TMI Blog1994 (7) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... a declaration in respect of the product in question on 20th September, 1990 as per law to the authorities declaring the goods as `Soap in any form coming within the mischief of Central Excise Tariff 3401.10. The duty chargeable on the said goods is only 25% and the value of the total clearances was Rs. 14,80,050. Then subsequently, after receipt of gate passes which indicated that the goods received by the petitioner from the various suppliers were described as `Organic Surface Active Agent , the petitioner filed a second declaration on 10-4-1991 for the period 1-4-1991 to 20-12-1991 describing the goods as `Organic Surface Active Agent coming within the mischief of Tariff 3402.90. It was urged that either for `Soap in any form or for `Organic Surface Active Agent the duty payable was only 25% and there was no duty difference in respect of the goods in question notwithstanding the difference in the description in the two declarations. It was urged that in respect of the goods in question viz. Organic Surface Active Agent the petitioner only added water and perfume. The duty liability in respect of the second declaration for the period 1-4-1991 to 20-12-1991 is worked out at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vit allegedly filed by the petitioner and referred to in the Chemical Examiner s report and also to the other pleas. It was further urged that even in the commercial parlance the goods are only known as liquid soap and Tariff Heading 33.07 does not contain even one item which has the quality of an ordinary toilet soap and for that matter no soap is classified under Heading 33.07 at all particularly a category of the type manufactured by the petitioner. The petitioner has also referred to the I.S.I. specification wherein also it is clarified that the goods correspond to the requirement of local toilet soap as contended by the petitioner. The learned counsel finally pleaded financial incapacity and undue hardship and prayed for waiver of pre-deposit of duty and penalty. 3. Heard Shri Jeyaseelan, the learned DR. 4. We have gone through the entire records and heard the learned counsel in extenso. As a matter of fact the matter was adjourned on a quite few occasions only to enable the learned counsel for the petitioner to produce further evidence and also the learned DR to get instructions on the pleas of the learned counsel regarding petitioner s affidavit referred to by Chemical E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic Surface Active Agent and in other words the show cause notice does not refer to the first declaration of the petitioner describing the goods as `Soap in any form . In the absence of any factual circumstance indicating either malafides on the part of the petitioner or suppression of facts prima facie invoking the longer period of limitation in the show cause notice issued on 18-6-1992 would not be sustainable. We are not able to agree to the plea of the learned counsel that cross-examination of the Chemical Examiner was denied in the absence of anything in writing and it would be difficult to accept the ipse dixit of the petitioner without any supporting documentary evidence. We also take note of the fact that the I.S.I. standard also prima facie confirms the plea of the petitioner in regard to the nature of the goods. Therefore, in the peculiar facts and circumstances of this case having regard to the nature of the goods, the declarations filed, we are of the view that the issues are contentious and arguable and, therefore, prima facie the evidence does not indicate that the petitioner was guilty of any suppression and, therefore, prima facie the show cause notice issued beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y form. 34.02 Organic surface-active agents (other than soap); surface-active preparations, washing preparations (including auxiliary washing preparations) and cleaning preparations, whether or not containing soap. 3402.90 - Other 33.07 Pre-shave, shaving or after-shave preparations (not containing substances specified in Note 1(c) to this Chapter), personal deodorants, bath preparations, depilatories and other perfumery, cosmetics or toilet preparations, not elsewhere specified or included; prepared room deodorisers, whether or not perfumed or having disinfectant properties. 3307.90 - Other 7. The learned Counsel for the appellants pleaded that the appellants during the year 1990-91 declared their product as soap in any form falling under Tariff Heading 3401.10 carrying a rate of duty of 25% as the product was understood by appellants as soap and was used as soap. He pleaded that in the year 1991-92, however, they changed the description to Organic Surface active agent and Anionic used for body wash as they were advised by their Consultant since they were merely carrying out mixing of Emulsifier 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants were wrong since the appellants were holding out their product as soap. In any case misdeclaration if any attributable can be only in respect of the demand for the year 1991-92. He pleaded that the appellants had made the declaration in the bona fide belief that their product would fall within the tariff heading as declared by them. The learned Counsel also pleaded that the lower authority has dealt with the whole issue based on the second declaration filed by the appellants in which they have described goods as surface active agent and the lower authority has not taken note of their declaration for the year 1990-91 declaring their product as soap in any form falling under Heading 3401.10. Therefore, there had been non-application of mind by the lower authority. He fairly conceded that the appellants had not made any written request for cross-examination of the Chemical Examiner to elicit any information in regard to the affidavit stated to have been filed by the appellants and referred to by him in his report and also about the test results. He has also pleaded that the demand raised beyond the period of six months was barred by limitation as there was no suppression of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood as soap. Soap as it is answers to description of a product which is manufactured in a particular manner with the use of certain specified ingredients and is a well defined term commercially and is also understood in the trade. In the Condensed Chemical Dictionary (10th Edition) Soap is defined as under : The water-soluble reaction product of a fatty acid ester and an alkali (usually sodium hydroxide), with glycerol as by-product. For the reaction, see saponification. A soap is actually a specific type of salt (q.v.), the hydrogen of the fatty acid being replaced by a metal which is common soaps is usually sodium ....... . In the New Encyclopaedia Britannica, Volume 16, soap is defined as under : The first detergent (or surface-active agent) was soap. In a strictly chemical sense, any compound formed by the reaction of a water-insoluble fatty acid with an organic base or an alkali metal may be called a soap. Practically, however, the soap industry is concerned mainly with those water-soluble soaps that result from the interaction between fatty acids and alkali metals. In certain cases, however, the salts of fatty acids with ammonia or with triethanolamine are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for use as soap in the form of bars, cakes, moulded pieces or shapes as seen from the tariff entry and chapter notes and the appellants product does not fall under this category. Prima facie Headings 3401.10 and 3401.20 under which the appellants have filed their declarations for the year 1990-91 and 1991-92 do not cover the appellants products. The appellants have not adduced any plea or shown as to how the appellants product prima facie falls under Heading 34.02. The appellants product is for human use (body wash) and the appellants are operating under a licence issued to them under Cosmetics and Toilet Preparations Act and the product is used according to them as toilet product as was mentioned by the learned Counsel for the appellants. In the literature filed by them before us, the appellants have described the product as liquid soap. It is also seen that this description liquid soap was differently described in their literature as seen from the order of the learned lower authority in para 5 of the impugned order and the goods were described as `Extra Mild Liquid Bodywash and later the description was changed in their packing to include `Extra Soft soap and the words `Ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a separate heading and the surface active products which can be used as soap under a separate heading, it is not understandable as to why they declared their product as soap falling under Tariff Heading 3401.10. They did not indicate the ingredients going into their product nor the end-use and which should have been done more so when soap is a well defined term and understood in the trade as a product manufactured out of certain specified ingredients. The appellants did not give their manufacturing process or details of the product in the declaration, and therefore, there was misdeclaration and suppression. In the declarations for the year 1991-92 they have mentioned the description as Organic Surface active agents Anionic used for body wash - Ch. 34.02. This description is misleading. The appellants product is not Surface active agents as such, but something prepared out of it and there is no indication as to the other ingredients going into the manufacture of their product. It is observed that the appellants had a similar product manufactured for animal use out of emulsifier 600 and the same has been classified under Heading 33.07 i.e. the heading for Cosmetics and Toilet pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cie on the part of the petitioner for the reasons given by Member (J), whether longer period of limitation invoked in the show cause notice dated 18-6-1992 would be sustainable in law or on facts for the detailed reasons given in Member (J) s order in para 4, and whether the petitioner would therefore be entitled to waiver of pre-deposit of duty and penalty, as held by Member (J). OR Whether in the facts and circumstances of the case taking into consideration the scope of the tariff entries, the Chemical Examination report and as to how the product is known and understood in the technical and trade parlance, the goods `Acquadermis is prima facie assessable under Heading 3307.90 as held by the lower authority and that the lower authority s order suffers from no infirmity prima facie in view of the parameters considered by the lower authority in view of the report of the Chemical Examiner and the scope of the tariff entries of the appellants/petitioners own literature and further that there has been mis-declaration and suppression on the part of the appellants/ petitioners in respect of the description of the goods in the declaration filed by them as the same was misleading and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He pointed out that at that juncture when he argued the matter before the Tribunal, he was not having copy of the ISI. In this connection he produced documents wherein the Chemical Examiner has analysed the product of the applicant and in column 7C it was mentioned that the product of the applicant conforms to ISI specifications. Copy of this report was not furnished to the learned D.R. He further pointed out that is was classified in the beginning under tariff item 3401.10. There is no allegation that was done with a mala fide intention to evade payment of duty. The second declaration was made by the applicant under tariff heading 3402.90. In this connection he pointed out that the applicant was getting goods from other parties and they were describing the goods in the gate pass and accordingly the applicant also described the same and there was no misdeclaration with intention to evade payment of duty. He pointed out that the Chemical Examiner has opined that the product of the applicant was not a bath preparation. He pointed out that classification under tariff heading 3307.90 is prima facie not tenable. He also pointed out that prima facie longer period of limitation is not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty. There must be some materials to show that the applicant misdeclared the goods with an intent to evade central excise duty. Prima facie at this juncture it cannot be inferred that there is any such intentment. These are matters which should be gone into at the time of hearing the main appeal. There is another factor which has to be taken into consideration, while considering the prima facie case of the assessee/applicant. The Chemical examiner has relied upon the affidavit produced by the applicant which they denied in reply to the show cause notice and demanded a copy of the same which was not furnished to them. This fact was enlightened by them before the adjudicating authority who recorded the same but did not give any specific finding in this regard. These are required to be gone into in detail. In regard to the financial position it was submitted that the applicant who is a SSI unit, has no sufficient funds. Learned Member (T) held that an un-audited balance sheet has been furnished. But on a perusal of the same, it is seen that the balance sheet furnished by the applicant is certified by a Chartered Accountant and also has been signed by the partner. Therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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