Is 'Close Up Whitening' a toothpaste or dental cleaner?

By Vijay Kumar

THAT which you call a rose, by any other name will smell as sweet.

Addressing the graduates of a college in 1977, the famous humourist Art Buchwald said, "my generation gave you Close-Up toothpaste to find someone to marry you."

The question that was answered by the Supreme Court yesterday in a Central Excise case was whether 'Close Up whitening' was a toothpaste or not.

The question was raised sometime in the year 2002 after Hindustan Lever introduced a new product in the market called 'Close Up whitening' in 2001. The assessee classified the product under Chapter sub-heading 3306.90. The Revenue treated the 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, instead of assessment under Section 4A. 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, including a Box File with Heading 'Production Manual', namely, the literature containing pages 1 to 235 issued by the Dental Information Centre of HLL.

The Commissioner in his Order-in-Original dated December 10, 2003, confirmed the excise duty demand as mentioned in the show-cause notice. He, inter alia, recorded the following findings:

1. Close Up Whitening was known in the market or to the trade and public as tooth paste for cleaning the teeth as such it was nothing but tooth-paste used for cleaning the teeth.

2. M/s. Global Health Care Products in collusion with M/s. Hindustan Lever Ltd. by willfully suppressing the fact that Close-up Whitening was a variant of Close Up tooth paste classifiable under Tariff Heading 3306.10 failed to show particulars of classification, assessable value and duty leviable with an intention to evade payment of applicable central excise duties.

3. The contention of M/s. Global Health Care products that the product Close Up Whitening was classified under chapter sub heading No. 3306.90 was not accepted.

4. The said product was correctly classified under sub heading 3306.10 of the Tariff attracting the provisions of Section 4A of the Act."

The Tribunal set aside the order of the Commissioner and the aggrieved Revenue is before the Supreme Court.

The headings in dispute were like this:

As can be seen, there is one sub-heading for tooth powders and toothpaste and another one for other dentifrices.

The Supreme Court noted that the Chapter Heading makes it clear that it covers various preparations for oral and dental hygiene. These preparations specifically include dentifrices. Examples of such oral and dental hygiene are also given, like toothpaste, tooth powder, denture fixative pastes and powders. Out of these, two products which are covered by sub-heading 3306.10 are toothpaste and tooth powder. Other oral and dental hygiene preparations fall under the reminder sub-heading, i.e. 3306.90, nomenclature of which is 'Other'.

Revenue treats Close-Up Whitening as 'toothpaste'. The plea of the assessee, on the other hand, is that it is not toothpaste but a 'dental cleaner', which is different from toothpaste and, therefore, has to necessarily be covered by the residual sub-heading, i.e. 3306.90.

Therefore, the moot question is as to whether Close-Up Whitening is toothpaste or not.

If it is found to be toothpaste then the stand of the Revenue would be justified. On the other hand, if the product does not qualify to be a toothpaste, then the assessee stands vindicated.

The Supreme Court agreed with the Tribunal and held 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.

The Supreme Court found these appeals bereft of any merits and were, accordingly, dismissed.

And just recall the learned Commissioner's words:

M/s. Global Health Care Products in collusion with M/s. Hindustan Lever Ltd. by willfully suppressing the fact that Close-up Whitening was a variant of Close Up tooth paste classifiable under Tariff Heading 3306.10 failed to show particulars of classification, assessable value and duty leviable with an intention to evade payment of applicable central excise duties.

Can't they be a little more courteous to their assessees? The other day I saw an order passed by an Assistant Commissioner on similar lines - that the assessee with an intention to evade duty had suppressed certain facts - the duty involved was 30,000 rupees and the assessee was paying more than a hundred crores a year as excise duty. This assessee was found to have suppressed and evaded 30,000 rupees.

Coming back to tooth paste, this product has always been a litigant subject. It was first a simple toothpaste; then it became a 'dental cream'; then it became an Ayurvedic cream - remember Vicco Vajradanti ayurvedic cream? It is not clear whether toothpaste is a health care product, a cosmetic product, a medicine or simply one of those products of the advertising industry - you buy those things which you don't need.

Every dentist knows that we actually don't need a tooth paste; the tooth paste doesn't clean the teeth, the brush does. Maybe the toothpaste only has a cosmetic value and as Art Buchwald says, maybe helpful in marriages.

When the British came to India, they laughed at us that we were cleaning our teeth with salt and coal, now paste manufacturers are advertising that their paste contains salt and charcoal!

We bring you this order of the Supreme Court today. Please see Breaking News