2005 (5) TMI 146 - AT - Central Excise

Summary

Issues:
Classification of 'Tetmosol' soap under CET sub-heading 3401.11 or 3401.19, additional issue of limitation in Appeal No. E/337/02.

Classification Issue Analysis:
The soap in question, 'Tetmosol,' contains monosulfiran B.P. 5% w/w and is used for treating and preventing scabies. The wrapper indicates its use for bathing and washing, especially for scabies prevention in hospitals and schools. The Tribunal observed that toilet soap is primarily for bathing purposes, citing the Oswal Agro Mills Ltd. v. CCE case. The HSN explanatory notes confirm that medicated soaps fall under the category of toilet soap. Therefore, the Tribunal concluded that 'Tetmosol' qualifies as toilet soap and should be classified under CET sub-heading 3401.19, as determined by the Revenue authorities.

Limitation Issue Analysis:
Regarding the issue of limitation in Appeal No. E/337/02, it was found that the appellants misdeclared the product as "soap other than for toilet use" under CET sub-heading 3401.11, despite its actual use for bathing and washing. This misdeclaration led to a lower duty rate of 8% instead of the correct 18% duty rate under CET sub-heading 3401.19. The Tribunal held that the appellants' misdeclaration indicated an intention to evade duty, triggering the provisions of Sec. 11A(1) of the Central Excise Act. Consequently, the extended period for duty recovery was deemed applicable. As a result, the duty demands were upheld, and the penalties were reduced to Rs. 7.5 lakhs in Appeal No. E/337/02 and Rs. 35,000 in Appeal No. E/4026/02.

In conclusion, the Tribunal upheld the classification of 'Tetmosol' soap under CET sub-heading 3401.19 as toilet soap and addressed the issue of limitation by finding the appellants guilty of misdeclaration to evade duty, leading to the imposition of penalties. The appeals were disposed of accordingly on 13-5-2005.