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A lousy case

THE New Delhi CEGAT got busy with lice in the Sujanil Chemo Industries case concerning an excise demand. The dispute was about the classification of the company's product `Licel' _ whether as insecticide or medicament.

Licel was meant for killing head louse ``on the heads of human beings, argued the company'', and hence classifiable as insecticides. The Assistant Collector of CE, however, was of the view that infestation of lice on one's head is a disease called pedicu losis and as such the product Licel had therapeutic value.

The company's counsel, Mr. L. P. Asthana, contended that it was not correct to view lice infestation as a disease. He explained that lice are small wingless parasites which infest humans and are of three types _ head, body and crab. Unlike body lice, the head lice do not transmit diseases but only cause irritation and annoyance. Therefore, he argued, a substance that merely killed lice cannot be considered a medicament.

The Tribunal spent time to refer to the following: `Merck Manual of Diagnosis and Therapy', `Physicians Desk Reference', `Handbook of Non-prescription Drugs', `Andrew's Disease of the Skin' and also a research paper on lice published through WHO. The con clusion was that infestation with lice is a disease, and a lice killer, a medicament.

Quite a lousy case, you could say, scratching your head.

Reproductive

ignorance

HEAVYWEIGHTS such as Soli J. Sorabjee, Nariman and Harish N. Salve argued in the SBI vs Customs case before the apex court recently. The story goes like this: SBI had imported, for Rs. 10.8 crores ($4 millions), `Bankmaster' software and manuals from Kin dle, Dublin. The detailed invoice gave the break-up as $0.4 million towards cost of software for use at one site and $3.6 millions as licensing fee for use of software country-wide.

The bank said that it was required to pay Customs duty only on the software amount as the other amount related to reproduction charges which were exempt from duty. But the Department sought duty on the whole amount.

The apex court studied the agreement between SBI and Kindle to find out the transaction value, so crucial for determining the duty burden. ``Country-wide use and reproduction are two different things,'' observed the court. Accordingly, licence fee for co untry-wide use cannot be considered as the charges for the right to reproduce the imported goods, it was ruled, and the decision went in favour of the Department.

A thought-kindling case, if one looks at the confusion the master of banks, SBI, was under in mistaking the right to use as the right to copy.

Tool vision

STRANGE are the doubts that come up in the minds of the Department officials. Take, for instance, the Arunachal Forest Products case that came up before the CEGAT, Calcutta. The company stated that emeri paper (also known as coated abrasive paper) was an input in the manufacture of plywood. The excise authorities were, however, of the view that emeri paper's function was to polish plywood and, hence, a tool, not an input.

The Tribunal could not accept the plea that the paper was a tool, ``It merely smoothens or polishes plywood. It does not shape the plywood. It is also not known in the market as a tool,'' said Mr. P. C. Jain of the CEGAT.

You can't fault the Department; for many within its fold, even ordinary papers could come in handy as `tools' to leverage the assessees with.

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Tailpiece

``I saw a cane-crusher at the ITO!''

``To recover taxes?''

D. Murali