2010 (10) TMI 400 - AT - Central Excise

Classification - Demand - the products in question do not contain any soap but are organic surface active agents - The difference between the two entries is that whereas Chapter 34 covers cleaning preparations Chapter 33 includes bath preparations - That in view of the HSN their products under reference are specifically excluded from the scope of Heading 33.07 and specifically included under the scope of Heading 34.02 - The product being an OSSA product and keeping in view the amended provisions of explanatory notes, such products have to be held as classifiable under Heading 34.02 - Tribunal in the case of Mul Dentpro Pvt. Ltd. v. CCE, Vapi 2007 -TMI - 2681 - CESTAT, AHMEDABAD) in which case Pears Face Wash, produced on the principle of surface active agents was held to be classifiable under Heading No. 34.02 - Accordingly decided in the favour of the assessee

Issues Involved:
1. Correct classification of Lux Body Wash, Lux Skin Care Moisturizing Body Wash, and Lux Skin Care Deep Cleaning Body Wash.
2. Demand of duty and imposition of penalty.
3. Interpretation of Chapter 34 and Chapter 33 of the Central Excise Tariff Act, 1985.
4. Application of the Harmonized System of Nomenclature (HSN) explanatory notes.
5. Limitation aspect under Section 11A of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Correct Classification of Products:
The primary dispute revolves around the classification of three products: Lux Body Wash, Lux Skin Care Moisturizing Body Wash, and Lux Skin Care Deep Cleaning Body Wash. The appellants claim classification under Heading 3402.90, while the Revenue asserts classification under Heading 3307.39. The Tribunal noted that the products do not contain soap and are organic surface-active agents. The classification hinges on whether the products are considered "cleaning preparations" under Chapter 34 or "bath preparations" under Chapter 33.

2. Demand of Duty and Imposition of Penalty:
A demand of duty amounting to Rs. 28,20,347/- was confirmed against the appellant, along with an identical amount in penalty, for the period from October 2000 to February 2002. This demand was based on the classification under Heading 3307.39 as claimed by the Revenue.

3. Interpretation of Chapter 34 and Chapter 33:
Chapter 34 covers "cleaning preparations," while Chapter 33 includes "bath preparations." The Tribunal emphasized the importance of the amended HSN explanatory notes (February 1998), which clarify that preparations consisting wholly or partly of organic surface-active agents, in liquid or cream form, for washing the skin, fall under Heading 34.02. The Tribunal found the Commissioner (Appeals)'s interpretation of limiting the scope to hand washing as unjustified.

4. Application of HSN Explanatory Notes:
The Tribunal relied on the amended HSN explanatory notes, which explicitly state that preparations consisting wholly or partly of organic surface-active agents, in liquid or cream form, for washing the skin, are classified under Heading 34.02. This interpretation was supported by precedent decisions in similar cases, such as Mul Dentpro Pvt. Ltd. v. CCE, Vapi, and Hindustan Unilever Ltd. v. CCE, Chennai, where products like Pears Face Wash and Liril Active Shower Gel were classified under Heading 34.02.

5. Limitation Aspect:
The Tribunal did not delve into the limitation aspect under Section 11A of the Central Excise Act, 1944, as the appeal was allowed on merits.

Conclusion:
The Tribunal concluded that the products in question should be classified under Heading 34.02, rejecting the Revenue's claim under Heading 3307.39. Consequently, the demand of duty and imposition of penalties were set aside. The appeal was allowed on the grounds of correct classification, making it unnecessary to address the limitation aspect.

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