TaxTMI 
TaxTMI 
2000 (6) TMI 290
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....DOVE BATHING BAR in their Haji Bunder factory after filing classification list under chapter heading 3401.10 some time in December, 1993. It was provisionally approved and was cleared on payment of duty at 20%, during the period January, 1994 to June, 1994. On 20-6-1994 the appellants filed another classification list in respect of the same product seeking to classify it under Heading 3401.20 attracting basic excise duty at 30% ad valorem. The appellants reclassified DOVE BATHING BAR after ascertaining the inputs used in the manufacture of the product and on their own without being called upon by the department and also paid the differential duty at 10% in respect of the earlier clearances made from January, 1994 to June, 1994. 3.  A show cause notice dated 9th September, 1994 was issued by the Assistant Commissioner to the appellants requiring them to reply as to why the bathing bar under the trade name Dove not be reclassified under chapter heading 3304 attracting basic excise duty at 70% ad valorem from 15-12-1993 and attracting excise duty ad valorem w.e.f. 1-3-1994. By their letter dated 30-1-1995 a reply was filed and written submission was filed by their letter dated....
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....nd, therefore, under the rules of interpretation, the criteria of pre-dominance should be applied in determination of classification. Hence these appeals. 4. Shri C.S. Lodha, Advocate, argued for the appellants and Shri Deepak Kumar, DR, argued for the department. 5. Shri Lodha argued that the appellants claim the product as an item coming under chapter heading 3401.20 whereas the department claims it under 3304. He invited our attention to chapter note 33 as available from 1994-95 period which states at note 1(a) that the chapter does not cover soap or other products of heading 3401. He stated that soap is one of the species out of generic term cosmetics. He also referred to HSN notes for soap as well as organic surface active products pages 18 and 519. He took us through the ISI definition which states that (IS: 7597 to 1974 UDC 661.185.12:001.4 1975 where soap has been defined at paragraph 4.1.4 as follows: a product specifically formulated and manufactured for use as a detergent wherein the surface active agent is predominantly the salts of mixtures of fatty acid contained at least 8 carbon atoms. The surface active agent has been defined as a chemical compound ....
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....nson's pH 5.5 - Johnson (4) & Johnson. He mentioned composition of Lux International which contents : Soap 85%, - Moisture 13%, - Perfume 1%, - Sodium Chloride 0.7%, - Preservatives 0.3%. - He also read what is emollients. He vehemently charged that the appellate authority had erred in mentioning at page 170 where the appellate authority held as follows: "It is also not their case that the subject product is covered under technical acceptance of bathing bar, as contained in Indian Standard Bathing Bar specification ....." He stated that in reply to the show cause notice at page 32 the appellants have stated that the product is described as bathing bar under the Drugs and Cosmetics Act. The soaps are classified in two types namely bathing bar and toilet soap. Bathing bars are soaps while toilet soaps are based on fatty matter ingredients. Bureau of Indian Standards which are mandatory policy lays down a specification of bathing bar and toilet soaps separately. At page 36 also in the written submission it was stated that essentials between ....
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....ing bars at paragraph 42.1. He also invited our attention to Annexure 'X' to the said Bathing Bar Specifications which contained in page 7 thereof. 6. In reply Shri Deepak Kumar states that even though the appellants contention that it is a bathing bar and undisputedly it is used as soap and he states that it is not used as a soap, it is used as only SKIN CARE. He invited our attention to the composition of the products which states stearic acid and coconut acid, fatty acid 22% and perfume is 1.5% and moisture is 5%, sodium salt 12%. Therefore, the fatty matter is only 34% and not 40% as required under Bathing Bar Specifications as mentioned in the ISI. Hence he states that it cannot be treated as a bathing bar. Moreover OSAA shows organic surface active agent is 53% namely sodium cocyl isethionate and sodium dodecyl benzene is 2%. It is argued that therefore it can never be a bathing bar and he also emphasized that it is not used as soap. He invited our attention to the same observation of the order-in-appeal at page 5 to the same extract which the counsel showed. He states that in the appeal memorandum at page 18 what is stated therein which reads as: "Without prejudice t....
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.... of ellipsoidal shaped dull white piece having fragrance. It is sticky in feel and is not alkaline. It is composed mainly of combined fatty matter, free fatty matter, OSAA & emollient materials such as Lecithin etc. The percentage of OSAA is much more than 5%. The sample does not satisfy the statutory definition of Soap as given in the HSN as much as it is not an alkaline Salt of a fatty acid or a mixture of fatty acids coupled with the advertisements, it is unlike soap, but it is a beauty bar". The Dy. Chief Chemist's report is contradictory to the declaration given by the Company." In reply to the show cause notice the appellants by their letter dated 30-1-1995 at page 3, paragraph iv stated as follows : "The Dove bathing bar is described as bathing bar because under the Drugs and Cosmetics Act, the soaps are classified in two types, viz. Bathing Bars and Toilet Soaps. Bathing Bars are performance based soaps while toilet soaps are based on a fatty matter or ingredient based soap. The Bureau of Indian Standards which are mandatory also lays down the specifications of Bathing bar and Toilet Soaps separately. We crave leave to refer to and rely upon the same at the time of pe....
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....eparately." In the Order-in-Original in the finding portion it was found by the AC as follows : "I have gone through the case records while deciding the correct classification of the product 'Dove Soap'. I have discussed the issue in length vide Order-in-Original No. 95/96 dated 20-12-1996 passed by me under F. No. CLVL/FII/VI/HLL/94. It is agreed that 'Dove' contains more than 1/4 moisturising cream comprised to 23% fatty acids, 5% moisture and pH 6 to 7 i.e. very mild acidic or neutral and 1.5% perfume. The product 'Dove' is cosmetic preparation as beauty bar and used for care of the skin to moisturising cream and does not dry skin like soap. Therefore, the said product merit classification under CH. S.H. 3004.00 attracting duty @ 40% for March 1995, @ 40% for January 1997 to February 1997 and @ 30% to March 1997 to May 1997. Therefore, I find that SCNs issued by the Range Superintendent are sustainable and are required to be confirmed. Accordingly, I pass the following order." In the Order-in-Appeal when the appeal was filed in paragraph 13 of the said order the Commissioner (Appeals) has held as follows : "Appellants have also not claimed the classification for the ....
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.... of Dove is as follows : Item % incorpn Nature Function Sodium Cocyl Isethionate 51 % Organic Surface Active Agent Cleaning & Foam Sodium Dodecyl Benzene Sulphonate 2 % Organic Surface Active Agent ² Stearic Acid and Coconut Acid 22 % Fatty Acid Binder Sodium Salt of Vegetable Oil, Sodium Cocoate and Sodium Palm Kernelate 12 % Soap Cleaning Sodium Chloride and Sodium Isethionate 5.6 % Electrolyte Bar hardening Perfume 1.5 % Fragrance Tri-Sodium EDTA and Tri-Sodium Etidronate 0.2 % Chelating agent Preservative BHT 0.2 % Phenolic compound Anti-oxidant Titanium Dioxide 0.5 % Pigment Impart whiteness Moisture 5 % Water Moisturiser Composition of Moisturising Cream is like this :- Item % incorpn Nature Function Stearic Acid 22 % Fatty Acid Moisturiser Moisture 50 % Water   ² Mineral Oil 10 % Paraffin   ² Glycerine 10 % Chemical   ² Tween 60 5 % Organic Surface Active agent Emulsifier Perfume 3 % Perfume Fragrance ....
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....onate. 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." So when we go through this it is very clear that the product contains fatty acids OSAA which is sodium cocyl isethionate 53%. But if it is an OSAA, does it indicate coming under 3401? What does it say? If we look into the chapter heading it starts with soap, OSAA products organic surface active products and preparation for use as soap in the form of bars. The product here is in the form of bar. It can be the chapter heading which covers soap in any form. What is soap has been already described in HSN. The various categories of soaps are also mentioned. It is not the case of the appellants that they are having soap only. Here the soap is consisted in the form of sodium salt, it contains 11 to 12%, i.e. less than what is contained in OSAA which comes to nearly 53%. The bathing bar has been....
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....ay contain synthetic actives in addition, it becomes necessary to quantify the fatty chain (s) linked with synthetic surface active agents and include their contribution to the TFM. Fatty chain anionic surfactants undergo hydrolysis when refluxed with mineral acids to give corresponding fatty matter which can be extracted by petroleum ether along with fatty matter from soap. Non-fatty anionics like LAS and AOS do not undergo hydrolysis and therefore do not interfere in the analysis. Since several synthetic surfactants are permitted to be used in bathing bar formulations, there is wide variation in the molecular weight range of these surfactants. Estimation of individual surfactants is not necessary from the analytical point. The analytical strategy involves the estimation of total absolute alcohol soluble matter which will include all surfactants (soaps, non-ionics, anionics and amphoterics). This is the total actives. This absolute alcohol soluble matter is refluxed with 2 N sulphuric acid and extracted with petroleum ether. The residue obtained after evaporation of petroleum ether is the total fatty matter comprising of free fatty acid, fatty matter from soap, as well as....
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....at toilet soap is based on composition and bathing bar is based on performance." Paragraph 13 makes a very pointed reference to skin preparations and soap : "I further state that merely because some soap contain emollient material by itself cannot make such product as cosmetics. Essentially, the difference between soap and skin preparations is that while soap is used for cleaning purposes and it is a rinse off product whereas skin preparation are used for beautification of skin and are leave-on products. Further, skin preparations do not contain active agents which are used for cleaning purposes in most types of soaps. In Dove the active agent is as high as 50%. Dove cannot, therefore, be classified as beauty preparations or cosmetic in technical sense of the term." These two paragraphs clearly clinch the issue for and on behalf of the assessees. Unfortunately the department has not filed any affidavit nor did they bring any evidence to rebut the same. No doubt in page 4 paragraph 14 they say something about care of skin. The moment any product comes within chapter 3401 comes into play and such a product goes out of chapter 33 in view of chapter note 1(b) thereof. We are t....
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....s could never be considered as an item of cosmetic or toilet preparation." 14. In the case of Blue Star Ltd. v. UOI [1980 (6) E.L.T. 280] the Bombay High Court was considering the classification of "walk-in-coolers". There also the advertising material had led the department to classify the product to the detriment of the assessee. In holding for the assessee the High Court held - "In any event, what the petitioner may advertise by way of attracting customers, can be no criterion for adjudicating upon the issue whether duty is payable under a particular tariff item. In other words, 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. Thus, it is not on the basis of what the petitioner advertises to attract customers, can its liability to pay duty under a particular tariff item be fastened but on the facts and circumstances actually existing and on a determination whether on the basis of those facts and circumstances as disclosed by the record, the case would fall within the provisions of Tariff Item No. 29A (1) or not". The present case is another example of how the tall claims ma....
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....t some of the ingredients such as cocyl isethionate which is a Organic Surface Active Agent had the function of cleaning and foaming would also classify for TFM as a percentage thereof. Similarly, stearic acid and coconut acid were fatty acids and would count towards the TFM content. 21. During the proceedings, Shri Lodha's attention was drawn to the claim containing of 1/4th moisturing cream. A specific question was made whether the cream was first made and then added as an input in making the soap. Shri Lodha very candily explained the reality and that is that the ingredients in the soap were of such kind and of such quantity as would be available in a moisturing cream weighing 1/4th of the weight of the soap. In the face of this explanation, I agree with the ld. brother that the contested product contained sufficient TFM to qualify as "soap". Since the bathing bar does not have a separate identity in the Tariff, it is not necessary to labour the issue whether the contested product passes muster as bathing bar or not. 22. The limited issue is whether dove is an OSAA product for use as soap or whether it is a preparation for the care of the skin. Shri Lodha has dem....