Custom, Excise & Service Tax Tribunal
M/S.Dabur India Ltd vs Cce, Ghaziabad on 29 May, 2015
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:29.05. 2015
Excise Appeal No.E/3880/2012-EX(DB)
[Arising out of Order-in-Appeal No.163-CE/GZB/2012 dated 25.09.2012 passed by the Commissioner of Central Excise (Appeals), Ghaziabad]
M/s.Dabur India Ltd. Appellants
Vs.
CCE, Ghaziabad Respondent
Appearance:
Rep. by Shri B.L. Narsimhan, Advocate for the appellant. Rep. by Shri Ranjan Khanna, DR for the respondent. For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical) Honble Smt.Sulekha Beevi, Member (Judicial) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?3
Whether Their Lordships wish to see the fair copy of the Order?4
Whether Order is to be circulated to the Departmental authorities?
Coram: Honble Shri Rakesh Kumar, Member (Technical) Honble Smt.Sulekha Beevi, Member (Judicial).
Final Order No. dated:29.05.2015 Per Rakesh Kumar:
The appellants are manufactures of excisable goods falling under different Tariff Headings of Central Excise Tariff. The period of dispute in the present case is from 1.9.2011 to 31.03.2012. The dispute is in respect of product Anmol Coconut Oil being manufactured by them in the packing of 200 ml or less. While according to the appellant, this product which is packed in the packings of 200 ml or less, contains anit-oxidants and is sold as pure coconut oil or edible product, is classifiable under Heading 1513 of the Central Excise Tariff and the rate of duty would be nil, according to the Department, the coconut oil packed in the packings of 200 ml or less is hair oil covered by heading 3305 in view of Chapter Note 3 to Chapter 33. The departments stand is based on the Boards Circular No.890/10/09/CX dated 3.6.2009 issued under Section 37 B of the Central Excise Act, 1944 wherein with regard to heading 3305 read with Chapter Note 3 of Chapter 33, as it stood during the period w.e.f. 28.02.2005, it was clarified that the coconut oil packed in containers upto 200 ml. may be considered generally used as hair oil and the same would be classifiable under Heading no.3305 and not under heading 1513. The CBEC in this regard, referred to field survey conducted wherein it had been found that smaller packings upto 200 ml are normally purchased by the customers for use as hair oil. During the period of dispute, in view of the instructions of the department, the appellant cleared the coconut oil packed in the packings of 200 ml or less on payment of duty under heading 3305 of the Tariff. Subsequently, however, refund claim was filed, which was rejected by the Asstt. Commissioner vide order-in-original dated 1.8.2012. The Asstt. Commissioner while rejecting the refund claim relied upon the Boards Circular dated 3.6.2009 mentioned above and also the Apex Courts judgements in the case of Ranadey Micronutrients Vs. CCE reported in 1996 (87) ELT 19 (SC), CCE Vs. Dhiren Chemical Industries reported in 2002 (139) (ELT) 0003 (SC) ,CCE, Vs. Maruti Foam Ltd. reported in 2004 (164) ELT 394 (SC), wherein it was held that the circulars issued by the CBEC under Section 37 B of the Central Excise Act, 1944 is binding on the department even if it is against the statutory provisions.
2. On appeal being filed to the Commissioner (Appeals) against this order of the Asstt. Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 27.08.2012 dismissed the appeal. The Commissioner (Appeals) also relied upon the Apex Court judgement in the case of Ranadey Micronutrients Vs. CCE (supra), wherein it was held that the circular issued by the Board are binding on the Department.
3. Against the above order of the Commissioner (Appeals), this appeal has been filed.
4. Shri B.L. Narsimhan, Advocate, ld. Counsel for the appellant, pleaded that the dispute is in respect of Coconut oil sold in the packings of 200 ml or less under the brand name Anmol, that from the photographs of the labels of the product placed on record, it would be seen that it is not marked as hair oil but is marketed as edible oil, that the label on the packing nowhere mention the product packed as Hair Oil but describes the same as edible oil or as pure coconut oil or coconut oil, that in view of this, the product, in question, would be classifiable as coconut oil under heading no.1513 of the Central Excise Tariff, that the departments case against the appellant is based only on the Boards Circular dated 3.6.2009 issued under Section 37 B of the Central Excise Act, 1944 wherein in respect of coconut oil being sold in retail in the packings of 200 ml or less with the labels indicating the same as edible oil or pure coconut oil or coconut oil would be classifiable under heading no.3305 in view of Chapter Note 3 of Chapter 33 read with Section Note 2 to Section VI as according to the survey conducted by the Department, the small packings of coconut oil upto the size of 200 ml. are generally used as hair oil by the customers, that the refund claim filed by the appellant has been rejected by the Asstt. Commissioner only on this basis and also in view of the judgements of Apex Court in the case of Ranadey Micronutrients (supra) and Dhiren Chemicals (supra) holding that the Boards Circular are binding on the Department, that the impugned order passed by the Commissioner (Appeals) has also rejected the appeal on the same basis, that the validity of the Boards Circular dated 3.6.2009 was challenged before the Honble Madras High Court by filing a writ petition by M/s. VVD and Sons (Pvt.) Ltd and the Honble Madras High court vide judgement dated 29.04.2014 reported in 2014 TIOL- 2142-HC-MAD-CX quashed the above mentioned circular issued under Section 37 B of the Central Excise Act, 1944 observing that the same is arbitrary and unreasonable and without jurisdiction and hence, null and void and contrary to the provisions of the Central Excise Act, 1944, that the validity of the Boards Circular dated 3.6.2009 was also challenged before the Honble Kerala High Court by filing of writ petition by M/s. Marico Industries and Honble Kerala High court vide judgement dated 10.11.2009 reported in 2012 (282) ELT 180 (KER) held that the circular issued by the department cannot operate when the field is occupied by a decision rendered by Appellate Tribunal and that the department cannot take a stand contrary to the Tribunals order on this issue, that the Tribunal in the case of Aiswarya Industries Vs. CCE, Pondicherry reported in 2009 (235) ELT 544 (Tribunal-Chennai) after taking into account sub-heading Entry no.33051990, as it stood w.e.f. 28.02.2005 held that coconut oil packed and sold in the packages of capacity ranging 50 ml to 500 ml (plastic bottles) and marketed as pure edible oil would be classifiable under heading 1513 as coconut oil and not as hair oil under sub-heading no.33051990 of the Central Excise Tariff, that this judgement of the Tribunal was followed by the Tribunal in its subsequent judgement dated 3.5.2011 in the case of Capital Technologies Ltd. & Ors. Vs. CCE reported in 2011-TIOL-775-CESTAT-Bang, wherein an identical issue was involved and in this judgement, the Tribunal also held that coconut oil marketed in the packings of size of 50 ml and 100 ml. pouches, 100 ml. , 200 ml and 500 ml. pouches/containers would be classifiable as coconut oil under Heading No.1513 and not as Hair oil under heading no.3305, that the civil appeal filed to the Apex Court against this judgement of the Tribunal has been dismissed by the Apex Court vide order dated 23.2.2012, that the Tribunal in the case of Amardeo Plastics Industries Vs. Commissioner reported in 2007 (210) ELT 360 while examining the question of classification of coconut oil being marketed in plastic containers of 100 ml or 200 ml in addition to pouches of 6 ml. by its majority judgement held that the same would be classifiable under Chapter 15 as coconut oil and not as Hair Oil under chapter 33 and that in this judgement , the Tribunal also took into account the fact that the coconut oil being packed in the above mentioned packing was being marketed by the assessee as Hair Oil but the Tribunal observed that advertisement of a product is not indicative of its classification under the Central Excise Tariff as the same is to lure the customer and enhance the sales, that the Tribunal in the case of Raj Oil Mills and Others Vs. CCE, Thane-II reported in 2013 TIOL 1609 (CESTAT-Mum) has held that coconut oil sold in the packing of upto 200 ml or less would be classifiable as coconut oil under heading 1513 and not as hair oil under chapter 33 and in this regard, the Tribunal followed its earlier judgement in the case of Capital Technologies Ltd. & Ors. and also in the case of Aiswarya Industries (supra) and that in view of the above, the impugned order upholding the rejection of the refund claim is not correct.
5. Shri Ranjan Khanna, ld. Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner and pleaded that the Boards Circular dated 3.6.2009 had been issued on the basis of Heading no.3305 of Chapter 33 read with Chapter Note 3 to this Chapter and Section Note 2 to Section VI as it stood w.e.f. 28.02.2005, that while the erstwhile Chapter Note 2 to Chapter 33 prescribed a condition that heading 3305 (which covers hair oil also) applies to the products put up in packings with label, literature or other indications showing that they are for use as cosmetics or which are put up in a form clearly specialized for such use, this chapter note of Chapter 33 has been replaced by a new Chapter Note 3 which provided that Heading 3305 to 3307 applies to the products, whether or not mixed, (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings of a kind sold by retail for such use, that in view of the amended Chapter Note 3 to Chapter 33 read with Section Note 2 to Section VI, which provided that the goods classifiable under Heading No.3305 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other headings of this schedule, the Board by this Circular clarified that the coconut oil packed in the packigns of 200 ml or less would be classifiable as hair oil under hearing no.3305 of the Tariff, that the Board, thus, has merely clarified the amended Chapter Note 3 to Chapter 33 and Section Note 2 to Section VI, that Dabur India Ltd. Coconut Oil under the brand name Vatika is sold as Hair Oil for use on hair and which is supposed to contain various herbs, that this shows in the present case also that the product in question is meant to be used as hair oil and the same cannot be treated as edible coconut oil to the Heading No.1513.
5.1 Shri Khanna further pleaded that the appellant had filed a writ petition before the Allahabad High Court challenging the Boards Circular dated 3.6.2009 but, thereafter, filed an application before the Apex Court for transfer of the writ petition pending before the Allahabad High Court and the transfer petition is pending before the Honble Supreme Court. He pleaded that till the appellants transfer petition is decided by the Apex Court, the Tribunal should not pass any final order in this matter. He pleaded that as is clear from the order-in-original passed by the Asstt. Commissioner and the order-in-appeal passed by the Commissioner (Appeals), the appellant in various communications to the Department had stated that they have filed a writ petition before the Allahabad High Court challenging the Boards Circular dated 3.6.2009 and as and when the issue is decided by the Honble High Court they would be filing a refund claim for refund of the duty paid under protest. Shri Khanna pleaded that when the writ petition filed by the appellant before the High Court of Allahabad has been transferred to the Apex Court where the matter is still pending, the refund claim filed by them is pre-mature and should not have been decided.
6. We have considered the submissions from both the sides and perused the records.
7. The period of dispute in this case is from 1.9.2011 to 31.03.2012. The dispute is about the classification of the coconut oil packed in the packings of 200 ml or less. As per the labels on the packings placed on record, the coconut oil contains anti-oxidants and is an edible product. From the labels of the product placed on record, it is seen that there is no indication on the label that it is meant for use as hair oil. The dispute in the present case is about classification of this product which is sold as edible coconut oil, pure coconut oil or coconut oil. While according to the appellant, coconut oil though packed in retail packs of 200 ml. or less is covered by Heading 1513 for the product coconut oil according to the department, in view of the Boards Circular dated 3.6.2009 this product would be classifiable as Hair Oil under Heading No.3305 as the same is packed in retail packings which are meant for its use as Hair Oil. According to the Boards Circular dated 3.6.2009 the coconut oil packed in retail packs of 200 ml. or less with the labels on the packing indicating the same as edible oil or Pure Coconut Oil or Coconut Oil would be classifiable as Hair Oil under Heading No.3305 of the Tariff, as the survey conducted by the Board indicated that the small packs of upto size of 200 ml. are normally used as Hair Oil by the customers and the retail shops also keep the coconut oil packs upto 200 ml. along with the Hair Oil and not with the edible preparations or edible oils. The appellant during the period of dispute had paid duty at the rate applicable to the Heading 3305 under protest but subsequently they filed the refund claim, which had been rejected by the Asstt. Commissioner on the basis of the Boards Circular dated 3.6.2009 and also relying upon the various judgements of the Supreme Court holding that the Boards Circular are binding on the departmental officers and on the same ground, the Commissioner (Appeals) has upheld the order passed by the Asstt. Commissioner
8. The first objection of the Department is that the refund claim is pre-mature inasmuch as while paying duty under protest, the appellant had communicated to the Department that they have filed a writ petition before the Honble Allahabad High Court challenging the Boards Circular dated 3.6.2009 and they would file refund claim if the decision is in their favour and that since the writ petition filed by the appellant, on transfer application being filed by them before the Apex Court, has been transferred to the Apex Court where it is still pending, the refund claim filed by the appellant is pre-mature and should not be considered. We do not accept this plea of the Department, as even if the writ petition filed by the appellant before Allahabad High Court, challenging the Boards Circular dated 3.6.2009, has now been transferred to the Apex Court where it is still pending and even if at some point of time, the appellant had addressed a letter to the Department that they would file refund claim as and when the matter is decided in their favour, in our view, they are at liberty to file the refund claim even though the matter is still pending before the Apex Court, more so, when the Honble Madras High Court in its judgement in the case of VVD & Sons (Pvt.) Ltd. (supra) reported in 2014 TIOL 2014 after considering the Boards Circular dated 3.6.2009 has quashed the same observing that the same is arbitrary and contrary to the provisions of Section 37 B of the Central Excise Act, 1944 and hence null and void.
9. Coming to the question of classification on merits, on going through the order-in-original passed by the Asstt. Commissioner and order-in-appeal passed by the Commissioner upholding the Asstt. Commissioners order, we find that the orders of both the lower authorities rely upon the Boards Circular dated 3.6.2009 issued under Section 37 B of the Central Excise Act, 1944 and also the judgement of the Supreme Court in the case of Ranadey Micronutrients (supra) and CCE Vs. Dhiren Chemical Industries (supra), wherein it was held that the Boards Circular even if contrary to the provisions of law, are binding on the Departmental officers, we are of the view that the reliance of the lower authorities on the Apex Courts judgement in the case of Ranadey Micronutrients (supra) and Dhiren Chemical Industries(supra), is not correct as the issue of binding effect of Boards Circular had been examined by Constitutional Bench of the Apex Court in the case of CCE, Bolpur Vs. Ratan Meltings & Wire Industries reported in 2008 (231) ELT 0022(SC), wherein the Apex Court has held that the Boards circular would be binding only if they are in accordance with the provisions of law and the same would not be biding if they are contrary to the provisions of law. In the present case, when validity of the Boards Circular dated 3.6.2009 issued under Section 37 B of the Act has been examined in detail by the Honble Madras High Court in the case of VVD & Sons (Pvt.) Ltd. (supra) and when the Boards Circular has been held to be contrary to the provisions of Central Excise Act, 1944 and arbitrary and unreasonable and for the same reason, the same has been quashed, the Boards Circular cannot be treated as binding on the Departmental Officers. Moreover the Kerala High Court in the case of Marico Ltd. (supra) has held that the circulars and departmental clarifications issued by the Department cannot operate when the field is occupied by decisions rendered by the Appellate Tribunal. In the present case, there are a series of decisions of the Tribunal wherein the Tribunal after examining the Tariff Heading No.1513 pertaining to Coconut Oil and Heading No.3305 which covers Hair Oil and the relevant Chapter and Section Notes examined the question of classification of Coconut Oil in the packing upto 200 ml, which are not marketed as Hair Oil and held that just because the retail packs are of 200 ml. of less, the same cannot be presumed to be meant for use as Hair Oil and would not be classifiable under Heading No.3305. One of the Tribunals judgement is in the case of Capital Technology Ltd. (supra) reported in 2011-TIOL-775-CESTAT-Bang, wherein the Tribunal independently examined the issue of classification of Coconut Oil packed in retail packs of 50 ml., 100 ml. and 200 ml in respect of the period w.e.f. 28.02.2005 and after discussing the amendments to Chapter Note to Chapter 33 and Section Note 2 to Section VI w.e.f. 28.02.2005 held that the Coconut oil packed in retail packs of 500 ml. and 200 ml. would be classifiable as Coconut Oil under Heading No.1513 and not as Hair Oil under Heading 3305. This judgement of the Tribunal has been affirmed by the Supreme Court by way of dismissal of civil appeal and hence, become a binding procedure.
10. As regards the coconut oil packs, in question, containing TBHQ, an antioxidant, its addition is permitted under Prevention of Food and Adulteration Act, 1954 to improve its shelf life by preventing its oxidation and hence rancidity. The addition of antioxidant does not make the coconut oil as suitable for use as Hair Oil. Even in terms of Boards Circular No.166/77/95-CX dated 29.12.95, the use of anti-oxidants as specified under Rule 59 of the Prevention of Food Adulteration Rules, 1955 will not alter the classification if they are meant only for preventing the rancidity of the oil. No evidence has been produced by the Department to show that the addition of anti-oxidants in coconut oil will make the same more suitable for use on hair.
11. In view of the above discussion, we hold that the impugned order is not sustainable. The same is set aside. The matter is remanded to the Original Adjudicating Authority for processing the refund claim after examining the question of unjust enrichment. The appeal stands disposed of as above.
(Rakesh Kumar) Member (Technical) (Sulekha Beevi C.S. ) Member (Judicial) Ckp.
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