2002 (3) TMI 682 - AT - Central Excise

Summary

Issues Involved:
1. Classification of VIM Dish Wash Bar under the CET Act.
2. Applicability of Note 2 to Chapter 34 for classification.
3. Jurisdiction and maintainability of the Commissioner's appeal under Section 35E.
4. Interpretation of HSN notes and their persuasive value in classification.
5. Role and relevance of the Chemical Examiner's report in classification.

Issue-wise Detailed Analysis:

1. Classification of VIM Dish Wash Bar under the CET Act:
The primary issue was whether VIM Dish Wash Bar should be classified under sub-heading 3405.40 as a 'scouring preparation' or under sub-heading 3401.20 as an 'organic surface-active product for use as soap'. The Assistant Commissioner initially classified it under 3405.40, but the Commissioner (Appeals) reclassified it under 3401.20, stating that the product, being a mixture of surface-active agents and abrasive materials, functions primarily as a soap. The Tribunal upheld the original classification under 3405.40, emphasizing that the product's primary function is scouring, given its high abrasive content (78%).

2. Applicability of Note 2 to Chapter 34 for Classification:
Note 2 to Chapter 34 specifies that products containing abrasive powders remain classified under heading 34.01 only if in the form of bars, cakes, or molded pieces. The Tribunal noted that VIM Dish Wash Bar, although in bar form, is primarily a scouring preparation due to its high abrasive content. The Tribunal concluded that the product is excluded from heading 34.01 and falls under heading 34.05, which covers scouring powders and similar preparations.

3. Jurisdiction and Maintainability of the Commissioner's Appeal under Section 35E:
The assessee contended that the appeal by the Commissioner was not maintainable as the classification had already been accepted by the Commissioner in a prior review. The Tribunal found that the directions under Section 35E were issued within the stipulated period and that the prior review did not pertain to the same file, thus the appeal was maintainable.

4. Interpretation of HSN Notes and Their Persuasive Value in Classification:
The Tribunal emphasized the persuasive value of the HSN notes for tariff classification, citing precedents from the Supreme Court. The HSN notes for heading 34.01 and 34.05 were crucial in determining that abrasive soaps in bar form fall under heading 34.05 if they function primarily as scouring preparations. The Tribunal concluded that the product's predominant function as a scouring preparation, supported by its high abrasive content, warranted classification under heading 34.05.

5. Role and Relevance of the Chemical Examiner's Report in Classification:
The Chemical Examiner's report stated that the product is composed mainly of water-insoluble inorganic compounds and synthetic organic surface-active agents. The Tribunal noted that the Chemical Examiner's role is to provide test results, not classify the product. The report supported the conclusion that the product is not soluble in water and functions primarily as a scouring preparation, thus aligning with the classification under heading 34.05.

Conclusion:
The Tribunal upheld the classification of VIM Dish Wash Bar under sub-heading 3405.40 as a 'scouring preparation', setting aside the orders of the Commissioner (Appeals). The decision was based on the product's predominant abrasive function, the persuasive value of the HSN notes, and the Chemical Examiner's report. The appeals were allowed, and the original classification by the Assistant Commissioner was restored.