2011 (5) TMI 901 - AT - Central Excise

Tribunal reclassifies coconut oil: Edible oil, not hair oil, duty demands dismissed

CCE and Service Tax Versus Capital Technologies Ltd.

CCE and Service Tax Versus Capital Technologies Ltd. - 2015 (321) E.L.T. 479 (Tri. - Bang.) Issues Involved:1. Classification of repacked coconut oil.2. Applicability of Central Excise Duty.3. Relevance of Board Circulars and Tribunal judgments.4. Evidentiary value of packaging specifications and marketing representations.5. Limitation aspect.Issue-wise Detailed Analysis:1. Classification of Repacked Coconut Oil:The primary issue was whether the repacked coconut oil should be classified under Chapter 15 (as edible oil) or Chapter 33 (as hair oil) of the Central Excise Tariff Act, 1985. The appellants argued that their product, repacked coconut oil, should fall under Chapter 15, relying on previous Tribunal decisions and Circulars. The adjudicating authority, however, classified it under Chapter 33, citing the Board's Circular dated 03.06.2009 and the packaging and marketing specifications indicating it as hair oil.2. Applicability of Central Excise Duty:The adjudicating authority concluded that the repacked coconut oil was excisable under Chapter 33, thereby attracting Central Excise Duty. The appellants contested this, arguing that their product was merely repacked edible coconut oil and should not be subject to excise duty under Chapter 33. They cited previous Tribunal decisions that supported their classification under Chapter 15, which would exempt them from such duty.3. Relevance of Board Circulars and Tribunal Judgments:The appellants argued that the Board's Circular dated 03.06.2009 should not be applied retrospectively and that Tribunal judgments, which had consistently classified repacked coconut oil under Chapter 15, should prevail. They cited several cases, including Aiswarya Industries vs. CCE, Pondicherry, which had similar facts and were decided in favor of classification under Chapter 15. The Tribunal in this case agreed with the appellants, stating that the Board's Circular should not override judicial precedents unless explicitly set aside by a higher forum.4. Evidentiary Value of Packaging Specifications and Marketing Representations:The Revenue argued that internal documents and marketing materials from M/s. Hindustan Lever Limited (HLL) indicated the product as hair oil, thus supporting classification under Chapter 33. The Tribunal, however, found that the packaging clearly labeled the product as '100% pure, edible grade coconut oil,' and there was no contrary evidence to suggest it was marketed as hair oil. The Tribunal emphasized that the product's representation to the market as edible oil was crucial and that the Revenue had not refuted this representation effectively.5. Limitation Aspect:The appellants also raised the issue of limitation, arguing that the demand for duty was time-barred. However, since the Tribunal decided the case on merits, it did not record any findings on the limitation aspect.Conclusion:The Tribunal allowed the appeals filed by the assessee, setting aside the impugned orders to the extent challenged. It concluded that the repacked coconut oil should be classified under Chapter 15 as edible oil, not under Chapter 33 as hair oil. Consequently, the demands for duty, interest, and penalties were vacated. The appeals filed by the Revenue were rejected. The Tribunal's decision was based on the consistent judicial precedents and the clear labeling of the product as edible grade coconut oil.