Classification of perfumed hair oil over ayurvedic medicament turns on recognised formulation and specific tariff entry priority.

A product containing ayurvedic ingredients was treated as perfumed hair oil under CET sub-heading 3305.10 because it was not shown to be manufactured in accordance with a recognised ayurvedic formula, and Chapter 33 specifically covers perfumed hair oils even where they have incidental therapeutic value. On that basis, exemption under Notification 75/94, which applied only to Chapter 30 goods, was unavailable. The duty demand was nevertheless not sustained because the lower appellate finding that the product did not bear another person's brand name and that clearances remained within the SSI ceiling under Notification 140/83 was left unchallenged.

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Issues: (i) Whether the product was classifiable as an ayurvedic medicament under CET sub-heading 3003.30 or as perfumed hair oil under CET sub-heading 3305.10; (ii) whether the product was entitled to exemption under Notification 75/94; (iii) whether the duty demand could stand in view of the unchallenged SSI exemption under Notification 140/83.

Issue (i): Whether the product was classifiable as an ayurvedic medicament under CET sub-heading 3003.30 or as perfumed hair oil under CET sub-heading 3305.10

Analysis: The product contained ingredients found in ayurvedic texts, but it was not shown to be manufactured in accordance with any formula prescribed in a recognised ayurvedic text. The competing test reports were considered, but the decisive consideration was that Chapter 30 covers only preparations genuinely answering the description of ayurvedic medicaments, while Chapter 33 specifically includes perfumed hair oils even if they possess subsidiary therapeutic value. Since the product was perfumed oil used on hair, the specific tariff entry in Chapter 33 prevailed over the general claim under Chapter 30.

Conclusion: The product was correctly classifiable as perfumed hair oil under CET sub-heading 3305.10, not as an ayurvedic medicament under CET sub-heading 3003.30.

Issue (ii): Whether the product was entitled to exemption under Notification 75/94

Analysis: The exemption under Notification 75/94 was available only to goods falling under Chapter 30. Once the product was held to fall under Chapter 33 as perfumed hair oil, the chapter-based exemption could not be applied.

Conclusion: The benefit of Notification 75/94 was not available to the product.

Issue (iii): Whether the duty demand could stand in view of the unchallenged SSI exemption under Notification 140/83

Analysis: The lower appellate authority's finding that the product did not bear another person's brand name and that the clearance value was within the ceiling limit under Notification 140/83 was not challenged by the Revenue. That finding therefore remained undisturbed, and the duty demand could not be sustained.

Conclusion: The duty demand was not sustainable.

Final Conclusion: The classification adopted by the Revenue was upheld, the chapter-based exemption claim failed, but the duty demand was set aside because the SSI exemption finding remained unchallenged.

Ratio Decidendi: A product can be treated as an ayurvedic medicament only if it is shown to be manufactured in accordance with a recognised ayurvedic formulation, and where a specific tariff entry in Chapter 33 covers perfumed hair oil, that entry governs even if the product has incidental therapeutic value.

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