METROPOL INDIA PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN these appeals, filed by M/s. Metropol India Private Ltd., the issue involved is whether the products namely "Cleanzo" and "Cleano" are classifiable under sub -heading 3401.12 of the Schedule to the Central Excise Tariff Act as Soap as claimed by the Appellants or under sub -heading 3402.90 as cleaning preparation as confirmed by the Commissioner (Appeals) in the impugned order.

(2.) SHRI B.L. Narasimhan, learned Advocate, submitted that the products have been classified by them under sub -heading 3401.12 as Liquid Soap Solution; that these products are manufactured out of vegetable oil such as castor oil, acid oil, rosin and pine oil; that the pine oil is added for antiseptic and medicinal purposes; that these oils are used in the manufacturing process of soap as fatty acid is required and it is reacted with Alkali; that various vegetable oils are blended in a vessel and thereafter reacted with caustic soda; that after heating of the blend, hydrolysis of oil takes place and as a result of the said reaction the soap is obtained. He, further, submitted that as per Explanatory Note of HSN below Heading 34.01 soap is an Alkaline Salt (inorganic or organic) formed from a fatty acid or mixture of fatty acids containing at least 8 carbon atoms. In practice, part of the fatty acid may be replaced by Rosin acids. According to HSN Explanatory Notes the Heading covers only soap soluble in water that is to say true soap. The learned Advocate also mentioned that as per Note 2 to Chapter 34 of the Central Excise Tariff for the purpose of Heading 34.01 soap applies only to soap soluble in water; that there are 3 categories of soap as per Explanatory Notes, namely Hard Soap, Soft Soap, and Liquid Soap; that liquid soaps are solution of soap in water, in some cases with small quantity (generally not exceeding 5%) of alcohol or glycerol added, but not containing synthetic organic surface active products; that the appellants are manufacturing only liquid soap; that it has not been disputed by the Revenue; that both the impugned products are soluble in water and that they have been made out of vegetable oils and as such Note 2 to Chapter 34 is satisfied and accordingly the product is classifiable under Heading 3401.12.

(3.) HE , further, submitted that Heading 34.02 of the HSN covers organic Surface Active Agent (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 No. 34.01. He thus contended that Heading 34.02 will be attracted only if the product does not fall under Heading 34.01; that what is being manufactured by the appellants is nothing but soap as pine oil is added along with fatty acids and as such pine oil is added while manufacturing soap; that pine oil is a raw material for manufacturing liquid soap. In support of his contention he relied upon the New Encyclopaedia Britannica Vol. IX wherein it is mentioned that pine oil is also used in Odorant, Insecticides, Detergents, Liquid Soaps, etc. He also referred to "The Wealth of India" - Dictionary of Indian Raw Materials and Industrial products, according to which pine oil finds a wide range of industrial applications as it is used in paints, varnishes, laqured, distempers, soap and detergents and in perfumery and Pharmaceuticals. The learned Advocate contended that it is, thus, apparent from these two technical books that pine oil is used in the manufacture of soap. The learned Advocate also referred to the Explanatory Notes of HSN to Heading 34.02 according to which washing preparations and cleaning preparations generally contain essential constituents and one or more subsidiary constituents and presence of latter constituent distinguishes in particular these preparations from surface active preparations; that according to Explanatory Notes subsidiary constituents are builders, boosters, and fillers and ancillar -ies; that for a product for being classified under Heading 34.02 as cleaning preparations it has to have a basis of soap to which subsidiary constituents are added; that in the present matter as per their process of manufacture, pine oil is not added after the soap base has been obtained but it is added while making the soap itself and therefore, it does not satisfy the criteria of addition of subsidiary constituents as provided in Explanatory Notes of HSN. He also mentioned that the Adjudicating Authority has classified the impugned product under Heading 34.02 on the ground that HSN clearly mentions that generally subsidiary constituents are used in washing preparations and cleaning preparations and essential constituents are surface active agent and soap or mixture thereof and that cleaning preparation may or may not contain subsidiary ingredients; that the Adjudicating Authority has classified the impugned products under 34.02 observing that soap has no doubt being used as a basis. Finally he submitted that the Commissioner (Appeals) ha? heavily relied upon the labels and catalogues of the products used by them for marketing the products; that it is well settled law that reliance cannot be placed on labels, etc. as these are used only for marketing purposes. He relied upon the decision in the case of Peshawar Soap and Chemical Works v. CCE, Chandigarh, 2001 (138) E.L.T. 855 (T) - 2001 (46) RLT 400 (CEGAT) and Kothari Products Ltd. v. CCE, Kanpur, 2002 (139) E.L.T. 633 (T) = 2001 (47) RLT 173 (CEGAT).