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M/s Dabur India Ltd. Versus CCE, Ghaziabad

2015 (8) TMI 102 - CESTAT NEW DELHI

Classification of goods - classification of the coconut oil packed in the packings of 200 ml or less - Classification under Heading 1513 or under Heading No.3305 - Edible oil or hair oil - Held that:- 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 2 .....

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the coconut oil as suitable for use as Hair Oil. Even in terms of Board s 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.

Denial of refund .....

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still pending before the Apex Court, more so, when the Hon ble Madras High Court in its judgement in the case of VVD & Sons (Pvt.) Ltd. (2014 (12) TMI 653 - MADRAS HIGH COURT) after considering the Board s Circular dated 3.6.2009 has quashed the same observing that the same is arbitrary and contrary to the provisions of Section 37B of the Central Excise Act, 1944 and hence null and void. - Decided in favour of assessee. - Excise Appeal No. E/3880/2012-EX(DB) - Final Order No. 51984/2015 - Dated .....

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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 department s stand is based on the Board s Circular No.890/10/09/C .....

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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 Boa .....

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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, A .....

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duct, in question, would be classifiable as coconut oil under heading no.1513 of the Central Excise Tariff, that the department s case against the appellant is based only on the Board s 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 Cha .....

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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 Board s Circular dated 3.6.2009 was challenged before the Hon ble Madras High Court by filing a writ petition by M/s. VVD and Sons (Pvt.) Ltd and the Hon ble 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, 194 .....

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hen the field is occupied by a decision rendered by Appellate Tribunal and that the department cannot take a stand contrary to the Tribunal s 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 pu .....

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l 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 .....

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on 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 .....

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, 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 aqueou .....

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ified 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 .....

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s 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 Board s Circular dated 3.6.2009 and as and when the issue is decided by the Hon ble High Court they would .....

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t 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 .....

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icating 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 t .....

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e-mature inasmuch as while paying duty under protest, the appellant had communicated to the Department that they have filed a writ petition before the Hon ble Allahabad High Court challenging the Board s 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 cla .....

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w, they are at liberty to file the refund claim even though the matter is still pending before the Apex Court, more so, when the Hon ble Madras High Court in its judgement in the case of VVD & Sons (Pvt.) Ltd. (supra) reported in 2014 TIOL 2014 after considering the Board s 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 classi .....

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hat the Board s 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 Court s judgement in the case of Ranadey Micronutrients (supra) and Dhiren Chemical Industries(supra), is not correct as the issue of binding effect of Board s 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 (2 .....

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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 Board s 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 seri .....

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