(a) Hair lotions, creams and pomades

(b) Perfumed hair oils

(c) Shampoos whether or not containing soap or detergent

(iii) Shaving creams, whether or not containing soap or detergents.

Explanation : 'Alcohol', 'Opium', 'Indian Hemp', 'Narcotic Drugs' and 'Narcotics' have the meanings respectively assigned to them in Section 2 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955."

2. In the Finance Bill 1985 (which later became Finance Act 1985) certain changes were effected in Tariff Item 14F and after the amendment the item read as follows :

"14F. Cosmetics and Toilet Preparations Not containing Alcohol or Opium, Indian Hemp or Other Narcotic Drugs or Narcotics, Namely

One hundred and five per cent ad-valorem.

(i) Preparations for the care of the skin, beauty or makeup, preparations and manicure or pedicure preparations, such as : beauty creams, vanishing creams, cold creams makeup creams, cleansing creams, skin foods and skin tonics, face powders, baby powders, toilet powders, talcum powders and grease paints, lipsticks, eye-shadow and eyebrow pencils, nail polishes and varnishes, cuticle removers and other preparations for use in manicure or chiropody, sub-burn preventive preparations and sub-tan preparations, barrier creams to give protection against skin irritants, personal (body) deodorants, depilatories.

(ii) Preparations for the care of the hair, such as: brilliantines, perfumed hair oils, hair lotions, pomades and creams, hair dyes, shampoos whether or not containing soap or organic surface active agents.

(iii) Shaving creams, whether or not containing soap or organic surface active agents.

Explanation I:...

Explanation II: This item includes cosmetics and toilet preparations whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value.

Explanation III:..."

The Central Excise Department felt that after the inclusion of Explanation II to Item 14F the appellants' products become classifiable under 14F. A show cause notice was, therefore, issued to the appellants proposing the reclassification of the goods under 14F(1). The notice was resisted by the appellants but after due process the Assistant Collector passed an order holding that the product was classifiable as cosmetics and toilet preparation for the care of skin and not as an item of medicine falling under Tariff Item 14E.

3. An appeal to the Collector of Central Excise (Appeals) was rejected. The Collector (Appeals) recorded, inter alia, that all products manufactured under Drug Licence cannot be medicines/drugs. This observation he made while disposing of a plea of the appellants that a reference should have been made to the Drug Controller. Hence the present appeal.

4. Shri Rathindra Nath Das, the learned Senior Advocate of the appellants recalled all the facts of the matter and advanced the following arguments in support of his appeal :

I. The product is primarily a drug (P P Medicines defined in explanation I to 14E CET). This is because :