Old Spice factory sealed
18 December 2000 09:25 IST Colfax Laboratories, the unit here manufacturing Old Spice and Blue Stratos after shave lotions for the Procter and Gamble, has been sealed by the state authorities over non-payment of excise duty in spite of court orders.
It is a 15-year old issue of duty evasion by the local manufacturers, claiming that the after shave lotion is a medicine and not a toilet preparation, though both the products were licences as cosmetics. The evasion during 1985 to '91 had finally come to light, involving amount of around Rs 18.5 crore.
The company had then approached the court against the government decision classifying it as cosmetics, while the amount got swollen to almost Rs 29 crore by 1998. The local bench of Bombay high court had then passed an interim order for Rs 14 crore, half of which was to be deposited in the court along with bank guarantee for the balance.
As the company still failed to deposit the amount till last month while the court also dismissed its further plea to reconsider the decision, the state authorities moved into action last week, attaching the machinery worth Rs one crore, besides also not releasing goods worth Rs 40 lakh.
While the whole scandalous act of reclassification had taken place during the Congress regime then headed by Pratapsing Rane, it came to light in 1991 only after Rane's 10-year long tenure came to an end with the defection series beginning in the state.
While Rane is now the speaker and sympathetic to the newly formed BJP government, the first action of chief minister Manohar Parrikar was to suspend excise commissioner N Suryanarayan, for siding the Colfax in contravention of the court decision.
"The company officials are now negotiating with the government over the mode of payment", says P S Reddy, the new excise commissioner. On the condition of making full payment of value of the goods as well as the duty, the goods has however been released.
While the chief minister is planning to appoint a panel of four financial experts to work out the recovery methods, he is also considering the company's proposal to pay the arrears in monthly instalments, beginning with Rs one crore, including total value of finished goods towards adjustment of the arrears.
While the Colfax Laboratories manufactures after shave lotion worth Rs 40 lakh every month, the government is presently insisting that the company should also pay Rs 60 lakh in cash along with it, besides the regular excise duty over it.
It was a major case of evasion since the difference in excise duty between the medicinal preparation and cosmetics is enormous. While the Colfax was paying only Rs 10 per bulk litre on these products once they were reclassified as medicinal preparations, toilet preparations are charged 100 per cent advalorem duty.
