TMI Blog2001 (4) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to the manufacture of which no process has been carried on with the aid of power or of steam . In the show cause notice dated 16-12-1999, it was mentioned that the Kesh Nikhar branded bar/cake manufactured by M/s. Peshawar was a bath preparation, containing soap exclusively meant for use on the hair (refer para 3.0 of the show cause notice). It was further summarised at page 10 of the show cause notice that Kesh Nikhar functioned more or less as a shampoo and that it could be used as an alternative to soap and could be rightly termed as a poor man s shampoo. It was proposed in the said show cause notice that the goods in question were correctly classifiable under Heading No. 33.05 of the Central Excise Tariff as preparations for use on the hair. Central Excise duty of Rs. 8,42,17,562/- for the period 1-12-1994 to 30-11-1999 was demanded invoking the extended period of limitation. Penal provisions were also invoked. The matter was adjudicated by the Commissioner of Central Excise (Adjudication), New Delhi, who under her order-in-original dated 30-11-2000, framed the question for her consideration as to whether the product - Kesh Nikhar was a soap or a shampoo in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be safeguarded. 3. We have carefully considered the submissions made by both the sides. Although, presently, we are concerned only with the disposal of the stay application, even at this prima facie stage, the matter deserves a relatively more careful consideration in view of the large amount of duty and penalty involved. We have done so. It is however, made clear that our conclusions drawn for disposal of the present stay application are tentative, and a more detailed examination of the issues involved will be required when the main appeal comes up for final disposal. 4. It is an undisputed fact that the product in question - Kesh Nikhar was in the form of soap cake/bar. It was used by the consumers as a soap cake/bar. Its ingredients were as of any other toilet soap. In the show cause notice, it had been noted that the Kesh Nikhar was a soap, although it was argued that it was not a normal soap as it was for application on the hair. The adjudicating authority had also observed that the product - Kesh Nikhar was in the form of a soap. Both in the show cause notice and the adjudication order, it has been mentioned that the product - Kesh Nikhar was being used by the consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orants for food, drugs and cosmetics. d Triethanolamine. At page 575 of the above Encyclopaedia, it is mentioned that during application, the shampoo must spread easily over the head and into the hair. It should foam quickly and copiously in both soft and hard water and then rinse out thoroughly, leaving no detectable residues. It has been added that almost without exception, shampoos consist of an aqueous solution, emulsion, or dispersion of one or more cleansing agents, together with additives employed for the purposes of modifying and stabilizing the various functional and aesthetic properties of the finished product. 7. The process of manufacture of the soap Kesh Nikhar has been given in para 3.3.2 of the show cause notice as under :- (page 18) Different types of non-edible grade vegetable oils namely Coconut solvent extracted, Mahuwa oil, Cotton seed oil, castor oil and coconut oil, etc., are weighed in required proportion and mixed manually with the help of wooden poles. Then liquid caustic soda lye is gradually added in the oil and thoroughly mixed. In this process heat is generated and the mixture starts thickening. As soon as saponification start ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification. It has been held by the Bombay High Court in Ram Tirth Yogashram v. State of Maharashtra - 1968 (22) STC 76 (Bombay) that the mode in which a person may choose to advertise his commodity cannot be decisive in determining its real nature (refer para 5 of Union of India v. TSR and Company - 1985 (22) E.L.T. 701 (Mad.). In the case of Subhash Chandra Nishad v. Union of India - 1979 (4) E.L.T. (J 212) (Bombay), the Bombay High Court had observed in para 10 of their judgment it is usual for an advertiser of products to claim all possible virtues for his products, but it would be erroneous to rely on all these claims to determine the trade use of the products. In the case of Leukoplast (I) Pvt. Ltd. v. Union of India - 1985 (20) E.L.T. 70 (Bombay), the Bombay High Court had held in para 12 as under :- 12. .... However, it may be pointed out that for the purposes of classification for levy, the advertisements are of no value or help. Advertisements are published by the manufacturers of a product in order to attract consumers and have nothing to do with the classification of the same product for levying of duty. This Court dealing with such contention has held, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir dyes (in whatever form), shampoos, whether or not containing soap or organic surface active agents. In the Harmonised Commodity Description and Coding System (HSN) Explanatory Notes, the scope of Heading No. 33.05 is given as under :- 33.05. Preparations for use on the hair 3305.10 Shampoos 3305.20 Preparations for permanent waving or straightening 3305.30 Hair lacquers 3305.90 Other This heading covers :- (1) Shampoos, containing soap or other organic surfaceactive agents [see Note 1(c) to Chapter 34], and other shampoos. (2) Preparations for permanent waving or straightening. (3) Hair lacquers (sometimes known as hair sprays ). (4) Other hair preparations, such as brilliantines; hair oils, creams ( pomades ) and dressings; hair dyes and bleaches used on the hair; cream-rinses. Preparations applied to hair on parts of the human body other than the scalp are excluded (heading 33.07). While shampoos containing soap or other organic surface active agents and other shampoos are covered, products that are not known and understood commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the prepared liquid shampoos. The Hon ble Supreme Court had held that the shampoos is a kind of liquid soap. It was observed as under :- The High Court concluded from the above that Palmolive Shampoo was soap covered by entry 28 of Schedule C to the Act. We agree with the High Court in this respect and are of the opinion that shampoo is a kind of liquid soap. It has all the essential ingredients of a soap. It may be that the proportion of the ingredients of the liquid soap differs from those of a soap in the form of a cake but that fact would not alter the basic character of shampoo and take it out of the category of soaps. In the present case, the goods are not in liquid form but in the form of cake/bar. Thus, its classification as soap does not appear to be appropriate. In the case of Colgate Palmolive (I) Ltd. v. Union of India - 1980 (6) E.L.T. 268 (Bombay), for classification of the product coconut shampoo, it was argued by the Revenue that it was nothing other than soap with the only difference that it was produced from liquid soap after adopting certain processes to give it perfume, colour, etc. The petitioners s contention that shampoo was not known commerciall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they attract duty under Item 15 where the only qualification and criterion is whether these products are known commercially as soap . The burden of proving that the petitioner s products are known commercially as soap was certainly on the part of the Department. Neither before the appellate nor the revisional authority, did the Department take the slightest step to discharge this burden which was essentially upon it. Mr. Dalal, however, urged that before the appellate and the revisional authorities, it was for the petitioner to have established that its products were not known commercially as soap . This is a curious contention. It was the Department which wanted to assess the petitioner s products to duty under Item 15. It was, therefore, for the department to establish that the petitioner s products were known commercially as soap and thus fell within Item 15 and not for the petitioner to establish a negative. This contention urged by Mr. Dalal is a negation of the well established principle that such burden is upon the Department. The latest of such decisions is of the Division Bench of this Court in Sandoz (India) Limited v. Union of India and others (Special Civil App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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