Whether duty payable on toilet paper is covered under section 4 or section 4A?

PJ/CASE LAW/2015-16/2837

Case:-KOHINOOR TISSUE CONVERTING CO.VERSUSCOMMISSIONER OF C. EX., PUNE-I

Citation:-2015 (323) E.L.T. 381 (Tri. - Mumbai)

Brief facts:-The applicant filed this application for waiver of pre-deposit of duty of Rs. 1,19,46,341/-, interest and penalty. The demand was confirmed on the ground that the toilet paper which was manufactured and cleared by the applicant was assessable to duty under Section 4A of the Central Excise Act. The applicant was paying duty as per the provisions of Section 4 of the Act.

Appellant’s contention:- The contention of the applicant was that as per the Central Excise Tariff, toilet papers were classifiable under Chapter Heading 4818 10 00 whereas handkerchiefs, cleansing or facial tissues and towel were classifiable under sub-heading 4818 20 00. The third schedule of the Central Excise Tariff covers cleansing or facial tissues, handkerchiefs and towels of paper pulp, paper, cellulose wadding or webs of cellulose fibres classifiable under Tariff Heading 4818 of the Tariff. The contention was that the toilet papers which are specifically classifiable under Heading 4818 10 00 were not covered under the Third Schedule of the Central Excise Tariff hence the applicants were not liable to pay duty as per the provisions of Section 4A of the Central Excise Act.

Respondent’s contention:- The contention of the Revenue was that entry at serial No. 55 of the third schedule covered the goods cleansing or facial tissues falling under Heading 4818 of the Tariff. The applicant marketed the goods in question as bathroom tissues thereby connoting similarity with cleansing tissues as the end-use of the subject goods was also cleansing. In these circumstances, the contention was that the goods in question were liable to duty as per the provisions of Section 4A of the Central Excise Act.

Reasoning of judgment:- It was found that under the Central Excise Tariff, toilet papers are separately classifiable than handkerchiefs, cleansing or facial tissues and towel and the third schedule to the Tariff does not cover toilet papers. In view of this, prima facie the applicants have made out a strong case in their favour. The pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal. The stay petition is allowed.

Decision:-Stay allowed.

Comment:- The substance of this case is that MRP based valuation prescribed under section 4A is applicable only for those goods that are specifically mentioned in the Third Schedule to the Central Excise Tariff Act. As the toilet papers are not specifically covered under the third schedule, valuation will be done under section 4 of the Central Excise Act, 1944 pertaining to transaction value.

Prepared by: Sharad Bang

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PJ/CASE LAW/2015-16/2837

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