2000 (2) TMI 114 - HC - Central Excise

Summary

Issues Involved:
1. Whether the products "Seeakkai Powder" and "Arappu Thool" are excisable.
2. Whether they attract levy of excise duty under Chapters 32, 33, 34, or any other Chapter of the Central Excise Tariff Act.
3. The relief the petitioner is entitled to.

Issue-wise Detailed Analysis:

1. Excisability of "Seeakkai Powder" and "Arappu Thool":
The petitioner, a partnership firm, argued that "Seeakkai Thool" (Soapnut Powder) and "Mohwa Powder" (Arappu Thool) are not excisable goods under the Central Excise Tariff Act, 1985. The petitioner contended that these products are natural, used primarily by the rural poor for bathing and cleaning utensils, and do not undergo any chemical process. The ingredients are natural substances like Mohwa de-oiled cake, Usilai leaves, and Seeakkai, mixed and pulverized without any chemical process. The petitioner further argued that the classification of these products under subheadings 3307.90 and 3402.90 by the Central Excise Department was incorrect and that these products do not fit within the descriptions of the relevant chapters of the Central Excise Tariff Act.

2. Classification and Levy of Excise Duty:
The respondents contended that the petitioner was engaged in the manufacture of excisable goods and had violated the Central Excise Act by not registering and not paying excise duty. They classified "Seeakkai Powder" under heading 3307.90 as a bath preparation and "Mohwa Powder" under heading 3402.90 as a cleaning preparation. The respondents argued that the products undergo a manufacturing process, creating a distinct product with a new name, character, and use, thus making them excisable. They cited various legal precedents, including Supreme Court judgments, to support their claim that the process of mixing and pulverizing constitutes manufacture.

3. Relief Entitlement:
The court examined the relevant chapters and headings of the Central Excise Tariff Act. Chapter 33 covers essential oils, resinoids, perfumery, cosmetic, or toilet preparations, but does not include natural oleoresins or vegetable extracts. Chapter 34 covers soaps, organic surface-active agents, and washing preparations. The court found that "Seeakkai Powder" and "Arappu Thool" do not fall under any of these headings. The products are natural, used for bathing and cleaning, and do not contain any chemical or synthetic ingredients. The court held that the products are not excisable under the Central Excise Tariff Act, as they do not fit within the specified categories or headings.

Conclusion:
The court concluded that "Seeakkai Powder" and "Arappu Thool" are not excisable commodities under the Central Excise Tariff Act, 1985. The classification by the Central Excise Department was incorrect, and the products do not attract excise duty. The court allowed the writ petition, directing the respondents to release all seized books of accounts, finished products, and raw materials to the petitioner. The court also noted that the petitioner had an alternative remedy but chose to approach the court, which was justified given the circumstances. The rule nisi was made absolute, and the respondents were ordered to bear their respective costs.