2006 (9) TMI 202 - AAR - Central Excise

Whether the Auto Janitor and Auto Sanitizer merit classification (i) Under Chapter 34 of the Central Excise Tariff Act 1985 and liable to Central Excise duty; or (ii)Under Chapter 38 of the Central Excise Tariff Act 1985 and liable to Central Excise duty?

Issues Involved:
1. Classification of "Auto Janitor" and "Auto Sanitizer" under the Central Excise Tariff Act, 1985.
2. Applicability of the Medicinal and Toilet Preparation (Excise Duties) Act, 1955 (MTP Act).
3. Determination of whether the products are "cleaning preparations" or "disinfectants".
4. Examination of the products under Chapter 34 and Chapter 38 of the Central Excise Tariff Act, 1985.

Detailed Analysis:

1. Classification of "Auto Janitor" and "Auto Sanitizer" under the Central Excise Tariff Act, 1985

The applicant sought an advance ruling on whether "Auto Janitor" and "Auto Sanitizer" should be classified under Chapter 34 or Chapter 38 of the Central Excise Tariff Act, 1985. Both products consist of a dispenser and a filler containing odoriferous substances that clean and deodorize toilet surfaces.

2. Applicability of the Medicinal and Toilet Preparation (Excise Duties) Act, 1955 (MTP Act)

The applicant argued that classification under Chapter 38 is ruled out due to Chapter Note 7, which excludes products containing alcohol from this Chapter. They also contended that the products do not fall under the MTP Act as they are not medicinal or toilet preparations despite containing alcohol. This stance is supported by a previous ruling in a similar case involving room fresheners.

The Commissioner, however, argued that the presence of ethyl alcohol necessitates classification under the MTP Act, citing Supreme Court judgments in Dabur India and Baidyanath Ayurved Bhawan.

3. Determination of whether the products are "cleaning preparations" or "disinfectants"

The products were examined to determine if they are primarily cleaning preparations or disinfectants. The applicant provided details of the ingredients, indicating that the products contain more surfactants (cleaning agents) than disinfectants. The products are marketed primarily as cleaning preparations, with disinfectant properties being secondary.

The Authority considered the General Rules for the Interpretation of the First Schedule to the Central Excise Tariff Act. Rule 3(b) was applied, which states that composite goods should be classified based on the component that gives them their essential character. The products were found to have the essential character of cleaning preparations, supported by their marketing as such.

4. Examination of the products under Chapter 34 and Chapter 38 of the Central Excise Tariff Act, 1985

The Authority examined Chapter 34, which covers "Soap, Organic Surface-Active Agents, Washing Preparations, Lubricating Preparations, Artificial Waxes, Prepared Waxes, Polishing or Scouring Preparations, Candles and similar Articles, Modelling Pastes, 'Dental Waxes' and Dental Preparations with a basis of Plaster." The products were found to be classifiable under Tariff Heading 3402, which includes "Organic surface-active agents (other than soap), surface-active preparations, washing preparations (including auxiliary washing preparations) and cleaning preparations, whether or not containing soap, other than those of heading 3401."

The products were specifically classified under Tariff Item 3402 20 10, which covers "Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents."

Conclusion:
The Authority ruled that "Auto Janitor Refill," "Auto Janitor 'Bio' Refill," and "Auto Sanitizer Refill" are classifiable under Tariff Item 3402 20 10 of the First Schedule to the Central Excise Tariff Act, 1985. The products are primarily cleaning preparations with subsidiary disinfectant properties, and their classification under Chapter 38 is ruled out due to the presence of alcohol. The products do not fall under the MTP Act as they are not medicinal or toilet preparations.

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