Customs, Excise and Gold Tribunal - Bangalore
Srikant Sachets Pvt. Ltd. vs The Commissioner Of C. Excise on 19 October, 2004
Equivalent citations: 2005(180)ELT401(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No 08/2004 (RP) dated 31.3.2004 by which the Commissioner confirmed the demand invoking provisions of Section 11A(1) of the Central Excise Act, 1944 and imposing like sum of penalty. The issue to be considered in this appeal is as to whether Coconut oil bearing the brand name "SUKESH' and NEW SUKESH' marketed in sachets of 8 ml and punches of 50 ml, 100 ml and jars of 500 ml, 200 ml and 100 ml can be classified under Chapter Sub-heading 3305.99 of Central Excise Tariff Act, 1985 which covers vegetable fats and oils. The Department took the view that in terms of Chapter Note 1(e) of Chapter 15 of the Central Excise Tariff, the item is Cosmetics or Toilet preparations falling under Chapter Sub heading 3305.10 as residuary entry and others. The appellant's claim was that the item has all the characteristics of Coconut oil. They appellant's claim was that the item has all the characteristics of Coconut oil. They contended that it is "pure coconut oil" without any ingredients and therefore, Chapter Note 1 (e) of Chapter 15 of the Central Excise Tariff would not apply to the facts of the case. They relied on the Tribunal judgment rendered in case of Kothari Products Ltd. v. CCE, Kanpur 2002-TIOL - 705 - CESTAT -DEL . The Commissioner in the impugned order, although noted the Board's Circular No CBEC/145/56/95-CX dated 31.08.1995 but has not applied the ratio of the Board's Circular nor the judgment of the Tribunal rendered in case of M/s. Kothari Products Ltd. (supra) and hence, this appeal.
2. Heard Shri G. Prabhakar Sastry, Learned Advocate appearing for the appellants and Shri L. Narasimha Murthy, learned SDR appearing for the Revenue.
3. Ld. Counsel submitted that the item continues to be Coconut Oil and has not assumed the characteristic of Cosmetic or Toilet preparation and therefore Chapter Note 1 (e) of Chapter 15 of Central Excise Tariff was not at all applicable to the facts of this case. He submitted that the judgment rendered in case of M/s. Kothari Products Ltd. (supra) applies to the facts of the case.
4. Ld. SDR files a Para-wise comments from the Revenue and re-iterates the Department's view.
5. We have carefully considered the submissions made by both the sides and perused the Board's Circular and the Tribunal's judgment referred to by the Ld. Counsel. Para 5 of the Board's Circular clearly indicates that -
"To enable its classification as a product falling under Chapter 33 it must satisfy the requirements of Chapter Note 2 and 6 of Chapter 33 of CETA. Note 2 of Chapter 33 applies, inter alia, to "the products whether or not mixed, suitable for use as goods as these headings and put up in packing with label, literature or their indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialized to such use".
In the present case, the item is merely packed in the sachets and they have not sold with the label with literature and other indications that their products as Cosmetic or Toilet preparations. The Tribunal has also analysed the matter in detail and held that Coconut oil is marketed in retail packs and re-packing from bulk into small packs does not result in a new product having a different name, use or character and also held that it does not result in manufacture. It is also held to continue to remain in Chapter Heading 15.03 so long as it is fixed vegetable oil and does not come under the purview of the Chapter 33 of the Act. In view of the finding recorded in Para 7 to 9 of M/s. Kothari Products Ltd. which is extracted below, we are of the considered opinion that the ruling of the Tribunal in Kothari Products Ltd. Case clearly applies to the facts of the case :
"7. We have considered the submissions of both the sides. It is not in dispute that the coconut oil in bulk falls under Heading 15.03 of the Central Excise Tariff. Coconut in bulk is also usuable as hair oil and it is not that it becomes usuable as hair oil only after it is re-packed into small containers. This has also been recognised by the Central Board of Excise & Customs in Circular No.145/56/95, dated 31.8.95 wherein it was mentioned that coconut oil has multiple uses, as besides cosmetics and toilet prepration, for making lubricating greases, synthetic detergent, laundering and cleaning preparations as a source of fatty acid and also as an oil for application on hair by some sections of the society. We are of the view that merely be repacking the coconut oil from bulk into small packs, no new product having a different name, use or character emerges and as such no manufacture takes place. The question which remains to be examined is whether Notes 2 or 4 to Chapter 33 will bring the small packs of coconut oil within the scope of Heading 33.05 as "preparations for use on the hair." Note 2, as clarified by the Apex Court in BPL Pharmaceuticals Case, supra, the product is required to be (i) a cosmetic, (ii) must be putup in packings (iii) with labels literature or indications that they are for use as cosmetics. It is not the case of Department that the coconut oil is not fixed vegetable oil falling under Heading 15.03. Further there is no labels, literature or indications on the packings that the product is for use as cosmetics or toilets preparations. Merely the fact that the product is being advertised as hair oil is not enough to classify it under Heading 33.05 or to attract provisions of Note 2 to Chapter 33. It is the consistant view of the Tribunal that classification of the product cannot be determined on the basis of certain characteristics of a product high lighted in the advertisement by the manufacturer. The classification is determined on the basis of the nature of the product and its description in the relevant Heading of the Tariff. In Ram Tirth Yogasharam, supra, relied upon by the learned Consultant, it has been held by the Bombay High court that the mode in which a person may choose to advertise his commodity cannot be decisive in determining its real nature. Similar views were expressed by Madras High Court in TSR & Company Case, supra. The Bomaby High Court again in Leucoplast (I) Pvt. Ltd. v. U.O.I. 1985 (20) ELT. 70 (Bom), observed as under :
"However, it may be pointed out that for the purposes of classification for levy, the advertisements are of no value or help. Advertisements, are published by the manufacturers of a product in order to attract consumers and have nothing to do with the classification of the same product for levying of duty. This Court dealing with such contentions has held, inter alia, in the case of Blue Star Ltd. v. Union of India and Anr. - 1980 (6) ELT 280 (Bom) that payment of duty under a particular Tariff item must depend upon the facts of the case and not on the advertisement gimmick of the advertiser. The same view has also taken in Subhash Chandarnishat v. Union of India and Anr. 1979 (4) ELT J-212 (Bom) and by a Division Bench of the Kerala High Court in the case of the Dy. Commissioner of Agricultural Income Tax and Sales Tax (Law) Board of Revenue (Taxes), Ernakulam v. Union Carbinde India Ltd. Madas-2 (1976 Sales Tax Cases (Vol 38) Page 198.)
8. We also observe that the Board has considered the classification of Coconut oil Packed in small containers' and after considering the minutes of the Conference of the Collectors of Central Excise, North Zone held at Lucknow on 20th and 21st September 1991 report of the Director General (Ante Evasion) and views of the Chief Chemist Central Revenue Chemical Laboratories, has clarified as under vide Circular No. 145/56/95-CX, dated 31.8.95 :
"The matter has been carefully considered by the Board. It is seen that coconut oil is obtained from the dried flesh of copra of the coconut. This coconut oil has multiple uses, as besides cosmetics and toilet preparations, for making lubricating greases, synthetic detergent, laundering and cleaning preparations as a source of fatty acid and also as an oil application on hair by some sections of the society.
On the other hand, coconut oil under consideration seems to be a fixed vegetable oil as per : Note 3 of the Chapter 15 which defines "fixed vegetable oils" as oils which cannot be easily distilled without decomposition, which are not volatile and which cannot be carried oil by superheated steam (which decomposes and saponifies them). Further, under general description at P. 101 of HSN, it has been stated that chapter 15 covers, inter alia, animal or vegetable fats and oils, whether crude, purified or refined or treated in certain ways (e.g. boiled, sulphurised or hydrogenated). Also Heading 15.13 is HSN covers coconut oil and its fraction whether crude or refined. Though it is true that the headings, in HSN are not aligned with CETA, 1985 the HSN Notes are a guiding factor they clearly bring out that coconut oil is a fixed vegetable oil which merits classification under Chapter 15.1.
Therefore, keeping in view of Chapter Notes, HSN Notes, the Tariff Conference of 1991, the report of D.G. (A.E.) and the opinion of Chief Chemist, CRCL it is felt that coconut oil whether pure or refined and whether packed in small or large containers merits classification under Heading No. 1503 as long as it satisfied the criteria of 'fixed vegetable oil' laid down in Chapter Note 3 of Chapter 15. It is also clarified that if the containers bear labels, literature, etc., indicating that it is meant for application on hair as specified under Note 2 of Chapter 33 and/or if the coconut oil has additives (other than BHA) or has undergone process which made it a preparation for use on hair as mentioned in Chapter Note 6 of Chapter 33 then the coconut oil may merit classification under Chapter 33."
9. As in the present matter, it has not been disputed by the Revenue that the impugned product satisfies the criteria of fixed vegetable oil laid down in Note 3 to Chapter 15 and the packing does not bear labels/literature or indication to the effect that it is meant for application on hair as specified under Note 2 to Chapter 33 and there is also nothing brought on record to show that any additive (other than BHA) has been added or has undergone process which made it a preparation for use on hair, the impugned product cannot be classified under Heading 3305.90 of CETA. Accordingly we set aside the impugned Order without going into the question of time limit and allow both the appeals."
Following ratio of the afore stated judgment of the Tribunal, the impugned order is seta side and the appeal is allowed.