2007 (12) TMI 42 - AT - Central Excise

MEDIMIX brand toilet soap - classifiable under heading 3401.12 as claimed by the assessee as no power or steam was used in, or in relation to, its manufacture or under sub-heading 3401.19 as claimed by the Revenue electricity has been used for transportation of raw material to the tanks not in conversion of raw material to soap so appellant stands is absolutely right impugned goods classifiable under heading 3401.12

Summary

Issues: Classification of 'MEDIMIX' brand toilet soap under heading 3401.12 or sub-heading 3401.19

Issue 1: Classification of the product under heading 3401.12 or sub-heading 3401.19
The case involved determining the classification of the appellant's product, 'MEDIMIX' brand toilet soap, under heading 3401.12 or sub-heading 3401.19. The appellant argued that their product should be classified under S.H 3401.12 as no power or steam was used in its manufacture process. The Revenue contended that power was indeed used in the manufacturing process, thus classifying it under sub-heading 3401.19. The appellant highlighted that power was only used prior to the manufacturing process and not during the actual soap production. The Commissioner of Central Excise, Chennai had previously ruled in favor of the appellant's classification under S.H 3401.12. The appellant also cited a Tribunal decision and argued based on Notification No. 230/86-C.E. to support their claim.

Issue 2: Precedents and legal arguments
The appellant relied on the Tribunal's decision in Shalimar Paints Ltd. v. CCE, Kolkata and argued that the transportation of raw materials using power did not constitute a part of the manufacturing process, thus supporting their classification under S.H 3401.12. On the contrary, the Senior Departmental Representative (SDR) referred to the Tribunal's decision in Mathanja Fabrics v. CCE, Jaipur and a Supreme Court judgment in CCE v. Rajasthan State Chemical Works to argue against the appellant's classification. The SDR contended that power usage in specific processes should determine the classification of the product.

Issue 3: Analysis of previous decisions
The Tribunal analyzed past decisions related to power usage in manufacturing processes. In the case of Shalimar Paints, it was held that activities like transferring raw materials using power did not constitute a part of the manufacturing process, thus supporting the appellant's claim. Conversely, in Mathania Fabrics, power usage in specific stages of the manufacturing process led to a different classification. The Tribunal distinguished cases where power was used directly in the manufacturing plant, unlike the present scenario where power was used for raw material transportation.

Judgment
After considering the submissions and precedents, the Tribunal accepted the appellant's case and classified the 'MEDIMIX' brand toilet soap under heading 3401.12. The Tribunal emphasized that power usage in transporting raw materials did not constitute power usage in the actual manufacturing process of soap. Consequently, the demand of duty and penalty were set aside, and the appeal was allowed.