TMI Blog2014 (12) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... avourable to the assessee to be adopted in preference to other use as held by Gauhati High court in Shalimar Chemical Works Ltd case [2011 (7) TMI 1062 - GAUHATI HIGH COURT]. At the risk of repetition, it is stated that the small packs, having been mainly meant for economically poor and down trodden, the presumption that it is used as cosmetics than as edible oil, has no rhyme, reason or logic in the same. By doing so, the poor purchaser of small packs are burdened by levying additional service tax. The first respondent has through the impugned circular, proceeded to impose tax for the coconut oil packed in the container upto 200ml and thus usurped the function of the legislative body. The first respondent has sought to impose duty indirectly, which, the legislature would intend to impose directly in accordance with law. Thus way, the same amounts to indirectly legislating, which is not legally permissible. - Decision in the case of Delhi High court in Faridabad Iron and Steel Traders Association v. Union of India case [2003 (11) TMI 107 - HIGH COURT OF DELHI] followed. Impugned circular issued by the first respondent is held to be arbitrary, unreasonable, without jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication on hair, as specified under Note 2 of Chapter 33 and/or if the coconut oil has additives (other than BHA) or has undergone processes which make 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. The same Chapter note 2 of Chapter 33 underwent a change consequent to the central excise tariff being changed to 8 digit tariff from the original 6 digits, so as to make the Central Excise Tariff aligning to HSN (Harmonised System of Nomenclature adopted world wide) and amendment was introduced in the Note 2 to Chapter 33 with effect from 1.3.2005. 3. It is not in dispute that the amended chapter note has done away with the requirement of label indicating the use as cosmetics which found place in the earlier Note 2 and the same was followed by the impugned circular bearing No.890/10/2009-CX issued by the first respondent vide F.No.102/05/2006-CX-3 dated 3.6.2009 under section 37B of the Central Excise Act, 1944 and the communication of the second respondent in O.C.No.2106/2009 dated 13.7.2009, whereby, coconut oil packed in containers upto 200 ml is classified under heading 3305 and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to satisfy the twin tests laid down by the Hon'ble Supreme Court. It is sought to be argued on the side of the petitioner that the classification on the basis of packing has no nexus to the object sought to be achieved and when the law making authority has not chosen to make one such classification, such classification cannot be introduced through the circular, whereby indirectly legislating under section 37B of the Act, which is in excess of jurisdiction vested upon the authority concerned. 7. Per contra, the learned counsel for the respondents department would submit that the market survey conducted, showed that smaller packs are normally used as hair oil by the consumers and the same warrants re- examination of the earlier circular issued in 1995 and in order to ensure the uniformity in the assessment of the product, coconut oil packed in retail packs which are generally used by consumers as hair oil, is classified under heading 33.05 and not under Chapter 15 and the same does not amount to reclassification of the coconut oil and such classification is also supported by amended Note 2 of Chapter 33 and how a product is generally being used by the consumer is the only crit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p in a form clearly specialised to such use. Whereas, the same was, as per the subsequent amendment, revised by solely depending upon the packing. 11. The first ground of attack against the validity of the impugned circular is that the impugned circular is in excessive exercise of jurisdiction vested on the authority concerned under section 37B of the Central Excise Act, 1944. It is contended herein that the first respondent Board cannot be permitted to issue one such circular to nullify or get over the effect of decisions of the Tribunal on earlier occasions on the same issue and the same amounts to interference with the quasi judicial power of the Assessing Officer under the Act, which is the domain of the appellate authority. The learned counsel for the petitioner would, in support of his contention that the Tribunal rulings will prevail over the circular if the same is contrary to the Tribunal rulings, cited the following authority reported in Pioneer Miyagi Chemicals v. Central Board of Excise and Customs, New Delhi, 2000 (116) ELT 441 (Mad) , wherein, our High Court has in paras 9 and 10 categorically held that while admitting that the legislature could set right the defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officers and the officials exercising quasi judicial powers must ignore any circular or direction interfering with their quasi judicial functions. It is also observed therein that when any authority is conferred with the power to determine certain question in judicial and/or quasi judicial manner, the authority is required to exercise the power conferred upon him as per his own discretion and cannot be influenced by any directions, instructions or the circulars that may be issued by any other agency and the circular issued by the respondents cannot be permitted to interfere with the discretion of the judicial and quasi judicial authorities. In the same judgment, the Delhi High court has categorically observed that the power to impose tax is essentially a legislative function and according to our constitutional scheme, it cannot be delegated and the Excise Duty which the legislature intends to impose must be imposed directly in accordance with law and not through any circular. In such event, the circular deserves to be quashed. 13. Next judgment relied on the side of the petitioner is the decision rendered by Gujarat High Court in Raymon Glues Chemicals v. Union of India, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Chennai); (ii)Aishwarya Industries, Pondicherry 2008 TIOL- 2846 -CESTAT-Mad (iii)Capital Technologies Limited and others v. Commissioner of Central Excise and Service Tax, Tirupathy, 2011-TIOL-775-CESTAT, Bangalore as confirmed by the Hon'ble Supreme court by dismissing the appeal; (iv)M/s.Raj Oil Mills Ltd and others v. Commissioner of Central Excise, 2013-TIOL-1609- CESTAT, Mumbai. In all the cases cited above, the Tribunal was of the view that the coconut oil did not fall under Chapter 33 and Note 2 of Chapter 33 excluded coconut oil from its purview. 15. In the first case M/s.Madhan Agro Industries (P) Limited, the following earlier decisions of the Tribunal were referred to (a) Amardeo Plastic Industries v. CCE, Belapur, 2007 (210) ELT 360 (Tribunal, Mumbai); (b) Kothari Products Ltd v. CCE, 2002 (139) ELT 633 (T); (c) Srikant Sachets Pvt. Ltd v. CCE, 2005 (180) ELT 401 (T); (d) CCE v. Essen Products (I) Ltd, 2006 (200) ELT 342 (T), wherein, the Tribunal observed that Chapter Note 2 of Chapter 33 excluded such oils form its purview. By way of clarification, it is further held that the bottles containing coconut oil did not indicate their use on hair and the bottles an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to show that it is meant for the use as cosmetics and irrespective of packings and the first respondent has no jurisdiction to issue circular, which has the effect of nullifying the decisions rendered by the Tribunal. The learned counsel for the petitioner also cited another decision in Shalimar Chemical Works Ltd v. State of Assam and others, (2012) 50 VST 253 (Gau), wherein the Gauhati High Court was of the view that construction favourable to the assessee to be adopted in preference to other possible construction. 18. Per contra, the learned standing counsel for the Revenue would rely on market enquiries, which according to the Revenue, revealed that smaller packs are normally used as hair oil by the consumers, as such, the same is classified under heading 3305 and not under chapter 15. It is contended by the learned standing counsel for the Revenue that though the small retail packs may be used as edible oil in some cases, the criteria is as to how the said product is generally sold in retail packs and the impugned circular is issued only to maintain uniformity in classification of the goods. It is also argued that by the impugned circular, the petitioner is not the aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterfere with the exercise of quasi judicial power of adjudication and as the impugned circular is contrary to well settled principles, the impugned circular is bad for want of jurisdiction. 19. Other grounds on which the impugned circular is sought to be challenged are that (i) it is hostile discrimination of identical goods in violation of the equality clause enshrined in Article 14 of the Constitution of India; (ii) it does not satisfy the twin tests to ascertain whether the classification is permissible or not; and (iii) it results in indirectly legislating under Section 37B of the Act. 20. Insofar as the second ground regarding violative of equality clause enshrined in Article 14 of the Constitution of India, is concerned, it is contended before this court that the department has not chosen to levy duty on coconut oil packed in the containers above 200 ml upto 20kgs, which are purchased and consumed by financially well to do people and the department has chosen to levy and collect service tax on coconut oil sold in small packs containing 50ml and 100ml and 200ml which are predominately purchased and consumed by economically poor and downtrodden, who cannot afford to buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich distinguishes persons or things that are grouped together from others left out of the group; (ii) that the differential must have a rational relation to the object sought to be achieved by the statute in question. However, this court does not find any rational between the classification made and the object sought to be achieved on such classification. 23. As already referred to, small packs will be normally purchased by consumers with lesser financial ability to pay. If the object to be achieved by such classification is to bring uniformity, the classification leads to more disparity among the purchasers and the same is hence unreasonable and arbitrary. It is also not indicated in the impugned circular as to how the uniformity can be achieved by bringing the same coconut oil based on the packing under two different headings. Except stating that the market survey is the basis for arriving at the conclusion that upto 200ml pack is being purchased by the consumers for use it as hair oil, the classification made through the impugned circular is unfounded and without any basis. 24. Regarding the third ground that the impugned circular issued under section 37B of the Act amoun ..... 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