2009 (11) TMI 362 - AT - Central Excise

Tribunal rules masala pudies not under Chapter 3305.90, Central Excise Tariff Act, 1985.

COMMISSIONER OF C. EX., AHMEDABAD Versus MM KAMBHATWALA

The Tribunal rejected the Revenue's appeal, ruling that the masala pudies manufactured were not classifiable under Chapter 3305.90 of the Central Excise ... Masala Pudies- Classification- The appellant is manufacturers of various masala pudis-amla pudi, dudhi pudi, brahmi pudi, mehndi pudi etc. which contains amla powder, mehndi leaves powder as main ingredients as well as different other ingredients also and packed and sold in 100 grams packing to household buyers to prepare hair oil. The appellartt classified his products as masala pudies under Chapter/Heading No. 1401.00 and cleared goods valued at Rs. 6,89,205/- at Nil rate of duty from June, 98 to Nov. 98. The adjudicating authority classified the same under Chap ter/Heading No. 3305.99 attracting central excise duty @ 30% Adv., amounting to Rs. 2,06,762/-. Accordingly, show cause notice was issued on 3-12-98 which was adjudicated and was confirmed. Commissioner (Appeals) set aside. Held that- Henna powder and shikakai powder are directly applied to hair after mixing with water, hence not comparable to present items. Thus not classifiable under sub-heading 3305.90 of Central Excise Tariff Act, 1985. Issues: Classification of masala pudies under Central Excise Tariff Act, 1985Issue 1: Classification of Masala PudiesThe case involved the classification of masala pudies manufactured by the appellant under the Central Excise Tariff Act, 1985. The appellant declared the products as masala pudies under Chapter/Heading No. 1401.00, while the adjudicating authority classified them under Chapter/Heading No. 3305.99, attracting central excise duty at 30% Adv. The dispute arose regarding the correct classification of the products, leading to a series of appeals and decisions.Detailed Analysis:The appellant initially classified the masala pudies under Chapter/Heading No. 1401.00, clearing goods at a Nil rate of duty. However, the adjudicating authority classified them under Chapter/Heading No. 3305.99, resulting in a demand for central excise duty. The Commissioner (Appeals) set aside the original order, stating that the masala pudies were to be classified under Chapter No. 14, citing a decision of the Madras High Court. The Revenue argued that the product was comparable to another product classified under CETH 3305, emphasizing similarities between the products. The appellant contended that the masala pudies were raw materials for preparing hair oil and not finished products for direct application on hair.Issue 2: Comparison with Similar ProductsA key point of contention was the comparison between the masala pudies and another product, M37, previously classified under CETH 3305. The Revenue argued that since M37 was classified under Chapter 3305, the masala pudies should also fall under the same category. However, the appellant highlighted significant differences between the two products, emphasizing that the masala pudies were raw materials for preparing hair oil and not cosmetic preparations like M37.Detailed Analysis:The Tribunal analyzed the differences between M37 and the masala pudies, noting that M37 was a cosmetic preparation while the masala pudies were Ayurvedic raw materials. The products had distinct application processes and compositions, leading to different outcomes when used. The Tribunal found that the masala pudies required a detailed process involving boiling and filtering, resulting in residue disposal, unlike M37, which could be directly mixed with oil. The Tribunal concluded that the masala pudies were not comparable to M37 and should not be classified under Chapter 3305.Issue 3: Interpretation of Chapter NotesThe case involved an interpretation of Chapter Note 6 of Chapter 33, which lists products applicable to Heading No. 33.05, including perfumed hair oils and other hair preparations. The correct application of this Chapter Note was crucial in determining the classification of the masala pudies under the Central Excise Tariff Act.Detailed Analysis:The Tribunal examined Chapter Note 6 of Chapter 33, which specifies products covered under Heading No. 33.05, such as hair lotions, pomades, and hair dyes. Considering the nature of the masala pudies and the arguments presented, the Tribunal concluded that the products did not fall under the scope of Chapter 33.05. The Tribunal emphasized that the masala pudies were raw materials for preparing perfumed hair oil and did not align with the products typically classified under Chapter 33.05.In conclusion, the Tribunal rejected the appeal filed by the Revenue, determining that the masala pudies manufactured by the appellant were not classifiable under Chapter 3305.90 of the Central Excise Tariff Act, 1985. The detailed analysis of the differences between the products, the nature of the masala pudies, and the interpretation of relevant Chapter Notes played a crucial role in the final classification decision.