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Goa rules after-shave is toilet stuff, asks Colfax to pay Rs 400 million as excise duty

Sandesh Prabhudesai in Panaji

Is the after-shave lotion a cosmetic or a medicine? The 13-year-old long controversy in Goa seems to have ended with the state reversing its own decision and classifying it, like other states, as a toilet preparation.

This will mean that Colfax Laboratories, makers of Old Spice and Blue Stratos after-shave lotions, will have to pay about Rs 400 million as the excise duty. The influential industrial house is believed to have earlier succeeded in getting the duty waived.

Acting on the high court order to take a final decision after proper hearings, state Excise Commissioner R I Jaiprakash has directed the company to pay Rs 185 million towards the arrears within 30 days for the period from 1985 to 1991. The rest of the amount would be calculated later.

The difference in excise duty on medicinal preparations and cosmetics is enormous. When the product was classified as medicinal preparations, Colfax paid Rs 10 per bulk litre. But toilet preparations invite 100 per cent ad valorem duty in Goa.

Following a formal hearing on the matter, Jaiprakash also rejected the company’s argument that benzyl alcohol is used in the after-shave lotion because of its mild anaesthetic and antiseptic properties while propylene glycol is used in preparing a moisturiser.

''The after-shave lotion could not classified as medicinal preparation merely because its individual component has medicinal properties as claimed by the Colfax Laboratories,'' the order states.

The toiletry-to-medicine reclassification was made during Pratapsing Rane’s second-time Congress regime in March 1985. But it came to light only in 1991, well after his government was toppled by his own partymen. The excise commissioner’s order to pay the arrears was then challenged by the company in the high court.

Although Jaiprakash specifically mentions that both the brands were licenced as cosmetics, the company is likely to once again approach the court, challenging the state government order.