TMI Blog2001 (7) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 held that the product Kesh Nikhar in the form of a soap merited classification under Heading No. 33.05 (refer para 45.2 of the order). She found justification for invoking the extended period of limitation. The provisions of Section 11AB and Section 11AC of the Central Excise Act, 1944 (hereinafter referred to as the Act ) were found applicable. The following order was passed :- ORDER (I) Duty amounting to ₹ 8,42,17,562/- for the period 1-12-1994 to 30-11-1999 is hereby confirmed under Rule 9 (2) of Rules read with proviso to Section 11A(1) of the Act; (II) They are also liable under Section 11AC read with Rule 173Q to pay penalty equal to the aforesaid amount of duty evaded by them, which is hereby imposed on them; (III) They are also liable to pay interest @ 20% under Section 11AB on the aforesaid duty amount demanded till 11-5-2000 and thereafter @ 24% until the date on which it is paid. The amount of interest would be quantified in terms of the aforesaid provision by the jurisdictional Asstt. Commissioner/Deputy Commissioner; (IV) The noticees are also liable to penal action under Rule 9(2), 52A, and 226 of the Rules. Accordingly, I impose a penalty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere of no relevance in the light of a clear finding that the product in question was a shampoo though in the form of soap. He relied upon the Supreme Court s decision in the case of Shree Baidyanath Ayurved Bhawan Ltd. v. Commissioner of Central Excise, Nagpur - 1996 (83) E.L.T. 492 (S.C.). Both the sides referred to the case law in support of their respective arguments. 3. We have carefully considered the matter. The issue for our consideration is the classification of the product Kesh Nikhar branded cake/bar manufactured by M/s. Peshawar. M/s. Peshawar were classifying their product under sub-heading No. 3401.12 of the Central Excise Tariff. Heading No. 34.01 covered the following :- 34.01 Soap; organic surface-active products and preparations for use as soap, in the form of bars, cakes, moulded pieces or shapes, whether or not containing soap; paper, wadding, felt and non-wovens, impregnated, coated or covered with soap or detergent - Soap in any form : 3401.11 -- Soap, other than for toilet use, whether or not contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of hair. It did not contain any hair colouring substance, hair dye, or any hair conditioning material. It did not contain any additives like shikakai, amla, henna, etc. Their product was based on soap and it did not contain any detergent or surfactant or chelating agent or preservatives or emollients or thickening agents. It has no undissolvable material. It was soluble in water. When it is dissolved in water, no sedimentation was formed. (refer para B.2 of the reply). 5. The goods in question were packed and labelled as Kesh Nikhar soap. Kesh Nikhar was a registered trade mark of M/s. Peshawar. M/s. Peshawar were registered with the Central Excise Department as manufacturer of soap (refer page 1 of the paper book). In the classification list, the product was declared as a toilet soap. (refer pages 2, 6 and 8 of the paper book). According to the District Industries Centre, Patiala, it was a soap. (refer page 3 of the paper book). According to the Test Memo, dated 1-7-1999 of the Chemical Examiner, Central Revenue Control Laboratory, sample of one cake of 100 gms. drawn on 16-6-1999 drawn for the purpose of ascertaining the ingredients was analysed with the following result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e categories of soaps :- Hard Soaps, which are usually made with Sodium Hydroxide or Sodium Carbonate and comprise the bulk of the ordinary soaps. They may be white, coloured or mottled. Soft soaps, which are made with Potassium Hydroxide or Potassium Carbonate. They are viscous and generally green, brown or pale yellow in colour. They may contain small quantities (generally not exceeding 5%) of synthetic organic surface-active products. Liquid soaps, which are solutions of soap in water, in some cases with a small quantity (generally not exceeding 5%) of alcohol or glycerol added, but not containing synthetic organic surface-active products. It is explained at page 483 that the soap of this Heading are generally in the form of bars, cakes, moulded pieces, or shapes, flakes, powder, paste or aqueous solution. 10. It is an admitted position and there is no dispute in this regard that the product Kesh Nikhar that is before us for consideration was in the form of cake/bar. The issue for consideration is whether such a product could be classified under Heading No. 33.05 that covered preparations for use on the hair. Under Heading No. 33.05, two products - perfumed hair o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wipro Ltd. and Panchajanya Enterprises v. CCE, Bangalore - 2001 (136) E.L.T. 885 (Tribunal) = 2000 (92) ECR 410 (Tribunal). In the case of Hindustan Lever Ltd., the matter related to the classification of the product - Dove 100 gms. In para 10, the Tribunal observed that the moment any product comes within Chapter 34.01, it goes out of Chapter 33 in view of Chapter Note 1(b) under Chapter 33. In the case of Wipro Ltd., the matter related to the classification of the product - Santoor toilet soap and the question for consideration was whether they were bathing bar classifiable under sub-heading No. 3307.39, or were classifiable as soap under Heading No. 34.01 - sub-heading No. 3401.19. The Tribunal in para 36 observed that the Total Fatty Material (TFM) content was not the basis for classification, and the reference was made in para 37 to the Supreme Court s decision in the case of Oswal Agro Mills Ltd. v. CCE - 1993 (66) E.L.T. 37 (S.C.), wherein the Apex Court had observed that the individual preference, choice or taste for a particular soap for bathing purposes was not relevant. The Tribunal concluded that the soap whether it was a toilet soap or a non-toilet soap both con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ampoos, such as foaming, cleansing, luster, and manageability, pH is an intangible in that it cannot be observed or demonstrated during product usage, and the effects of low pH are not obvious to the user. It has been reported that mild aqueous acids cause anti-swelling action on the cuticle scales of the hair. As the cuticle tightens, the hair gains luster because light is more efficiently reflected from the surface of the hair shaft. In the absence of external charges hair shows its highest strength and resiliency at pH 4.0-6.0. Some surfactants do not perform well in an acid medium. Fatty alcohol sulfates hydrolyze rapidly and decompose below pH 4.0. Alkanolamides generally react in a similar manner. However, combinations of triethanolamine, and sodium and ammonium lauryl sulfates with amine oxides can be adjusted to low pH with good stability. Examples of clear, stable shampoo formulations adjusted to pH 4.0 are: 54.0 wt % water; 40.0 wt % ammonium lauryl sulfate (30% solution); 6.0 wt % cocamidopropylamine oxide (30% solution); and qs (as needed) preservative, color, perfume, acid, etc. Amphoteric Shampoos. Amphoteric surfactants are generally assumed to be less irritating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 wt % perfume; 0.4 wt % preservative; 0.1 wt % citric acid; and 0.1 wt % sequesterant Na2. A typical viscous liquid shampoo is: 60.0 wt % triethanolamine lauryl sulfate, 38% active; 21.1 wt % distilled or deionized water; 3.0 wt% myristic acid; 2.0 wt % oleyl alcohol; 2.0 wt% propylene glycol; 1.0 wt % perfume; 0.5 wt % poly(vinylpyrrolidinone) K-30; and 0.4 wt % preservative. A typical anti-dandruff shampoo is: 65.3 wt % water; 25.5 wt % sodium lauryl sulfate; 5.0 wt % stearic acid; 2.1 wt % lauramine oxide: 1.0 wt % zinc pyrithione powder; 0.7 wt % sodium hydroxide pellets; 0.4 wt % sodium chloride; plus preservative, color, and perfume. In the case of Colgate Palmolive (I) Ltd. v. Union of India Ors. - 1980 (6) E.L.T. 268 (Bombay), the petitioners contention before the appellate authority was that the shampoo was not known commercially as soap. The High Court rejected the argument of the Revenue that shampoo was also a kind of soap. The High Court observed in para 15 - If a person were asked for soap from a shopkeeper and instead was given shaving cream or shampoo, it would require no great degree of intelligence and common sense on the part of the person making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cake. According to this decision, while shampoo for the purposes of Bombay Sales Tax Act, 1959 was a kind of liquid soap in terms of the entries in Schedules C and E of that Act of 1959, it was different from the soap in the form of a cake. Soap in the form of a cake was not the same as shampoo, which for the above purposes was a kind of a liquid soap. In the Central Excise Tariff, soap including liquid soap on the one hand, and the shampoo on the other hand, had been separately described and classified. Thus, while shampoo may be a kind of a liquid soap, but as a separate classification has been made for soap including liquid soap, for the purposes of classification under the Central Excise Tariff, shampoo could not be classified as a soap, and the soap could not be classified similarly as shampoo. In no case, a soap in the form of cake/bar could be considered as a shampoo as shampoo in common parlance is not a product in the form of cake/bar. The scope of Tariff entries has to be determined with reference to Chapter Notes, Section Notes and the Rules of Interpretation. In the case of Commissioner of Central Excise, Hyderabad v. Bakelite Hylam Ltd. - 1997 (91) E.L.T. 13 (S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cold process saponification. The process of manufacture is carried on without the aid of power. It is the simplest of batch saponification procedures and requires a minimum of equipments. Since neither nigre nor lye are separated, the glycerol and impurities from the fats remain in the soap. The oils are put in a vessel and manual stirring is done and the calculated amount of caustic solution is added with vigorous manual stirring. After emulsification and thickening, colour and perfume are added at the stage and the mass is poured in the frames where saponification is completed during cooling and solidification. The soap blocks are removed from the moulds and the blocks are cut into slabs and slabs are further cut into bars and cakes. The process of manufacture of Kesh Nikhar toilet soap is without using power. In the publication, Soap, Detergent and Perfume Industry published by the Small Industry Research Institute, the cold process saponification is described at page 129 of the paper book as under :- Coconut oil is the most suitable oil for this process since it saponifies quickly and can take up an appreciable quantity of fillers. In this process a cylindrical or recta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... experts. Among the users at page 156 of the paper book, one Shri Vipin Kumar, has stated that he had been using Kesh Nikhar soap for bath purposes as also for cleaning hands and face and not only for washing the hair (head). At page 158 of the paper book, one Shri R. Sharma had submitted that he and his members of the family were using Kesh Nikhar soap, which was good not only for washing hair but also for bathing purposes. At page 163 of the paper book, one Shri Narendra Kumar had stated that he had been using Kesh Nikhar soap for bathing and washing hands and face for a long time and that it was not that the soap was being used only for washing the hair. Among the traders, there are statements at pages 150, 152, 154, 164, 165 and 166 of the paper book where they have testified that the soap was used on the body as well as on the head and was being sold like any other toilet soap. As regards the experts, there is a report at page 201 of the paper book prepared by Dr. (Mrs.) Sheela Kulkarni, Head of the Department of Cosmetic Technology. According to this Technical Report, the product was toilet soap and not shampoo. According to the report of Dr. (Mrs.) Sheela Kulkarni, sham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been repeatedly stated in the judgment is exemplified by this sentence : There can be no gain saying that judicial notice can be taken of a fact that a common man treat fish and prawns as two different articles ... We are unable to take such judicial notice. 17. The adjudicating authority in para 33.1 of her order had referred to the Rules for the Interpretation of the Tariff to make a point that the Heading No. 33.05 of the Tariff provided the most specific description to the goods in question and that Heading No. 33.05 was to be preferred to Heading No. 34.01 providing for a more general description. We do not consider that the Heading No. 34.01 provides for more general description vis-a-vis the Heading No. 33.05 in so far as the goods in question are concerned. In fact, soap is a more specific description than the description under Heading No. 33.05, which covered the preparations for use on the hair. Rule 3 of the Rules for the Interpretation of the Tariff could be applied only when the goods were prima facie classifiable under two or more headings, (refer Commissioner of Central Excise v. Wood Polymers Ltd. - 1998 (97) E.L.T. 193 (S.C.). We do not find such a case he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 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, inter alia, in the case of Blue Star Ltd. v. Union of India and another - 1980 (6) E.L.T. 280 that payment of duty under a particular Tariff Item must depend upon the facts of the case and not on the advertisement gimmick of the advertiser. The same view was also taken in Subhash Chandra Nishat v. Union of India and another - 1979 (4) E.L.T. (J 212) (Bom.), and by a Division Bench of the Kerala High Court in the case of The Dy. Commissioner of Agricultural Income-tax and Sales Tax (Law) Board of Revenue (Taxes), Ernakulam v. Union Carbide India Ltd., Madras-2, 1976 Sales Tax Cases (Vol. 38), Page 198. 19. Reference may also be made to the Supreme Court s decision in the case of ESPI Industries and Chemicals Pvt. Ltd. v. Commissioner of Central Excise, Hyderabad - 1996 (82) E.L.T. 444 (S.C.). The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when for a short duration from 4-3-1994 to 9-5-1994, duty was levied on the product of the appellants. They had explained the process of manufacture when they filed their classification lists. They have also described the various ingredients. Reference could be made to the appellants communication, dated 4-5-1994 addressed to the Asstt. Collector of Central Excise, at Page 4 of the paper book and the communication from the Superintendent of Central Excise dated 30-3-1995 at Page 10 of the paper book wherein, it has been intimated by the Deptt. to the appellants that their registration certificate stood cancelled and that their refund claim was being forwarded to the Asstt. Collector s office after due verification. All this will indicate that there is no justification for invoking the extended period of limitation. 21. The product with which we are concerned in these proceeding is in the form of cake/bar. It is a soap as popularly understood. There is nothing concerning the product that it is a preparation for use on the hair for the purposes of Heading No. 33.05 of the Tariff. It is not akin to any of the products specifically mentioned in the sub-headings of Heading No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e correct principles in concluding that the product in question was not a medicinal preparation ( Ayurvedic ) and, therefore, the appellant was not entitled to the benefit of the exemption notification. Having heard the learned Counsel at length and having perused the line of reasoning adopted by the Tribunal with which we are in general agreement, we see no reason to interfere with the conclusion reached by the Tribunal and, therefore, we dismiss these appeals, but make no order as to costs. The Hon ble Supreme Court had emphasised the importance of popular meaning in interpreting the statutes and had explained that the popular meaning is the one attached to them by those using the product. 22. In the light of the above discussion, we consider that the product in question is not a shampoo or a preparation for use on the hair in the sense the term has been used in Heading No. 33.05 but is a soap as described in Heading No. 34.01 of the Central Excise Tariff. Accordingly, we hold that the product Kesh Nikhar branded cake/bar is correctly classifiable under sub-heading No. 3401.12 of the Central Excise Tariff. Its classification under Heading No. 33.05 is not correct. As a res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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