M/S. H.P.L. CHEMICALS LTD. versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH

Citation: [2006] SUPP. 1 S.C.R. 125 · Decided: 20-04-2006 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

i 
M/S. H.P.L. CHEMICALS LTD. 
A 
V. 
COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 
APRIL 20, 2006 
[ASHOK BHAN AND LOKESHWAR SINGH PANTA, JJ.] 
B 
Central Excise Tariff Act, 1985: 
Chapter Heading No. 25.01 and 38.23 (now 38.24)-Denatured salt-
Assessee manufactured Hydrazine falling under Chapter heading No. 28.25- C 
During the course of manufacture of the final product assessee produced a 
residuary byproduct i.e. 'Denatured Salt'-Assessee filed classification list 
claiming classification of the said product under Heading No. 25. 0 I carrying 
'Nil' rate of duty-Deputy Commissioner held that the said product was 
correctly classifiable under Heading No. 38.23 (now 38.24) and he accordingly D 
confirmed the demand of duty and directed the appellant to deposit the same 
along with interest-Commissioner (Appeals) held that the said product was 
classifiable under heading 25.01-But the Tribunal held that the said product 
was classifiable under heading No. 38.23 (now 38.24)-Correctness of-Held: 
"Denatured Salt" is unfit for human consumption and used only for industrial 
applications such as by soap manufacturers-Classification of goods is a E 
matter relating to chargeability and the burden of proof is squarely upon the 
Revenue-In the instant case, the said burden has not been discharged by the 
Revenue-Hence, "Denatured Salt" would not fall under the sub-heading 
38.23 (now 38.24) but would fall under the specific heading 25.01 . 
Words & Phrases: 
"Denatured Salt"-Meaning of-Jn the context of Chapter Heading No. 
25.01 of the Central Excise Tariff Act, 1985. 
F 
The appellant-assessee was a company engaged in the manufacture 
of Hydrazine falling under Chapter heading No. 28.25 of the Central G 
Excise Tariff Act, 1985. The appellant, during the course of manufacture 
of the final product, produced a residuary by product i.e. 'Denatured Salt'. 
The appellant filed classification list claiming classification of the said 
product under Heading No. 25.01 carrying 'Nil' rate of duty. The Deputy 
12s 
H 
126 
SUPREME COURT REPORTS [2006) SUPP. I S.C.R. 
A Commissioner held that the said product was correctly classifiable under 
Heading No. 38.23 (now 38.24) and he accordingly confirmed the demand 
of duty and directed the appellant to deposit the same along with the 
interest. However, the Commissioner (Appeals) held that the said product 
was classifiable under heading 25.01 of the Tariff Act. Customs, Excise 
and Gold (Control) Appellate Tribunal set aside the order passed by the 
B Commissioner (Appeals) and restored that of the adjudicating authority. 
Hence the appeal. 
Allowing the appeal, the Court 
HELD: 1. Heading 25.01 of the Central Excise Tariff Act, 1985 is a 
C specific heading covering "Denatured Salt" by name. The fact that the 
product in question is a "Denatured Salt" is clear from the test report of 
the Chemical Examiner, Central Revenue Control Laboratories (CRCL), 
who has found that the product comprises of 53.6% of Sodium Chloride 
and "is to be taken as Sodium Chloride". Test report was obtained by the 
D Central Excise authorities from their own Chemical Examiner. Even as 
per the market and trade enquires conducted by the Central Excise 
Department itself, it was found that the said goods are being consumed 
by local soap manufacturers as a filler in the detergent and as a substitute 
of the common salt; these are purchased and sold as "denatured salt" and 
are known to the local consumers by this name only. Thus, as per the said 
E market and trade enquires conducted by the Central Excise Department 
the goods in question are bought and sold as "Denatured Salt". 
1133-E-GJ 
2.1. As. per the Harmonized Commodity Description and Coding 
F System (HSN) this Heading 25.01 relates to sodium chloride, commonly 
known as salt. Salt is not only used for culinary purposes i.e. cooking salt, 
table salt, but it also has many other uses and, if necessary, may be 
denatured to render it unfit for human consumption. The heading includes 
salt extracted from underground, evaporated salt, sea water salt obtained 
by evaporation of sea water by the sun, refined salt obtained by 
G evaporation of saturated brine and other saline solutions and also covers 
table salt, salt to which anti-caking agents or free-flowing agents have been 
added, salt which has been denatured by any process and also covers 
residuary sodium chloride, in particular that left after chemical processing 
or obtained as a byproduct of 

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