1993 (4) TMI 73 - SC - Central Excise

Whether toilet soap would be household soap within the meaning of Tariff Item 15(1) of the Schedule? Held that - As considered in the legal setting and commercial parlance we are of the considered view that toilet soap being of everyday household use for the purpose of the bath and having removed its separate identity which it enjoyed preceding amendment and having been not specifically included in other sorts , it took its shelter in commercial parlance under household . As stated if anybody goes to the market and asks for toilet soap he must ask only for household bathing purpose and not for industrial or other sorts. Even the people dealing with it would supply it only for household purpose. It may be true that household consists of soap used for cleaning utensils, laundry used for cleaning soiled clothes and soap toilet is used for bathing but household is compendiously used, toilet soap is used only by the family for bathing purpose. Individual preference or choice or taste of a particular soap for bath is not relevant. The soap toilet would, therefore fall within the meaning of the word household in sub-item (1) of Item 15 of the Schedule. The classification shall accordingly be adopted. The appeals are accordingly allowed. The cases are remitted to the primary authority to deal with the matters accordingly.

Summary

Issues Involved:
1. Classification of "toilet soap" under Excise Item 15 of the First Schedule to the Central Excises and Salt Act, 1944.
2. Claim for refund of excess excise duty in certain appeals.

Issue-wise Detailed Analysis:

1. Classification of "toilet soap" under Excise Item 15 of the First Schedule to the Central Excises and Salt Act, 1944:
The primary issue revolves around whether "toilet soap" should be classified under Tariff Item 15(1) "household" or Tariff Item 15(2) "other sorts". Initially, the Assistant Collector classified toilet soaps under Tariff Item 15(2) "other sorts" with a 15% ad valorem duty. On appeal, the Collector reclassified them under Tariff Item 15(1) "household". However, the CEGAT reversed the Collector's order and upheld the Assistant Collector's classification.

The legislative history shows that in 1954, "soap" was categorized into plain bars, other sorts, toilet soaps, and soaps other than household or laundry or toilet. The 1964 amendment rephrased it to "soap" meaning all varieties known commercially, with "household and laundry" and "other sorts" as sub-categories, both subjected to ad valorem tariffs. The argument presented by the Union's counsel was that toilet soap, being used for bathing, falls under "other sorts" and not "household", which is meant for cleaning household articles and laundry.

However, the court found that the legislative amendments and commercial parlance indicate that "toilet soap" falls within the "household" category. The court emphasized that the tariff provisions do not define the entity but classify it for duty purposes. The interpretation must adhere to the language used in the statute without assumptions or presumptions. The court referred to various precedents to underline that terms in taxing statutes should be understood in their popular sense unless otherwise defined.

The court concluded that "toilet soap" is used for household bathing purposes and should be classified under Tariff Item 15(1) "household". This interpretation aligns with the commercial understanding and the legislative intent post-1964 amendment.

2. Claim for refund of excess excise duty in certain appeals:
The appellants in C.A. Nos. 813/86, 3632-34/88, and 1102/89 sought a refund of excess excise duty paid under the classification of "toilet soap" as "other sorts". The court remitted the cases to the primary authority to handle the classification in accordance with the judgment. The issue of refund was not adjudicated by the court but left to be dealt with by the concerned authorities as per the law. The appellants were directed to apply for refunds, and the authorities were instructed to process these applications in compliance with legal provisions.

Conclusion:
The appeals were allowed, and the classification of "toilet soap" was determined to fall under Tariff Item 15(1) "household". The cases were sent back to the primary authority for reclassification and handling of refund claims as per the law. Each party was directed to bear its own costs.