2002(10)LCX0048

IN THE CEGAT, WEST ZONAL BENCH, MUMBAI

S/Shri Gowri Shankar, Member (T) and G.N. Srinivasan, Member (J)

HINDUSTAN LEVER LTD.

Versus

COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Order Nos. 3146-3148/2002-WZB/C-II, dated 22-10-2002 in Appeal Nos. E/904-906/98-Bom.

CASE CITED

Warner Hindustan Ltd. v. Commissioner — 1999(08)LCX0297 Eq 1999 (113) ELT 0024 (S.C.) — Relied on...... [Para 6]

Advocated By : Shri C.S. Lodha, Advocate, for the Appellant.

Shri P.K. Agarwal, DR, for the Respondent.

[Order per : Gowri Shankar, Member (T)]. - The common question for consideration in these three appeals is the classification of the product “Liril Active Shower Gel” that the appellant manufactured. It had classified the product in Heading 3401.10 of the tariff. Notices issued by the department, one of which had invoked the extended period, proposed classification of the product in Heading 33.04 of the tariff. The Commissioner having confirmed the classification proposed in the notice, and justified invocation of the extended period of limitation, the manufacturer is before us.

2. Heading 34.01 covers soap and various other substances. Sub heading 10 in which the appellant had classified the goods is “soap in any form.” The basis for the notice was that the product in question was a liquid soap and the Explanatory Notes to the Harmonised System of Nomenclature (HSN), at Page 518 of 2000 Edition, provided that liquid soap must not contain surface active products. Since the product in question contained surface active products of the order of 4.49%, it could not be considered to be liquid soap. Therefore, the notice proceeds, the product must be classified in Heading 33.04. The notice also noted “the composition, characteristics and advertised use for care of skin” justified classification in this heading. In his order, the Commissioner has not accepted the contentions made by the assessee in this regard and excluded classification in Heading 34.01. He goes on to say that, in view of the allegations in the notice relating to the composition, characteristics and advertised use of the product, it should rightly be classified in Heading 33.04.

3. Although we have heard the extensive arguments as to the content and scope of the Explanatory Notes on which the notice is based, we do not consider it necessary to deal with them, and have not found it necessary to consider the arguments on limitation.

4. Heading 33.04 covers “Beauty or make up preparations and preparations for the care of the skin (other than medicaments), including sunscreen and suntan preparations; manicure or pedicure preparations.” This heading again is identical Heading 33.04 of the HNS Explanatory Notes. The Explanatory Notes split this heading into two categories. The first deals with the first part of the main heading. The notes explain that this part covers lipsticks and other lip make up preparations, eye shadow, mascara, eye brow pencils and other eye make up preparations and “other beauty or make up preparations and preparations for the care of the skin (other than medicaments) such as face powers, baby powders, beauty creams, cold creams, make up creams, skin tonics, body lotions, anti acne preparations.” The other part relates to manicure or pedicure preparations which would not at all cover the product under consideration.

5. It is not disputed by either side that the use of the product is for washing of the skin and of bath. On the face of it, the product does not fall within any of the categories of the first part of Heading 33.04. The show cause notice relies upon the advertised use of the product. It is to be noted that, it is settled law that the use to which the product is purported to be suitable, as claimed by its manufacturer, is not a criterion for its classification. Apart from this, it is difficult to accept that it is advertised as claimed by the department. The notice does not set out any specific basis for the allegations it contain. The advertising that the Departmental representative emphasises, that the product makes its user feel fresh can by no means justify its classification in Heading 33.04. Freshness in by no means an expected or desired result of most of the product of Heading 33.04. It is hard to think of such products as lipstick etc. conferring any freshness upon its user. It is also of course evident that the claim for freshness can be made for any number of products or processes such as sweet, end use preparations, beverages, foods, nutritional substances etc. In fact, such a claim can be made for products which are used in connection with bathing. No one can deny the freshness that results after a wash or a bath. Such a general claim is no justification for classifying the product in Heading 33.04.

6. The Departmental Representative raises the contention that the goods ought to be correctly classified as bathing preparations in Heading 33.07. This was not a case before the Commissioner and it is not permissible for him to raise this contention at this stage. The judgment of the Supreme Court in Warner Hindustan Ltd. v. CCE - 1999 (113) ELT 24, holding that “it is impermissible for the Tribunal to consider the case that has led for the first time in appeal, because the stage for setting out the factual before the authorities below” is sufficient authority for this view. The classification in Heading 33.04 confirmed by the Commissioner therefore cannot be upheld.

7. The appeals are accordingly allowed and the impugned order set aside. Consequential relief.

Equivalent 2003 (151) ELT 387 (Tri. - Mumbai)