TMI Blog2007 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the appeal filed by the appellant herein. FACTS: 2. Acting on the basis of intelligence, a team of officers from CPO of Calcutta I Central Excise Commissionerate, Headquarters visited the factory-cum-office of the appellant on 5 th September, 1997 and conducted a search operation. Search resulted in seizure of 3 files, 9700 pieces of Philips Ultra cleaner, 500 pieces of degreasing cleansing fluid, 700 pieces of Switch cleaning oil all bearing brand name of Philips. These were detained and later seized on 9 th February, 1998. Also, some 13 files belonging to M/s. T. Paul Sons were tendered by the partner of the appellant firm. Certain other documents were also handed over to/seized by the raiding party. 3. On the basis of the statements made by Shri Arun Kanti Paul partner of the appellant and other records recovered from the said premises on the day of search, it was found that the orders were being received from M/s. Philips India Ltd., by M/s. T. Paul Sons and the same were executed by the appellant on the basis of arrangement with M/s. T. Paul Sons to the effect that the appellant gets a job charge of paise 0.20 per 50 ml. bottle of the said product. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order in original dated 27 th January, 1999, confirmed the demand of duty. It was held that sub-heading 3402.90 covers surface-active preparations, washing preparations and cleansing preparations, whether or not containing soap. Explanatory notes of HSN were referred to and relied upon wherein it has been provided that washing preparation act on the surfaces by bringing the soil on the surface into a state of solution or dispersion. With reference to the degreasing preparation, it was stated that these preparations are used with a basis inter alia of solvents and emulsifiers. That the goods covered under the heading 34.02 are selected basically on the properties/characteristics of the products than on the basis of the constituents from which the goods were manufactured. 8. Chapter note 6 of Chapter 34 which reads as follows: "6. In relation to products of sub-heading No.3402.90, packing or repacking into smaller packs, including packing or repacking of bulk packs to retail packs or adoption of any other treatment to render the product marketable to the consumer shall amount to "manufacture"." was relied upon to hold that the activity of repacking, re-labeling amounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same as classifiable under sub-heading no.3402.90: - (i) Ultraclean Audiotape Headcleaner. (ii) DCF-847-Degreasing and Cleansing Fluid. (iii) SCO-846-Switch Cleaning Oil-cleans and lubricates switch controls. 12. Shri S.K. Bagaria, learned Counsel appearing for the appellant contended that the activities undertaken by the appellant of filtering, packing and labeling resulting in emergence of the said product cannot be a manufacturing activity. That filtering and re-packing thinner, liquid paraffin and Isoprophile Alcohol, which fell under tariff heading 3814.00, 2710.90 and 2905.90, respectively of the Central Excise Tariff Act, from bulk to small containers would not amount to manufacture. He submits that raw materials are not classifiable under Chapter 34 and their nature and identity do not get changed after filtration and re-packing into smaller packs. The said note was applicable to the products of Chapter 34 only. It is further submitted that with effect from 1 st March, 1997, a note similar to Chapter note 6 of Chapter 34 was inserted in Chapters 29 and 38, and, if at all the activity undertaken by the appellant amounts to manufacture, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter, it was not disclosed by the appellant that the products were being marketed as "cleanser" and gave the impression as if they are only re-packing the raw material into smaller packs. It was not disclosed that a new name has been given to the products. That the appellant did not disclose the applicability and functions of the products. The correspondence between T. Paul Sons and M/s. Philips India Ltd. clearly indicates that there was a doubt as to whether the products would invite the Central Excise duty. To overcome this, they obtained the opinion of an Advocate and the Advocate advised them that instead of solvent, the word "thinner" should be printed on the carton to avoid the Central Excise Rules. 16. Counsels for the parties have been heard at length. 17. It would be necessary to refer to the relevant entries to Chapters 34, 27, 29 and 38 to appreciate the controversy involved in the case. 18. Chapter 34 deals with soap and organic surface-active agents, etc. Heading No. 34.02 reads as under: - Heading No. Sub-Heading No. Description of goods Rate of duty (1) (2) (3) (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20% 22. Chart (as per appellant) showing the material supplied and the relevant headings under which the said material would fall, activity undertaken and the description on the labels put on the bottles reads as under: - S.No. Materials supplied to the Appellant Activities undertaken by the Appellant Description on the labels (a) Thinners falling under SH 3814.00 Filtering, packing in small plastic containers or bottles and pasting of labels and holograms of Phillips India Ltd. Ultraclean Audio Tape Head cleaner (Special thinner for cleaning all kinds of recording head, pinch rollers and capstans of audio tape-recorders). (b) Liquid Paraffin falling under SH 2710.90 -do- SCO- 845-Switch cleaning oil - cleans and lubricates switch controls (c) Isopropyl Alcohol falling under SH 2905.90 -do- DCF 847-de- greasing and cleaning fluid (specially packed for servicing audio/video industry). 23. It is not in dispute that the raw materials out of which the impugned goods have been manufactured by way of filtering, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to Chapter Note 6 of Chapter 34 was introduced in Chapter 29 and 38 with effect from 1.3.1997 and till that date the repacking or re-labeling of the goods supplied to it which were classifiable under Chapters 27, 29 and 38 could not be covered under Chapter 34 cannot be accepted as the goods after repacking were being supplied and marketed as cleansing products, which is evident from the outer cover of the 3 products shown to us by the appellant during the course of hearing. 30. On the question of limitation, the submission made by the counsel for the appellant that the letter dated 8 th March, 1994 disclosed the entire facts to the authorities regarding the items manufactured by the appellant cannot be accepted. The letter dated 8 th March, 1994 did not disclose the entire facts. The letter did not disclose the situation in its proper perspective. The authorities were not informed about the actual activity undertaken by the appellant. The authorities were also not informed that a new name has been given to the products. The applicability and functions of the new products was also not clearly stated. The new and distinct product which had come into existence was sold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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