1995 (1) TMI 143 - AT - Central Excise

Summary

Issues: Classification of product as soap or detergent, Misdeclaration of product, Time-barred demand, Eligibility for exemption under Notification No. 39/87

Classification of product as soap or detergent:
The case involved an appeal against the classification of a product as soap or detergent by the Collector of Central Excise. The appellants argued that they had fully described their product as soap, organic surface active products, and preparations for use as soap in various forms. They contended that detergent cakes were organic surface active products meant for use as soap, hence falling under the heading 34.01. The department, however, claimed that the product was detergent mis-declared as soap, attracting a different classification. The Tribunal observed that soaps and detergents are distinct commodities with different manufacturing processes and chemical compositions. It was held that the appellants incorrectly included detergents under the heading for soaps, leading to a misclassification.

Misdeclaration of product:
The appellants maintained that they consistently used the term "detergent" in their application and classification lists, even specifying "detergent cakes." They argued that the officers had approved the classification under the soap heading despite the mention of detergent. The Tribunal noted that the mere reproduction of a tariff description or commercial name was insufficient for classification. It was emphasized that the proper officer should have corrected the classification upon noting the discrepancy. The Tribunal found that the approval under the soap heading was incorrect, given that detergents were not covered under that classification.

Time-barred demand:
Regarding the demand for duty, the department alleged deliberate misdeclaration by the appellants to evade duty, justifying a longer period for invoking duty demand. However, the Tribunal held that the demand was time-barred as the department failed to establish intentional suppression or misstatement by the appellants within the normal limitation period. Therefore, the demand for duty was set aside as time-barred.

Eligibility for exemption under Notification No. 39/87:
The appellants claimed exemption under Notification No. 39/87, asserting that their detergent cakes were used as soap and should be treated as such. The department argued that the notification covered only soap, not detergents. The Tribunal concurred that the benefit of the notification was not available for detergents. Despite upholding the classification under a different heading and denying the exemption, the Tribunal set aside the duty demand and penalty due to the time-barred nature of the demand.