Case Law Details
Hindustan Unilever Ltd. Vs Commissioner of Central Ex. (CESTAT Kolkata)
It is clear that the Revenue has suddenly taken upon itself the understanding that the Drugs & Cosmetics Act has distinguished the ‘toilet soaps’ that the content of 60% TFM and above alone are soaps and less than 60% are bath preparations which is totally misconstrued and erroneous understanding. A simple question was posed to learned Additional Solicitor General as to whether each soap manufactured in local and/or Khadhi industry with very low TFM content would be considered as bathing preparation as they are expensive, he attempted to explain that when the tariff does not make such a distinction, then the classification has to be adopted in that manner only. We are not impressed with this reply as the TFM content is not the basis for classification at all. Even in terms of the judgment of Hon’ble Apex Court in the case of Oswal Agro Mills Ltd. v. CCE as reported in 1993 (66) E.L.T. 37, it has been laid down that considered in the legal setting and commercial parlance, the Court observed that ‘toilet soap’ being of everyday household use for the purpose of bath and having removed its separate identity which it enjoyed preceding amendment and having been not specifically included in “other sorts”, it took its shelter in commercial parlance under “household”. The Hon’ble Apex Court proceeded to state that if anybody goes to the market and asks for toilet soap, he must ask only for household bathing purpose and not for industrial or other sorts. It further laid down that even the people dealing with it would supply it only for household purpose. It may be true that household consists of soap used for cleaning utensils, laundry used for cleaning soiled clothes and soap toilet is used for bathing but household is compendiously used, toilet soap is used only by the family for bathing purpose. It observed that individual preference or choice or taste of a particular soap for bath is not relevant. It laid down that the soap ‘toilet’ would therefore, fall within the meaning of the word ‘household’ in sub-item (1) of Item 15 of the Schedule. Taking this principle, we have to hold that Santoor toilet soap prescribed as bathing bar is also a household soap and the tariff distinguishes between toilet soap and non-toilet soap. Hence, the plea that TFM content does not refer separately to soap is well founded and requires acceptance. The soap whether it is toilet soap or non-toilet soap continues to fall under Chapter Heading 34, merely because TFM content is less than 60% and the item in question is not toilet soap and it does not go out of Chapter 34. The vary logic adopted by the Commissioner that ordinary toilet soap with less content of TFM in both preparations in terms of commercial understanding of the item is little surprising. Bath preparations as shown to us in terms of the understanding and product itself are very expensive item which are used for softening the item and leave the body scented. Hence, the item in question is soap only for classification under Chapter Heading 34 and it is not bath preparation for classification under Heading 33.07 of the Central Excise Tariff Act as contended by the Revenue.
FULL TEXT OF THE CESTAT JUDGEMENT
The appellants M/s. Hindustan Unilever-Dabgram are engaged in the manufacture of various Toilet Soaps under various brands and were clearing the same claiming classification under S. H. No. 3401.10 of CETA. Department issued a Show Cause Notice dated 24/04/1998 seeking to classify the products ‘Rexona’ and ‘Lux’ under sub-heading 3307.30 of CETA. The Show Cause Notice was confirmed by Commissioner vide Order-in-Original No. 09/Commr/CE/SLG/11-12 dated 16/03/2012.
2. Learned Counsel for the Appellant submits that the distinct feature of the Bathing Preparations and Toilet soaps substantiates classification of “Rexona” as soaps under S. H. No. 3401: Chapter note 1 (b) to Chapter 33 excludes from its purview Soap and other products of the Heading No.34.01. Bathing Preparations under Sub-Heading 3307.30 covers items like perfumed bath salts, Preparations for foam baths, Foams or Bath preparations i.e. items used to soften the water in terms of the extracts of bath preparation. Impugned product ‘Rexona’ is a simple soap used by the people for maintain personal hygiene. The show Cause Notice proposed to classify “Rexona” under sub-heading 3307.30 mainly alleging that totally fatty mater (TFM) content is less than 60% and therefore it is a bathing preparation and not toilet soap.
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