Classification of soap noodles turned on their form at clearance, not intended future use, under the exemption notification.

Soap noodles were classified on the basis of their condition at the time of clearance, not their intended end use after further processing. CEGAT held that noodles cleared in unfinished form did not answer the description of "soap for toilet use" under Notification No. 12/93-C.E. because they were not themselves toilet soap when presented for assessment. They therefore fell within the residuary category of other soaps and attracted duty at 5% ad valorem; the higher demand and penalty were set aside.

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Issues: Whether soap noodles cleared in noodle form were "soap for toilet use" under Notification No. 12/93-C.E. and therefore liable to duty at 20% ad valorem, or whether they fell under the residuary description of other soaps attracting 5% ad valorem.

Analysis: The relevant point for classification was the condition of the goods at the time of presentation for assessment. Although the noodles were intended to undergo further processing and would ultimately become toilet soap, the goods as cleared were not themselves toilet soap or soap for toilet use. The notification distinguished between soap for toilet use and other soaps, and the goods in noodle form, requiring further processing before becoming toilet soap, did not answer the description of soap for toilet use.

Conclusion: The goods were not classifiable as soap for toilet use and were liable only to duty at 5% ad valorem; the demand and penalty were set aside in favour of the assessee.

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