TaxTMI 
TaxTMI 
2001 (9) TMI 1115
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....gents (P) Ltd., M/s. Sabena Detergents (P) Ltd. and M/s. Alpha Detergents (P) Ltd., are all licensees who also manufacture the same product and market the same. All of them are the first sellers of the product. 3.. Scientific Compounds and Process Private Limited, commenced manufacturing this product prior to 1965. The product manufactured by it being taxable it was taxed originally under entry 37 of the Schedule to the Tamil Nadu General Sales Tax Act. That entry till July 1, 1967 read as soaps. Subsequently though there were changes in the description of the items covered by entry 37 between July 1, 1967 and April 1, 1999, this product was, till the assessment year 1991-92 for a period of over 25 years brought to tax only under entry 37. It is necessary to notice the change in the description in entry 37 in this period. From the time of enactment till July 1, 1967, the entry was "soaps". From July 1, 1967 to August 1, 1968 it reads as "All kinds of soaps and soap powder including metal polishing bar". From August 1, 1968 to February 20, 1974 the entry was "All kinds of soaps, soap flakes, soap powders, detergent powders and liquids and metal polishing bars". From February 20, ....
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.... 1977. Metal polishers were specifically mentioned as having been excluded from March 12, 1993 onwards. 6.. Even before the word "detergent" was used in the entry, the powder manufactured by the assessee being undisputedly a powder used for cleansing, was regarded as "soap" by the assessing authorities and, after the word "detergent" came to be included in the entry, was regarded as detergent powder "continuously from August 1, 1968 till 1991 for a period of twenty three years. In this period the Commissioner has also issued clarifications instructing his subordinates to assess the product manufactured by the assessee as a detergent powder". It was only in the year 1993 that the Commissioner, for the first time, took the stand that the cleansing powder manufactured by the assessee is not a soap or detergent and that it has to be taxed under section 3(1) of the Act and later under the residuary entry. 7.. The provisions referred to by the Commissioner are the residuary provisions which bring to tax, goods which are not covered by any of the specific entries in the Schedule. The rate of tax for entries for goods falling under the residuary entry which was eight per cent earlier....
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....ircumstances in which the residuary entry can be invoked are well-settled. The Supreme Court in the case of Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise (1990) 45 ELT 525 a case which arose under the Excises and Salt Act, 1944 has observed thus, "The question before us is whether the Department is right in claiming that the items in question are dutiable under tariff entry No. 68. This, as mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item". 11.. Applying the tests so formulated by the apex Court, it is clear, on the facts of this case, that it cannot be stated that the cleansing powder manufactured by the assessee which is used primarily for cleaning utensils cannot, by any conceivable process of reasoning be brought under entry 37, more particularly the word "detergent" thereunder when the Revenue itself h....
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....titute for soap but became a product in many ways superior to soap." Synthetic detergents, it is noted in this Encyclopaedia. ".....are generally unaffected or very little affected by metal salts or acids; although they may react chemically with them the resulting compounds are either soluble or remain dispersed in colloidal form in the solution. Other useful properties of the synthetics such as solubility in cold water and flexibility in formulation..." The same Encyclopaedia also refers to various materials which are added to detergents to obtain specific characteristics. Such materials are optical brighteners, water softeners and abrasives. Abrasives are water-insoluble minerals. Examples of such waterinsoluble minerals given thereunder in that Encyclopaedia are talc diatomaceous earth, silica, marble, volcanic ash, (pumice), chalk, feldspar, quartz and sand. These abrasives, it is mentioned, are often powdered and added to soap or synthetic detergent formulations. 15.. It is thus clear that while detergents are synthetic formulations and are water soluble, the use of such detergents with additives is well known. The addition of abrasives to the detergent is c....