1979 (7) TMI 94 - CGOVT - Central Excise

Summary

Issues:
1. Classification of Palmolive brushless shaving cream under tariff item No. 15(2) of the Central Excise Tariff.
2. Interpretation of the term "soap" in the context of excisability.
3. Impact of the Supreme Court judgment on the classification of similar products.
4. Application of the commercial parlance test in determining excisability.
5. Comparison of chemical composition and commercial recognition in classifying products for levy of excise duty.

Detailed Analysis:
1. The judgment dealt with the classification of Palmolive brushless shaving cream under tariff item No. 15(2) of the Central Excise Tariff before the insertion of entry 14F (iii) on 1-3-1973. The petitioner argued that the product should not be classified as soap under the tariff entry based on commercial usage and composition, supported by affidavits from traders in major cities. The petitioner contended that the product's composition, specifically the presence of tri-ethanolamine, did not align with the functional purpose of soap commercially known as such.

2. The interpretation of the term "soap" was crucial in determining the excisability of the product. The counsel emphasized that the commercial usage of the term should govern its classification under the tariff entry. Reference was made to judicial pronouncements, including the Supreme Court judgment in Dunlop India Ltd. v. Union of India, to support the argument that commercial recognition plays a significant role in classification for excise duty purposes.

3. The judgment discussed the impact of a Supreme Court judgment in a Sales Tax case where Palmolive shampoo was classified as soap. However, the court distinguished this case from the present matter, highlighting that the chemical composition alone cannot be the sole determinant in classifying products for excise duty. The judgment emphasized the need for commercial recognition and market perception in such classifications.

4. The application of the commercial parlance test was pivotal in the decision-making process. The government considered affidavits from traders and the lack of evidence from the Department to establish that the product was commercially recognized as soap for excise duty purposes. The judgment underscored that the commercial criterion outlined in the tariff entry should not be disregarded in determining excisability.

5. The judgment compared the commercial recognition of the product as shaving cream versus soap in the market. It highlighted that the product's resemblance to vanishing cream formulation-wise and the lack of market recognition as soap were key factors in concluding that the Palmolive shaving cream fell outside the scope of item 15(2) of the Central Excise Tariff. The decision was based on a holistic analysis considering commercial usage, market perception, and the specific wording of the tariff entry.