or 400% whichever|
|        |           |kind used for the    |is higher….      |
|        |           |manufacture of       |                 |
|        |           |beverages.           |                 |

24.   Though it was already discussed in the preceding  paragraphs  about
the reliefs sought by the appellant before the High  Court,  we  deem  it
appropriate to extract the same hereunder:
      “(1)  a writ of Mandamus directing the first and second respondents
to issue a notification under Section 25(1) of the Customs Act, 1962,  in
order to exempt goods falling under Tariff Heading 2208.10 so as to  give
effect to the budget  proposal  announced  by  the  Finance  Minister  in
Parliament for financial years l993-94 and 1994-95;  (2)  a direction  to
the Chief Commissioner of Customs to finalize  assessment  of  the  eight
bills of entry after a notification is issued by  the  first  and  second
respondents under Section 25(1) of the Customs Act, 1962;  (3) a writ  of
Mandamus directing the second respondent to issue  a  notification  under
Section 25(2) of the Customs  Act,  1962,  for  granting  exemption  from
customs duty for goods falling under Tariff Heading 2208.10 for financial
years 1993-94 and 1994-95; (4) an order to refund after  assessments  are
finalized and (5) an order for the payment of interest at the rate of 12%
p.a. on the refund that is ordered.”
25.   The High Court of Bombay, after giving  a  thorough  consideration,
dismissed the writ petition on the ground that once a  particular  Tariff
Heading is prescribed, that constitutes the authoritative  expression  of
the legislative will of Parliament and the High Court cannot exercise its
power of judicial review and go beyond the law enacted by the  Parliament
and it is not permissible for  the  Court  to  undertake  a  scrutiny  of
whether there was an error on the part of the Parliament in legislating a
particular rate of duty.   Further, the High Court observed that there is
no discriminatory conduct which would  compel  the  interference  of  the
court. The  appellant,  unsatisfied  with  the  order,  has  preferred  a
revision before the High Court which ended up in dismissal  as  no  error
apparent on record has been made out.
26.   In those circumstances, the appellant is before us by way of  these
appeals; one arising out of the original order and one against the  order
passed in review.      Before this Court, the appellant has  amended  the
reliefs  and  sought  for  the  following  reliefs:   (1)    direct   the
respondents to perform their  duty  to  issue  suitable  notification  to
rectify the erroneous rate of duty prescribed on sub-heading 2208.10  and
to implement and execute the tariff rate already legislated;  (2)  direct
the respondents to return the excess amount of Rs.5,62,46,722/- collected
without any authority of law;   (3) direct the  respondents  to  pay  12%
simple interest for having willfully and deliberately refused to  rectify
the error.
27.   The appellant has come up  before  this  Court  with  a  voluminous
record and made submissions at  length.    The  gist  of  the  first  and
foremost grievance of the appellant appears to be  that  he  was  charged
with the duty @ Rs.300/- per litre or 400% which was already paid by  him
for the goods he imported as per the provisional assessment.
28.   According to him, the Finance Minister  has  presented  the  budget
proposals  before  the  Parliament  which  were  duly  approved  by   the
Parliament. As per the approved budget proposals, the goods  imported  by
him attracts reduction in duty higher than 85% to 85% advalorem for 1993-
94 and higher than 65% to 65% ad valorem for the year 1994-95 and he does
not fall under the exception of alcoholic beverages. The  tariff  he  was
charged and the tariff rates in the finance  bill  are  contrary  to  the
approved budget proposals.
29.   The second grievance appears to be that whenever the  tariff  rates
are erroneously prescribed, the 2nd respondent  is  issuing  notification
and in fact they have issued 85 notifications for the financial year 1993-
94  and  94  notifications  for  the  financial  year  1994-95.  The  2nd
respondent is  discriminating  the  appellant  by  refusing  to  issue  a
circular in respect of his goods; as such their action is  discriminatory
and violative of Article 14 of the Constitution of India.
30.   In view of the aforesaid rival submissions, the  issues  that  fall
for consideration are:

1) Whether the budget proposals, as alleged by the  appellant,  are  duly
 passed and approved by the Parliament and whether the tariff rates fixed
 by the TRU are contrary to the legislative mandate?


2) Whether this Court can  direct  the  Central  Government  to  issue  a
 notification under Section 25(1) of the Customs Act?


3) Whether the compound alcoholic preparations of a  kind  used  for  the
 manufacturing  of  beverages  fall  under  the  category  of   alcoholic
 beverage?


4) Whether there is  any  discrimination  on  the  part  of  the  Central
 Government in issuing a notification under Section 25(1) of the  Customs
 Act in respect of  other  goods  and  contrary  to  Article  14  of  the
 Constitution of India?

31.   In Re Issue No.1:
      The whole thrust of the appellant is  that  the  proposals  of  the
Finance Minister were duly approved by the  Parliament.   No  doubt,  the
appellant has placed before this  Court  the  proposals  of  the  Finance
Minister which discloses the intention of the Government but there is  no
material placed before us to demonstrate that the  budget  proposals  are
duly accepted by the Parliament.  It is an admitted fact that pursuant to
the proposals, the Finance Act was passed by the Parliament  wherein  for
the goods specified under Tariff Sub-Heading 2208.10,  particular  tariff
was specified.  We are unable to agree with the argument advanced by  the
appellant for the reason that he is unable to make note of the difference
between a proposal moved before the Parliament and a statutory  provision
enacted by the Parliament,  because  the  process  of  Taxation  involves
various considerations and criteria.
      Every legislation is done with the object of public good as said by
Jeremy Bentham.  Taxation is an unilateral decision of the Parliament and
it is the exercise of the sovereign power.  The financial  proposals  put
forth by the Finance Minister reflects the governmental view for  raising
revenue to meet the expenditure for the financial  year  and  it  is  the
financial policy of the Central Government.  The Finance Minster’s speech
only highlights the more important proposals of the  budget.   Those  are
not the enactments by the Parliament.  The law  as  enacted  is  what  is
contained in the  Finance  Act.  After  it  is  legislated  upon  by  the
Parliament and a rate of  duty  that  is  prescribed  in  relation  to  a
particular Tariff Head that constitutes the authoritative  expression  of
the legislative will of Parliament.   Now in the  present  facts  of  the
case, as per the finance bill, the legislative will of the Parliament  is
that for the commodities falling under Tariff Head 2208.10, the tariff is
Rs.300/- per litre or 400% whichever is higher. Even  assuming  that  the
amount of tax is excessive, in the matters of taxation  laws,  the  Court
permits greater latitude to the discretion of the legislature and  it  is
not amenable to judicial review.
      In view of the foregoing discussion, we are unable to  concur  with
the submission of the appellant that the budget proposals are duly passed
and approved  by  the  Parliament  and  moreover,  if  the  appellant  is
aggrieved by the particular tariff prescribed under the Finance  Act  and
the same is contrary to the approved budget proposals, he ought  to  have
questioned the same  if  permissible.   Hence,  this  issue  is  answered
against the appellant.
32.   In Re :  Issue No.2:
      It is the case of the appellant that in respect of other categories
of the budgetary proposals, several notifications were issued by the  2nd
respondent altering the Tariff rates, but whereas in his  case,  the  2nd
respondent refused to issue such a notification and  it  is  nothing  but
mala fide and corrupt practice on the part of the respondents.  According
to him, the budget proposals passed and approved by  the  Parliament  are
paramount and the Executive or Central Government cannot prescribe Tariff
rates contrary to the budget proposals and he finds fault  with  the  way
the 2nd respondent officials are functioning.
      A thorough look at the relevant provisions reveals that the  source
of power to issue notification  by  the  Central  Government  relates  to
Section 25 of the Customs Act, 1962, which reads as under:
      “Power to grant exemption from duty.

   1) If the Central Government is satisfied that it is necessary in  the
      public interest so to do, it may, by notification in  the  Official
      Gazette, exempt generally either  absolutely  or  subject  to  such
      conditions (to be fulfilled before or after clearance)  as  may  be
      specified in the notification goods of  any  specified  description
      from the whole or any part of duty of customs leviable thereon.

   2) If the Central Government is satisfied that it is necessary in  the
      public interest so to do, it may, by special  order  in  each  case
      exempt  from  the  payment  of  duty,  under  circumstances  of  an
      exceptional nature to be stated in such order, any goods  on  which
      duty is leviable.”

      Section 25 of the Act delegates power  to  the  Central  Government
i.e. the executive branch to grant exemption generally from duty whenever
it finds that it is necessary to do so  in  the  larger  public  interest
either absolutely or subject to such conditions as may  be  specified  in
the notification or by a special order in  each  case  under  exceptional
circumstances.
      As per Section 159  of  the  Act,  any  notification  issued  under
Section 25 shall be placed before the Parliament and the  Parliament  may
amend or reject the same.  This clearly demonstrates  that  the  ultimate
law making power is vested with the Legislature. Hence, the allegation of
the appellant that the notifications are issued basing on the  whims  and
fancies of the 2nd respondent is misconceived. Whereas, notifications are
issued generally in the larger public interest, the Legislature has given
the power to exempt duty to the 2nd respondent subject  to  the  amending
power.

      In these circumstances, it is not appropriate on our part to  issue
any orders directing them to issue a notification under Section 25 (2) of
the Act except on the  grounds  of  discrimination.   In  the  matter  of
taxation,  the  Court  gives  a  greater  latitude  to  the   legislative
discretion.  Accordingly, the issue is answered.

33.    In Re : Issue No.3:

       In  regard  to  this  issue  ‘Whether   the   compound   alcoholic
preparations of a kind used for manufacturing of beverages fall under the
category of  alcoholic  beverages’,  the  appellant  has  relied  upon  a
judgment of the Bombay High Court which was confirmed by this  Court  and
the  learned  senior  counsel  for  respondents   made   several   contra
submissions relying on some judgments.   According to us, it is  not  for
us to do this exercise.  It is always open to the parties to  settle  the
dispute before the appropriate forum if they choose to do so.  The  issue
is accordingly answered.

34.   In Re : Issue No.4:

      According to the  appellant,  the  Central  Government  has  issued
notifications under Section 25(1) and he  is  also  entitled  to  such  a
notification in respect of the commodities  falling  under  the  category
2208.10.  When the appellant alleges discriminatory action on the part of
the respondents, he has to establish that there is no rational basis  for
making classification between the goods which are notified and the  goods
of the appellant which are not notified.  It is also a firmly established
principle that the legislature understands and appreciates the  needs  of
its people.  A Taxing Statute can be held to contravene Article 14 of the
Constitution if it purports to impose certain duty on the same  class  of
people differently and leads to obvious inequality.  Such a  material  is
not placed before us to come to a just conclusion that the action of  the
respondents is discriminative.  Hence,  the  same  is  held  against  the
appellant.

35.   As far as the interest aspect is concerned, when the  appellant  is
not entitled for the relief, there is no  need  for  us  to  express  any
opinion on the interest aspect.

36.   Before we conclude, we would like to record  our  appreciation  for
the strenuous efforts put forth by the appellant and the kind of  efforts
he put in to collect the data.  We feel that it is not out  of  place  to
mention that the  appellant  has  presented  the  case  like  a  seasoned
professional with utmost skill and knowledge.

37.   In view of the aforesaid  elaborate  discussion,  we  reach  to  an
irresistible conclusion that the appeals,  being  devoid  of  any  merit,
deserve to be dismissed and are dismissed accordingly.  No costs.


                                                             ……………………………….J.
                                    (MADAN B. LOKUR)

                                                            ………………………………..J.
                                   (N.V. RAMANA)
NEW DELHI,
JULY 22, 2016

“Mediker” being a drug Starch (Revive) being not a chemical, are not liable to levy of entry tax under the Madhya Pradesh Entry Tax Act, 1976, (for short “the E.T. Act”), = Revive instant starch is used while washing the clothes. In common parlance it is not regarded and treated as a chemical or a bleaching powder. If the very substance or product would have a chemical composition, then only it would make the said substance a chemical within the meaning of Entry 55. Needless to say, the purpose and use are to be taken note of. Common parlance test has to be applied. If the revenue desired to establish it as a chemical, it was obligatory on its part to adduce the evidence. As is manifest, no evidence has been brought on record by the revenue that it is a chemical. Therefore, it can safely be concluded that it is not a chemical.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 8656 OF 2015
                      (@ S.L.P. (C) No. 21106 of 2014)


State of Madhya Pradesh                         Appellant (s)

                                   VERSUS

Marico Industries Ltd                        Respondent(s)




                               J U D G M E N T

Dipak Misra, J.



      In this appeal, by special leave, the State of Madhya Pradesh and  its
functionaries have  called  in  question  the  legal  acceptability  of  the
judgment and order dated 19.08.2013 passed by the  Division  Bench  of  High
Court of Madhya Pradesh, Indore Bench in W.P. No. 1198 of 2004  whereby  the
order dated 05.01.2004 passed by  the  Additional  Commissioner,  Commercial
Tax in Review  case   No.80/03/Ind/Entry  Tax  imposing  entry  tax  on  the
products, namely, Mediker and Starch (Revive) after declining  to  entertain
the stance of the assessee that  “Mediker”  being  a  drug  Starch  (Revive)
being not a chemical, are not liable to levy of entry tax under  the  Madhya
Pradesh Entry Tax Act, 1976, (for short “the E.T. Act”), has been  dislodged
and both the products have been held not to be within  the  ambit  of  entry
tax.

2.    The facts giving rise to the present appeal are the  respondent  is  a
manufacturer of hair oil, edible oil, Mediker and Starch (Revive) and  other
products and is a registered dealer under the Madhya Pradesh Commercial  Tax
Act, 1994,  as  well  as  a  dealer  under  the  E.T.  Act.   The  Assistant
Commissioner,  Commissioner  Tax  Division  II,  Indore  vide  order   dated
28.04.2003 imposed entry tax on Mediker treating it as a  hair  shampoo  and
“Revive Instant Starch” as  a  chemical;  and  as  the  tax  was  not  paid,
interest and penalty were also levied. Being grieved by the aforesaid  order
the  respondent-company  preferred  Review  case  No.  80/2003  before   the
Additional Commissioner, Commercial Tax, Indore.  It  was  contended  before
the said authority that the entry tax imposed on the  assessee  on  Mediker,
which is meant for anti-lice treatment, was illegal  being  not  permissible
under any of the entries mentioned in Schedule II of the E.T. Act and  there
was no material on record to treat starch  as  a  chemical.    It  was  also
urged that Mediker  is a medicine and hence, it did not attract  entry  tax.
The said submissions were repelled and tax was imposed  and  on  that  basis
penalty and interest were also levied.  Aggrieved by  the  order  passed  by
the  Additional  Commissioner,  Commercial   Tax,   Indore,   the   assessee
approached the High Court in  Writ  Petition  No.  1198  of  2004   and  the
Division Bench referring to the charging Section and the  Entries,  came  to
hold that Mediker is basically a medicinal  product  and  starch  being  not
meant for sale but used in production of  other  articles,  could  not  have
been made amenable to entry tax, more so, in the absence of its mention   in
the Schedule.  It was also held that starch is not a chemical.

3.    Criticising the order passed  by  the  High  Court,  Mr.  C.D.  Singh,
learned counsel appearing for the  State  would  contend  that  Mediker,  in
common parlance, is considered as shampoo and not as a medicine  because  it
is nowhere mentioned in the label of the product that after removal  of  the
lice, it cannot be used again or cannot be used as other shampoos  for  hair
wash.  Relying on  the  decision  in  Deputy  Commissioner  v.  G.S.  Pai[1]
learned counsel for the State would contend that while interpreting  entries
in sales tax legislation, it is to be borne in mind that the words  used  in
the entries must not  be  construed  in  any  technical  sense  nor  from  a
scientific point of view. They should be understood in their  popular  sense
and in the sense which the people conversant with the  subject  matter  with
which the statute  is  dealing,  would  attribute  to  it.    For  the  said
purpose, learned counsel has  also  drawn  inspiration  from  United  Offset
Process  Pvt.  Ltd.  v.  Asst.  Collector  of  Customs,  Bombay  &   Ors[2].
Submission of Mr. Singh  is  that  just  because  the  product  contains  D-
Phenothrin EP and is  used  for  treating  lice,  it  cannot  be  termed  as
medicament in view of the principles stated in Sunny  Industries  Pvt.  Ltd.
v. Collector of Central  Excise,  Calcutta[3].   According  to  the  learned
counsel for the State, Mediker is  a  kind  of  shampoo  and  hence,  it  is
covered under Schedule II of the E.T. Act  which  incorporates  the  heading
“shampoo of all variant  and  forms”.   As  far  as  the  Revive  starch  is
concerned, it is urged by Mr. Singh that it is a chemical covered  by  Entry
55 of Schedule II and consequently it is chargeable to entry tax.

4.    Mr. Bagaria, learned senior counsel appearing  for  the  assessee,  in
his turn, would argue that Mediker is a product meant for curing  hair  lice
infection in hairs  and  the  product  is  marketed  as  “Mediker  anti-lice
treatment”.  It  is  urged  by  him  that  Mediker  anti-lice  treatment  is
manufactured after obtaining the drug licence under the Drugs and  Cosmetics
Act, 1940 (for short, “the 1940 Act”) wherein it has been  classified  as  a
drug falling under Section 3(b) of the 1940 Act.  It  is  contended  by  him
that that “Mediker anti-lice treatment”  satisfies  the  definition  of  the
drug and after due scrutiny,  the  drug  control  authorities  have  granted
licence for the said product as a  drug.   Mr.  Bagaria  would  submit  that
period of treatment is four weeks and shampooing is only a method  to  apply
the medicine.  In essence, the submission of learned senior counsel is  that
the medium cannot determine the nature of the product.  He has commended  us
to certain authorities of this Court as  well  as  CESTAT  which  have  been
approved by this Court to bolster his stand, and we shall refer to  them  at
the appropriate stage.  It is canvassed by  him  that  it  is  the  admitted
position that drugs are not covered under the E.T. Act and do not  find  any
mention either in the Schedule I or Schedule II and are not liable  to  levy
of entry tax. Incrementing  the  submission  learned  senior  counsel  would
contend that the revenue has charged entry tax under Entry  32  of  Schedule
II which really relates to different cosmetics, depilatories, etc. and  hair
shampoo is one of such items, but “Mediker anti-lice  treatment”  is  not  a
hair shampoo but is a medicine/drug.  As far as  the Revive  instant  starch
is  concerned,  learned  senior  counsel  has  propounded  that  starch   is
manufactured by using the Tapioca roots and  even  on  the  packets,  it  is
clearly mentioned Revive instant starch and, therefore,  by  no  stretch  of
imagination it can be treated as a chemical to be covered under Schedule  II
of the Act.   He has also addressed us with regard to the  burden  of  proof
which  rests  on  the  revenue  when  it  intends  to  classify  a   product
differently than that as claimed by the assessee and according  to  him,  it
has not been discharged in the case at hand.

5.    Section 3 of the E.T. Act deals with incidence  of  taxation.  Section
3(1)(a) reads as follows:-

“There shall be levied an entry tax:

on the entry in the course of business of a dealer  of  goods  specified  in
Schedule II, into each local area for consumption, use or sale therein; and



……..”


6.    In the case  at  hand,  we  are  concerned  with  certain  entries  in
Schedule II.  Entry 32 which has been sought  to  be  used  to  justify  the
imposition of entry tax on Mediker, reads as follows:-

“Scents, perfumes, hair tonics, hair cream, hair shampoo,  depilatories  and
cosmetics including face creams, snows, lipstics, rougue and nail polish”


7.    As noted earlier, submission of Mr. Singh,  learned  counsel  for  the
revenue is that the Mediker is nothing but a hair  shampoo  and,  therefore,
it squarely falls under  Entry  32.    Learned  counsel  appearing  for  the
assessee has controverted the same on many an aspect.  The  High  Court,  as
the impugned order would show, has returned certain findings  which  are  to
the effect  that  Mediker  contains  active  Permethrin  which  is  used  to
paralyse the insect lice, thereby killing it; that Mediker  is  basically  a
medicinal product, since the skin (cuticulam) of the  louse  is  similar  to
the structure of human nail it has first to  be  made  porous  so  that  the
active ingredient can penetrate and enter the louse and  paralyse  it;  that
for the purpose of treatment a wetting agent  is  needed  and  this  wetting
agent is the surface active agent used in Mediker; that  the  surface  agent
is nothing but a medium to convey the active ingredient  on  to  the  louse;
and that the period of treatment is four weeks and the product is  not  used
generally for washing the hair.

8.    We shall presently consider  the  authorities  cited  at  the  Bar  to
appreciate the actual background.   In  G.S.  Pai  (supra),  the  Court  was
considering what meaning is to be placed on  “Bullion  and  Specie”  in  the
light of the provisions of the Kerala General Sales Tax Act, 1963.  In  that
context, the Court observed that:-


“… Now there is one cardinal rule of interpretation which has always  to  be
borne in mind while interpreting entries in sales tax legislation and it  is
that the words used in the entries must be construed not  in  any  technical
sense nor from the scientific point of view  but  as  understood  in  common
parlance. We must give the words used  by  the  legislature  their  popular-
sense meaning “that sense which people conversant  with  the  subject-matter
with which  the  statute  is  dealing  would  attribute  to  it”.  The  word
“bullion” must, therefore, be interpreted  according  to  ordinary  parlance
and must be given a meaning which  people  conversant  with  this  commodity
would ascribe to it. Now it is obvious that “bullion” in its  popular  sense
cannot include ornaments or other articles of gold. “Bullion”  according  to
its plain ordinary meaning means gold or silver in  the  mass.  It  connotes
gold or silver regarded as raw material and it may be either in the form  of
raw gold or silver or ingots or bars of gold or silver. …”


      Learned counsel for the State has heavily relied on the said  passage.
 It is well settled in law that ratio of a judgment is to be appreciated  in
the factual backdrop of the case.   In  the  said  case,  as  we  find,  the
factual background was absolutely  different  and,  therefore,  we  have  no
hesitation in holding that the said authority remotely does not  assist  the
revenue for buttressing the contention that Mediker is a shampoo.

9.    In Commissioner of Central Excise, Nagpur v. Shree Baidyanath  Ayurved
Bhavan Limited[4] [Shree Baidyanath Ayurved  Bhavan  Limited-II]  the  issue
pertained to classification of “Dant Manjan Lal” (DML) manufactured  by  M/s
Baidyanath Ayurved Bhavan Limited.  The  Court  took  note  of  the  earlier
decision  in  Shree  Baidyanath  Ayurved  Bhavan  Ltd.  v.  CCE[5]    [Shree
Baidyanath Ayurved Bhavan Ltd.-I]  wherein it had been  held  that  DML  was
not known as an ayurvedic medicine and the finding of the tribunal that  DML
was toilet requisite was upheld.  During the pendency of the appeals  before
this Court, the Central Excise Tariff Act, 1985 was enacted  which  replaced
the Schedule to the Central Excise and Salt Act, 1944.   The  1985  Act,  as
the Court noticed, dealt with pharmaceutical products and there was  a  Sub-
Heading 3003.30 which provided for no excise duty leviable  on  medicaments,
including those used in ayurvedic, unani, siddha, homeopathic or  bio-chemic
system.  The Court also noticed that in 1987 the First Schedule to the  1940
Act was amended and the book Ayurveda Sara Samgraha  was  included  therein.
On 25.09.1991, the Central Board of Excise and Customs issued a circular  in
respect of DML and advised its classification as an ayurvedic medicine.  But
the said circular was withdrawn  after  the  decision  in  Shree  Baidyanath
Ayurved Bhavan Ltd.-I (supra). The  assessee  approached  the  Board  regard
being had to the amendment to decide  the  classification  of  the  product.
Thereafter the dispute arose with regard to the classification.   Mr.  Singh
has drawn our attention to paragraph 46 of the decision in Shree  Baidyanath
Ayurved Bhavan Limited-II (supra) to emphasise on the common parlance  test.
 We think it appropriate to reproduce the entire paragraph:-

“As a matter of fact, this Court has consistently  applied  common  parlance
test as one of the well-recognised tests to find  out  whether  the  product
falls under Chapter  30  or  Chapter  33.  In  a  recent  decision  in  Puma
Ayurvedic Herbal (P) Ltd. v. CCE[6] this Court observed  that  in  order  to
determine whether a product  is  a  cosmetic  or  medicament,  a  twin  test
(common parlance test being one of them) has found favour with  the  courts.
This is what this Court observed: (SCC pp. 269-70, para 2)
“2. … In order to determine whether a product is a cosmetic or a  medicament
a twin test has found favour with the courts. The test has approval of  this
Court also vide CCE v. Richardson Hindustan  Ltd.[7]  There  is  no  dispute
about this as even the Revenue accepts that the test  is  determinative  for
the issue involved. The tests are:
I. Whether the item is commonly understood as a medicament which  is  called
the common parlance test. For this test it will have to be seen  whether  in
common parlance the item is accepted as a medicament. If a product falls  in
the category of medicament it will not be an item  of  common  use.  A  user
will use it only for treating a particular ailment and  will  stop  its  use
after the ailment is  cured.  The  approach  of  the  consumer  towards  the
product is very material. One may buy any of the  ordinary  soaps  available
in the market. But if one  has  a  skin  problem,  he  may  have  to  buy  a
medicated soap. Such a soap will not be an ordinary  cosmetic.  It  will  be
medicament falling in Chapter 30 of the Tariff Act.
II. Are the ingredients used in the product mentioned in  the  authoritative
textbooks on ayurveda?”


      The two-Judge Bench agreed with  the  view  taken  in  Puma  Ayurvedic
Herbal (P) Ltd. (supra) and applied the common parlance  test  and  accepted
the submissions of the revenue.

10.   There can be no dispute over the proposition of law laid down  in  the
aforesaid authority.  The thrust of  the  matter  is  how  the  courts  have
treated a particular product for the purpose  of  classification  under  the
excise law and  what  status  is  to  be  given.   The  issue  of  anti-lice
treatment arose in Collector of Central Excise  v.  Pharmasia  (P)  Ltd.[8].
The tribunal reproduced the label appearing on every bottle of Mediker.  The
label is reproduced below:-


                                  "Mediker


                             ANTI-LICE TREATMENT


                              DIRECTION FOR USE


      Shampoo hair with one capful of Mediker, Massage scalp for  3  minutes
Rinse, Repeat.  This  usually  eliminates  Lice.  For  best  results  repeat
shampooing 2 days later.


WARNING


      The product is toxic if swallowed. Store far from  food  and  drinking
water. Keep away from children and pets. If  it  gets  into  the  eyes  wash
affected area immediately with clean water


                                 COMPOSITION


D-Phenothrin EP 0.23% W/V


Triclosan E.P. 0.05% W/V base q.s.


MEDIKER is the registered trade mark of Richardson - Vicks Inc.


Manufactured by


PROCTER & GAMBLE INDIA LIMITED BOMBAY 400011


Licenced Users of the Trademark


Contents 45ml Mfg. Lic No. 526/A/AP


Retail price not to exceed Rs. 9.60


 (Local Tax extra)


 FOR EXTERNAL USE ONLY


MADE IN INDIA


Expiry date 2 years from the date of  Mfg.  Batch  No.  8969  Date  of  Mfg.
12/88."


11.   The tribunal, as the judgment would show, analysed many an aspect  and
opined that:-

“17. Considering the arguments advanced before us, we are convinced  that  a
person infested with lice does not get relief by merely washing his  or  her
hair with water or various types of  shampoo  which  are  available  in  the
market. The life and habits of the louse  seem  to  call  for  more  drastic
steps in orders to get rid of the lice. On the label it is claimed  that  if
the hair is shampooed with Mediker and left for 3 minutes  and  the  process
is repeated,  lice  are  eliminated.  The  label  also  shows  that  Madiker
consists of D-Phenothrin and other ingredients. The penetrating power of  D-
Phenothrin whereby it paralyses the lice was established  before  us  during
the course of hearing. The label itself immediately after the  name  of  the
product (Mediker) mentions "anti-lice treatment". These show that  "Mediker"
is a special product made for the treatment of lice.  The  submissions  made
by the learned Advocate that the anti-lice treatment is  not  subsidiary  to
the cosmetic function but is in the  main  function  is  borne  out  by  the
details given in the label and the explanations placed before us.”

12.   The tribunal  posed  a  question:  Can  Mediker  cure  and  prevent  a
disease?  On the basis of material on record,  the  tribunal  came  to  hold
thus:-


“20. … Our perusal of these documents shows that the infestation of lice  on
the head causes several diseases and  a  product  which  is  to  treat  such
diseases has to be considered to be a medicament. Merck Index  of  Chemicals
and Drugs, Biological, Tenth Edition  describes  D-phenothrin,  its  various
isomers and its use as insecticides.  Extra  pharmacopea  (Martindale)  also
mentions phenothrin  as  being  used  in  drugs  as  insecticides.  In  this
connection  we  find  that   the   certificate   from   the   Drug   Control
Administration, Government of Andhra Pradesh dated  22-6-1987  is  relevant.
The following extract supports the case of the respondents :


"As D-phenothrin is used on human body for topical  use  and  has  medicinal
properties on scalp for antilice treatment  as  per  the  Notification  from
Drugs  Controller,  India  bearing  No.  15-95/80-DC,  dated   2-1-1982   D-
phenothrin is to be considered as a drug under the Drug  and  Cosmetic  Act,
1940."


21. A disease may affect the outside or inside of a  person's  body.  Causes
for diseases may vary; these can be micro-macro  organism,  insects,  worms,
bacteria, etc. Any preparation containing active ingredients to  remove  the
root causes, whether they are used  for  internal  consumption  or  external
application has to be considered as a  medicament.  Therefore,  we  conclude
that Mediker is a medicament. We further observe that the medicinal  use  of
the product is not its subsidiary function but is the only function.”



      Be it noted, the order passed by the tribunal was assailed in Civil
Appeal No. 3220 of 1990 and this Court had dismissed the Civil Appeal in
Collector of Central Excise, Hyderabad v. M/s Pharmsia Pvt. Ltd.[9]

13.   In Sujanil  Chemo  Industries  v.  Commissioner  of  C.  Ex.  &  Cus.,
Pune[10]     a three-Judge Bench of this Court approved the decision of  the
tribunal by holding thus:-

“6.  In this case it has fairly not been denied that the  only  use  of  the
product is for killing lice in human hair.  We  are  unable  to  accept  the
submission  that  killing  lice  does  not  amount  to  a   therapeutic   or
prophylactic use.  Any medicine or substance which treats disease  or  is  a
palliative or  curative  is  therapeutic.   Licel  cures  the  infection  or
infestation of lice in human hair.  It  is  thus  therapeutic.  It  is  also
prophylactic  inasmuch  as  it  prevents  disease  which  will  follow  from
infestation of lice.  Thus, this is a product which is used for  therapeutic
and prophylactic purposes. It would thus be a Medicament within the  meaning
of the term “Medicament” in  Note  2  of  Chapter  30.   It  therefore  gets
excluded from Chapter 38.

7.    This view has also been taken  by  us  in  the  case  of  ICPA  Health
Products (P) Ltd. v. Commissioner of  C.  Ex.,  Vadodara  reported  in  2004
(167) ELT 20.  We are also in agreement with the opinion  expressed  by  the
Tribunal in Pharmasia’s case (supra) wherein  in  respect  of  an  identical
product it has been set out that such product would fall  under  Chapter  30
under Tariff Heading 30.03.”


14.   In Puma Ayurvedic Herbal (P)  Ltd.  (supra)  the  distinction  between
“medicament” and “cosmetic” was highlighted in the following words:-

“It will be seen from the above definition of “cosmetic” that  the  cosmetic
products are meant to improve appearance of a person, that is, they  enhance
beauty, whereas a medicinal product or a medicament is meant to  treat  some
medical condition. It may happen that while treating  a  particular  medical
problem, after the problem is cured, the appearance of the person  concerned
may improve. What is to be seen is  the  primary  use  of  the  product.  To
illustrate,  a  particular  Ayurvedic  product  may  be  used  for  treating
baldness. Baldness is a medical problem. By use of the product if  a  person
is able to grow hair on his head, his ailment of baldness is cured  and  the
person’s appearance may improve. The product used for the purpose cannot  be
described as cosmetic simply because it has ultimately  led  to  improvement
in the appearance of the person. The primary role  of  the  product  was  to
grow hair on his head and cure his baldness.”

15.    In  Commissioner  of  Central  Excise  v.  Wockhardt  Life   Sciences
Limited[11] the Court treated the  two  products,  namely,  povidone  iodine
cleansing solution USP and wokadine  surgical  scrub  as  medicaments  after
appreciating the facts that the products are used by the  surgeons  for  the
purpose of cleaning or degerming their hands and scrubbing  the  surface  of
the skin of the patient before that portion is  operated  upon.   Thereafter
the Court observed thus:-

“The purpose is to prevent the infection or disease. Therefore, the  product
in question can be safely classified as  a  “medicament”  which  would  fall
under Chapter Sub-Heading 3003 which is  a  specific  entry  and  not  under
Chapter Sub-Heading 3402.90 which is a residuary entry.”


16.   The aforesaid analysis makes it absolutely clear  that  Mediker  which
is used for anti-lice treatment is a drug because of its  medicinal  affect.
This position has been accepted by this  Court.   Once  it  is  a  drug,  it
cannot be a shampoo.  As  a  natural  corollary,  it  will  not  invite  the
liability of levy of entry tax.

17.   The second product is Revive instant starch. The  revenue  claimed  it
to be a chemical. An endeavour has been  made  to  put  it  under  Entry  55
Schedule II. Entry 55 Schedule II reads as follows:-

      “55. All kinds of chemicals and acids, sulpher and bleaching power.”


18.   The stand of the assessee before the authorities was that it is not  a
chemical. It is  not  sold  or  used  for  that  purpose.  It  is  a  starch
manufactured by using Tapioca roots. The revenue, per  contra,  without  any
material brought on record, put it in the category of a chemical.  In  Union
of India v. Garware Nylons Ltd.[12] it has been  held  that  the  burden  of
proof is on the taxing authorities to show that the particular case or  item
in question   is  taxable  in  the  manner  claimed  by  them.   Elucidating
further, the  Court  has  held  that  there  should  be  material  to  enter
appropriate finding in that regard and the material may be  either  oral  or
documents and it is for the taxing authority to lay evidence in that  behalf
even before the first adjudicating authority. Revive instant starch is  used
while washing the clothes.  In  common  parlance  it  is  not  regarded  and
treated as a chemical or a  bleaching  powder.  If  the  very  substance  or
product would have a chemical composition, then only it would make the  said
substance a chemical within the meaning of Entry 55. Needless  to  say,  the
purpose and use are to be taken note of. Common  parlance  test  has  to  be
applied. If the revenue desired to  establish  it  as  a  chemical,  it  was
obligatory on its part to adduce the evidence. As is manifest,  no  evidence
has  been  brought  on  record  by  the  revenue  that  it  is  a  chemical.
Therefore, it can safely be concluded that it is not a chemical.

19.   In view of the aforesaid analysis, the inevitable conclusion  is  that
the appeal is devoid of any substance and  deserves  to  be  dismissed  and,
accordingly, we so direct.  However, in the facts and circumstances  of  the
case, there shall be no order as to costs.



                                        ………………………….J.
                                        (Dipak Misra)



New Delhi.                        …………………………..J.
July 22, 2016                           (Prafulla C. Pant)
-----------------------
[1]

      [2]  (1980) 1 SCC 142
[3]   [4]  (1989) Supp. 1 SCC 131
[5]   [6]  (2003) 4 SCC 280
[7]

      [8] (2009) 12 SCC 419
[9]

      [10] (1996) 9 SCC 402
[11]

      [12] (2006) 3 SCC 266
[13]

      [14] (2004) 9 SCC 156
[15]

      [16] 1990 (47) E.L.T. 658 (Tribunal)
[17]

      [18] 1996 (83) ELT A178 (SC)
[19]

      [20] 2005 (181) ELT 206 (SC)
[21]

      [22] (2012) 5 SCC 585
[23]

      [24] (1996) 10 SCC 413