Law: Central Excise and Salt Act, (I of 1944)

Section: 3

[CENTRAL EXCISE ACT, 1944 (I OF 1944)]....Section 3---Pigments are not goods of daily use but industrial raw materials levy of 200% excise duty due to absence of retail price would have been inconsistent with the spirit and philosophy of the introduced retail price concept. Lead oxide had not reached a stage of manufacture as could categorise it as pigment in which state alone it could become liable to excise duty, therefore, Lead oxide and Zinc oxide were not liable to excise duty as being chemicals.-In view of chemical test findings as well as usages we have come to the conclusion that lead oxide in this case had not reached such stage of manufacture through a chemical process of classification at a temperature of over 350C based on which it could be categorised as pigment. Hence it fell outside the preview of item No. 04.03 of the Central Excise and Salt Act 1st Schedule and thus was not liable to Central Excise duty sought to be imposed as a result of a ruling from C.B.R. In fact, Central Board of Revenue should have resisted the temptation of issuing a ruling at the point of time when it was issued and that too in a vaccum. Classification of goods and in particular that of chemicals, their derivatives or preparations can only be given on the basis of very clear determination of chemical attributes which is possible only through chemical test and not on the basis of authority or wisdom. After having conclusively settled the foremost question in this case by holding that lead oxide seized in this case had not reached a stage of manufacture as could categorise it as pigment in which state alone it could become liable to excise duty. We have comprehensively dealt with all the crucial questions involved in this case which has led us to conclude that the disputed products i.e. lead oxide and alongwith it zinc oxide which the appellant were producing were not liable to excise duty as being chemicals when this case was made against them. In the absence of printing of retail price on commodities of daily use, 200% duty is a punitive duty, the philosphy behind this concept is to ensure that the will of legislature was not flouted in respect of goods of everyday use…

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