TaxTMI 
TaxTMI 
2011 (1) TMI 731
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.... passed by Commissioner (Appeals) in respect of various show cause notices issued for the period Nov 2000 to Jan 2003, wherein he allowed the appeal filed by the appellants against order-in-original confirming the demands and this appeal is numbered as E/3725/2004. All the appeals involve the same issue namely classification of the above products and consequent demand against the appellants. 2. All the four products mentioned above are different variants of the same product and there is a marginal variation in the level of main ingredient viz. Sodium Hypochlorite. The classification claimed by the appellant is under sub-heading 3808.90 of schedule of Central Excise Tariff Act, whereas the department proposed to classify the same under sub-heading 3402.90 of schedule of Central Excise Tariff Act (referred to as CETH). 3. This is the second round of litigation. In the first round, the matter had reached the Tribunal and the Tribunal by its order No. A/604 & 605/WZB/04-CI dated 22-3-2004 [2004 (170) E.L.T. 566 (T)] had upheld the classification under CETH 3808.90, as claimed by the appellants. 4. On an appeal filed before the Hon'ble Supreme Court by the Revenu....
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.... to above. 5. In the meanwhile, when the litigation relating to the re-classification and demand for the period from Oct 1997 to Oct 2000 was going on, the demands issued by the Revenue for the subsequent period from Nov 2002 to Jan 2003, were decided by the Commissioner (Appeals) in favour of the appellants, following the decision of the Tribunal upholding the classification of the products under CETH 3808.90. Appeal E/3725/2004 filed by the Revenue against this order is also required to be considered along with the appeal filed by the appellant against the order of the Commissioner dated 22-1-2008. 6. Heard both the sides and have gone through the records. 7. On behalf of the appellants it was submitted that in the appeal before the Hon'ble Supreme Court, the department had raised two contentions. The first contention was that the product was required to be diluted at the time of application and therefore, the nature of product at that stage should be examined and this has been rejected. The second contention was that since 'Disinfectant' was placed in the company of Insecticides, Rodenticides, Fungicides, Herbicides etc. and the expression "Cide" means "t....
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....he remand order of the Apex Court and passed a very detailed order. He submitted that according to the description of the goods in the classification list filed by the appellant and on the label of the product and also literature would show clearly that the product cleans the surface and also kills the germs. He drew our attention to the word "also" used in the labels and in the manufacturing process and product description filed with the department and submitted that this would show clearly that the main purpose of the product is to clean the surfaces and it also serve the subsidiary purpose of killing germs. He further submitted that the reliance of the Commissioner on the decision of the Authority for Advance Rulings in the case of Technical Concepts International Limited - 2006 (204) E.L.T. 251 (A.A.R.) is appropriate and in this decision also the AAR, had taken a view that what is to be seen is the main purpose of the product and the fact that product is capable of killing the germs or it contains disinfectant cannot be the only criterion to be adopted for the purpose of classification. He also relied upon the decision of the Apex Court in the case of Sujanil Chemo Industries ....
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....SS Vessel, heat upto 70 degree centigrade and add Lauric acid, caustic soda lye then solution is clear and add Lauryl Amine oxide, sodium silicates and perfumes and stirred for 15 minutes and then stop stirring. Then the product is packed in the retail containers of plastic. In the 173-B declaration dated 17-2-97, end use of the Domex All purpose Disinfectant Cleaner has been mentioned as a surface cleaner like floors, kitchen slabs, tiles, bathrooms etc." 12. It is the claim of the appellants that the four variants of the Domex contains Sodium Hypochlorite from 1.5% to 3% and they have relied upon the certificate issued by the Commissioner Food and Drugs Control administration. 13. Sodium Hypochlorite is, according to the Hawley's Condensed Chemical Dictionary which defines Sodium Hypochlorite as below :- "Sodium Hypochlorite (NaOCl 5HOH) - Properties : Unstable in air unless mixed with sodium hydroxide. Strong oxidizing agents, usually stored and used in solution, disagreeable, sweetish odor and pale greenish colour, soluble in cold water, decomposed by hot water, mp 18C. Hazard Five risk in contact with organic materials, Toxic by ingestion, s....
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.... HSN the heading 34.02 comprises of two parts/groups covering (I) Organic Surface Active Agents (other than soap); and (II) Surface Active Preparations, Washing preparations and Cleaning Preparations, whether or not containing soap, other than those of Heading 34.01. 7.20 The said second group (II) comprises of (3) categories of preparations namely (A) Surface Active Preparations; (B) Washing Preparations and Cleaning Preparations, having a basis of soap or other Organic Surface Active Agents; and (C) Cleaning or Degreasing Preparations not having a basis of soap or other Organic Surface Active Agents. 7.21 The second category of preparations i.e. Washing and Cleaning preparations as appearing at page No. 630 of the HSN is as under; (B) Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents. This category covers washing preparations, auxiliary washing preparations and certain cleaning preparations. These various preparations generally contain essential constituents and one or more subsidiary constituents. The presence of these latter constituents distinguishes, in....
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....ations or articles (for example, sulphur-treated bands, wicks and candles and flypapers) 3808.10 - Insecticides, fungicides, herbicides, weedicides and pesticides 3808.20 - Plant Growth Regulators. 3808.90 - Others." 23. Corresponding notes provided in HSN in respect of this Chapter are as under :- "This heading covers a range of products (other than those having the character of medicaments, including veterinary medicaments-heading 30.03 or 30.04) intended to destroy pathogenic germs, insects (mosquitoes, moths, Colorado beetles, cockroaches etc.), mosses and moulds, weeds, rodents, wild birds, etc. Products intended to repel pests or used for disinfecting seeds are also classified here. These insecticides, disinfectants, herbicides; fungicides, etc., are applied by spraying, dusting, sprinkling, coating, impregnating, etc., or may necessitate combustion. They achieve their results by nerve-poisoning, by stomach- poisoning, by asphyxiation or by odour, etc." The scope of the said sub-heading 3808.40 is further enumerated at Page 681, 682 & 683 of HSN which reads as under : At pg. 681 of HSN, the scope of the products under the said Heading 3808 is refe....
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....24. The products in this case are not sold as disinfectant but are sold as cleaning agents which can also kill germs. HSN also provides that products having multiple uses and are therefore prima facie classifiable in more than one headings are usually classified by application of general Interpretative Rule-3. 25. We agree with the Commissioner on his observation that on the basis of extracts from HSN and the Tariff Heading, for a product to be classified as "disinfectant" under Chapter 38, the following conditions have to be satisfied by the product :- (1) The product should have capacity to destroy or irreversibly inactivate undesirable Bacteria, viruses or other microorganisms, generally on inanimate objects. (2) The product should be put up in packing for retail sale as disinfectants. (3) The disinfecting, insecticidal, etc. properties of the product should not be subsidiary to any other function. (4) The product should not be covered by more specific headings of the Nomenclature elsewhere. 26. As regards ability to destroy or inactivate undesirable bacteria, germs, microorg....
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....rned Commissioner picked up only portions of the HSN notes which are in their favour without considering the notes as a whole and the conclusion that emerges from the notes viz-a-viz Chapter headings. 28. As regards the submission of the appellants that the Commissioner had completely ignored the decision in the following cases namely; (a) Bombay Chemicals case - 1995 (77) E.L.T. 3 (b) Bengal Chem. & Pharmaceuticals v. CCE, Mumbai - 2001 (138) E.L.T. 844 (Tr. Mum.) (c) Balsara Hygiene Products Limited v. Collector of Central Excise - 1999 (106) E.L.T. 41 (Tribunal) (d) Rosin & Terpentine Factory case - 1997 (94) E.L.T. 187 The decision in the case of Bombay Chemicals was rendered with reference to the erstwhile tariff as had it existed prior to 1986. In this case the Tribunal had found that the products under dispute were being referred to and marketed as disinfectants. In this case, the department's case is that the main function of the product is that of cleaning agent and the products are not being sold as disinfectants. Therefore, this decision is not relevant. In th....
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...., kitchen cabinets and window glass. Domex Power Cleaner makes your kitchen sparklingly clean and a safe place to be in. Domox Power Cleaner kills 100% germs when used undiluted Active ingredient : Sodium Hypochlorite (min. 0.5% w/w) Excipient : Myristic acid, amine oxide, sodium silicate, sodium hydroxide, perfume and water. Caution : Do not use the product along with other products, i.e.: Acids, Detergents etc. It may release dangerous gases (chlorine). Keep away from children. If swallowed drink one or two glasses of milk or water. Seek medical help. Avoid contact with eyes and skin. In case of accidental contact with eyes, rinse immediately with plenty of water and seek medical advice. Show the container or label to the doctor. In case of contact with skin, wash immediately with plenty of water. Keep only in the original container and store upright in a cool place." The labels and the contents clearly show that product is being sold as a cleaning agent which also kills germs. In fact, the label also says that it contains powerful Hypo formula, which obviously is Sodium Hypochlorite to show that it can remove dirt and stains completely and also kills germs. The wo....
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....n active agent and subsidiary constituents are other than OSAA. In fact, even HSN notes mention subsidiary components of cleaning agents in the HSN which cover Sodium Hypochlorite. The most important aspect which supports the case of the Revenue is the label of the product which specifically says that Domex cleans and also kills germs. In view of the labels, manufacturing process declared by the appellants under Rule 173(B) of Central Excise Rules, 1944, the product is sold to the public declaring as cleaning agent which also kills germs, the classification has to be as a cleaning agent. 33. It was also submitted that the chemical examination report was partial and does not help the case of the department. In fact while making submission, the appellant did not quote the last sentence, "on the label it is stated to be used as cleaner", special preparations, 34.02(ii)(B) of HSN (cleaning preparations). This shows that the chemical examiner while examining report had seen the contents of the products and had also taken note of notes in HSN. If it was disinfectant or if the function was mainly that of disinfectant, chemical examiner could not have ignored. In any case, the disp....