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of <h1>Court invalidates Circular on coconut oil classification under Central Excise Act, citing jurisdictional overreach and discrimination</h1> <h3>M/s. VVD And Sons (Pvt.) Ltd. Versus The Central Board of Excise And Customs Department of Revenue</h3> M/s. VVD And Sons (Pvt.) Ltd. Versus The Central Board of Excise And Customs Department of Revenue - 2014 (310) E.L.T. 718 (Mad.) Issues Involved:1. Jurisdiction of CBEC under Section 37B of the Central Excise Act, 1944.2. Classification of coconut oil based on packing size.3. Violation of Article 14 of the Constitution of India.Issue-wise Detailed Analysis:1. Jurisdiction of CBEC under Section 37B of the Central Excise Act, 1944:The petitioner argued that the CBEC exceeded its jurisdiction by issuing the impugned circular under Section 37B, which classified coconut oil packed in containers up to 200 ml under heading 3305. It was contended that Section 37B only allows CBEC to issue orders for uniformity in classification and excise duties, but not to overturn Tribunal decisions or interfere with quasi-judicial powers. The court referenced several judgments, including Pioneer Miyagi Chemicals, Faridabad Iron and Steel Traders Association, and Raymon Glues & Chemicals, which established that CBEC cannot issue circulars that nullify judicial decisions or interfere with quasi-judicial functions. The court concluded that the impugned circular was issued in excess of jurisdiction and was thus invalid.2. Classification of Coconut Oil Based on Packing Size:The petitioner challenged the classification of coconut oil based on packing size, arguing it was not proper or correct. The court noted that before the amendment of Chapter Note 2 of Chapter 33, coconut oil was classified as a fixed vegetable oil under Chapter 15, but post-amendment, it was classified as hair oil under Chapter 33 based solely on packing size. The court reviewed Tribunal decisions, including M/s. Madhan Agro Industries and Capital Technologies Ltd, which held that coconut oil should be classified under Chapter 15 unless there is specific indication for cosmetic use. The court found that the impugned circular contradicted these decisions and was therefore without jurisdiction.3. Violation of Article 14 of the Constitution of India:The petitioner contended that the circular violated Article 14 by creating hostile discrimination between identical goods based on packing size. The court agreed, noting that the same coconut oil was treated differently depending on whether it was packed in containers up to 200 ml or above, without any rational basis. This classification lacked a rational relation to the object sought to be achieved and was thus arbitrary and unreasonable. The court held that the circular resulted in discrimination against economically disadvantaged consumers who purchase smaller packs, thereby violating the equality clause in Article 14.Conclusion:The court declared the impugned circular null and void, holding it arbitrary, unreasonable, and without jurisdiction. It was found to be contrary to the provisions of the Central Excise Act, 1944, and ultra vires of Articles 14, 19(i)(g), and 21 of the Constitution of India. The writ petition was allowed, and the petitioner was granted the declaratory relief sought.
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