Commissioner Of Central Excise Vapi vs M/S Global Health Care Products ...

The respondent No.1 (hereinafter referred to as the 'assessee') is engaged in the manufacture of different brands of toothpaste and these are manufactured exclusively for M/s. Hindustan Lever Limited, Mumbai (for short, 'HLL') since 1998. Major brands of HLL manufactured by the assessee are Close-Up Red, Close-Up Blue, Close-Up Green and Pepsodent falling under Chapter 33 of the Excise Tariff. The assessee is registered with the appellant/Revenue and has been paying the excise duty on the aforesaid products under Chapter sub-heading 3306.10 of the tariff. There is no dispute about these products.

From July 01, 2001, a new product known as 'Close-Up Whitening' was introduced by the assessee. The assessee classified this product under Chapter sub-heading 3306.90. The Revenue treated the aforesaid classification as erroneous as according to it Close-Up Whitening also falls under Chapter sub-heading 3306.10 and not 3306.90. It also suspected that this product was deliberately misclassified in the said heading to evade payment of proper central excise duties by resorting to assessment of the product under Section 4 of the Central Excise Act, 1944 (hereinafter referred to as the 'Act') instead of assessment under Section 4A thereof. Investigation into the matter was initiated resulting into searching of the premises of the assessee. Some documents, which the Revenue claims to be incriminating in nature, were seized under Section 12 of the Act, including a Box File with Heading 'Production Manual', namely, the literature containing pages 1 to 235 issued by the Dental Information Centre of HLL.

On the scrutiny of these documents, the Revenue noticed that the difference in raw materials used for the product in question, namely, Close-Up Whitening, and the other products, i.e. Close-Up Red/Blue/Green is the additional presence of 2.8% and 0.2% w/s Silicon Agglomerate and Bluer Agglomerates respectively in Close-Up Whitening and absence of 0.1% w/w 2,4,4 Tri Chloro 2 hydroxy Diphenyl Ehter in this product in comparison with the other three products. It was also found that as far as Close-Up Whitening is concerned, there was presence of 'uniformity dispersed blue speckles'. Statements of certain persons were also recorded. On the basis of the aforesaid material, the Revenue took the position that the aforesaid differences did not change the essential character of the product in question which still remained 'toothpaste' and, therefore, it was classifiable under Chapter sub-heading 3306.10.

Show-cause notice dated March 21, 2002 was issued proposing confiscation of the goods and since these goods had already been provisionally released on payment of full excise duty as leviable on the goods under Chapter sub- heading 3306.10, show-cause notice stated as to why the amount of differential duty amounting to ?22,64,176 be not confirmed under the provisions of Section 11A(1) of the Act and why redemption fine in lieu of confiscation as well as penalty be not imposed. The assessee filed its reply thereto contending that it was not a toothpaste and, therefore, rightly classified by it under sub-heading 3306.90. The aforementioned contention of the assessee was brushed aside by the Commissioner in his Order-in-Original dated December 10, 2003, thereby confirming the excise duty demand as mentioned in the show-cause notice. He, inter alia, recorded the following findings in his order:

The upshot of the aforesaid discussion would be to hold that Close-Up Whitening dental cleaner is not a 'toothpaste' but other form of dental hygiene and, therefore will have to be classified under sub-heading 3306.90 as a consequence. These appeals are found bereft of any merits and are, accordingly, dismissed.

No costs.

JULY 28, 2015.