2018 (6) TMI 914 - AT - Central Excise

Benefit of N/N. 88/1988-CE - Silky brand liquid hand wash/liquid soap - Resham brand bathing bars/soap - non-speaking order - Held that - As per notification, if the items qualify to any of the description i.e. laundry and carbolic soap and to synthetic detergent, the exemption would be available - The Commissioner has ignored the reports of the two independent laboratories and simply relied on the report of the Chemical Examiner. Ideally the Commissioner should have examined the reports of the independent laboratory also. This is more so since the Chemical Examiner in his letter dated 19.10.2012 has clearly observed that the essential constituents are synthetic organic surface active agents or soaps or mixtures thereof and the same were found to be present in the sample. The subsidiary constituents like builders, boosters, fillers and ancillaries were missing. In these circumstances, it is felt that the Commissioner has simply ignored the reports of the independent laboratory. To that extent, the order of the Commissioner is not a speaking order. Resham Brand bathing bar/soap - Held that - It is seen that the product has been described as a bathing soap and, therefore, the same need not be tested for the description laundry soap. The Chemical Examiner has ruled out the description carbolic soap and thus, the only claim of appellant which needs examination is whether soap is a detergent. Soap by definition cannot be a detergent as detergent is a carbolic compound whereas the soap are made from the fact and alkali - the exemption is not available to the Resham band bath soap since it does not fall under the category of laundry and carbolic soap and synthetic detergent. Quantification of duty - Held that - It has been admitted by both sides that there is error in booking the figures. For the said purpose the matter is to be remanded for correct quantification in line with the figures obtained from the appellant or from the buyers. Appeal allowed by way of remand.

Summary

Issues:
- Denial of exemption notification and confirmation of demand of duty, interest, penalty, and confiscation of goods.
- Classification of Silky brand liquid hand wash/liquid soap and Resham brand bathing bars/soap under Notification No. 88/1988-CE.
- Discrepancy in quantification figures.
- Denial of small scale exemption and cum duty benefit.
- Assessment under Section 4 vs. Section 4A valuation.

Analysis:

Issue 1: Denial of exemption notification and confirmation of demand:
The appellants, engaged in manufacturing various products, challenged the denial of exemption under Notification No. 8/88-CE for items like Silky brand liquid hand wash/liquid soap and Resham brand bathing bars/soap. The Chemical Examiner's reports and independent laboratory tests conflicted on the classification of these products. The Commissioner relied solely on the Chemical Examiner's report, ignoring the independent lab reports, leading to a non-speaking order. The Tribunal noted the discrepancies and remanded the matter for a proper examination of all reports.

Issue 2: Classification of products under Notification No. 88/1988-CE:
The Chemical Examiner's report confirmed that Silky brand liquid hand wash was not laundry soap or synthetic detergent. However, reports from independent labs contradicted this, stating the product was a synthetic detergent. For Resham brand bathing bars, the Chemical Examiner ruled out carbolic soap but did not test for laundry soap or synthetic detergent. The Tribunal held that since the product was a bathing soap, not carbolic soap, and not a detergent, it did not qualify for exemption under the notification.

Issue 3: Discrepancy in quantification figures:
Both parties acknowledged errors in quantification figures, necessitating a remand for correct quantification based on figures from the appellants or buyers. Additionally, the denial of cum duty calculation benefits was deemed incorrect, and the appellants were entitled to such benefits as per precedents.

Issue 4: Denial of small scale exemption and cum duty benefit:
The appellants contended that the small scale exemption was wrongly denied due to lack of data, despite providing all necessary information. The Tribunal directed a re-examination of the SSI exemption claim. Moreover, the denial of cum duty calculation benefits was overturned based on a Supreme Court decision, entitling the appellants to such benefits.

Issue 5: Assessment under Section 4 vs. Section 4A valuation:
The appellants argued against the assessment under Section 4, contending that the commodities fell under Section 4A. The Tribunal did not delve into this issue explicitly but allowed the appeal by remanding the case for a reevaluation based on the above considerations.

In conclusion, the Tribunal allowed the appeal by remand, emphasizing the need for a comprehensive review of all reports, correct quantification, examination of exemption eligibility, and reconsideration of small scale exemption and cum duty benefits.