Coconut Oil packed in below 200 ml

[george thomas]

Our Company Manufacturing and Refining Pure Coconut Oil and clearing in below 200 ml Pack .

After several Tribunal judgements and dismissal of Revenue appeals by the Supreme Court, the CBEC has now withdrawn the 2009 Circular and the Section 37B order contained in it.

Now the field is free to classify the product taking into consideration the facts of the case read with the judicial pronouncements. THERE IS NO BOARD CLARIFICATION

After several Tribunal judgements and dismissal of Revenue appeals by the Supreme Court, the CBEC has now withdrawn the 2009 Circular and the Section 37B order contained in it.

Now the field is free to classify the product taking into consideration the facts of the case read with the judicial pronouncements. THERE IS NO BOARD CLARIFICATION

Our product we are declaring in the Label and bottle that ' For Edible Purpose Only' but in the Advertisement mentioning that also can be used for hair growth.

In such a situation our product is coming under Chapter 15 or 33 Plz advice

[Rajagopalan Ranganathan]

Sir,

If it is pure coconut oil then it will fall under Chapter 15. But if you add any other substance in the oil like perfumes, colouring matter etc then it will be classified under Chapter 33 as hair oil. This is my view.

[Mahir S]

Sir,

Further to add, you may also refer HSN for correct description of the product and its usages.

[KASTURI SETHI]

Dear Sh.George Thomas Ji,

The department has been changing its stand regarding classification of 'Coconut oil' in view of various judgements keeping in view of size, usage, purpose, ingredients etc. After the judgement of Supreme Court reported as [Commissioner v. Capital Technologies Ltd. - 2015 2012 (1) TMI 179 - SUPREME COURT = (321) E.L.T. A211 (S.C.)], the Board issued circular No.(Instruction) F. No. 96/85/2015-CX.I, dated 7-12-2015 for determination of classification of Coconut Oil. Refer Para No. No. B 6 of above circular. It is a undisputed fact that Coconut oil is used for both purposes i.e. as edible oil and hair oil. You may display the words, "For edible oil only" but it is a fact it is also used as hair oil. Board's circular dated 7.12. 15 has classified this product under Chapter 15. Despite the decision of Supreme Court and issuance of circular dated 7.12. 15 for classification of the product under Chapter 15, if you feel that it is not safe, then go ahead with higher rate of duty under Chapter 33.

[KASTURI SETHI]

In continuation of my reply dated 10.3.16, I add that Board vide its circular dated 7.12.15 has instructed to decide the classification on the basis of the facts of the case read with judicial pronouncements. What are the facts? These facts are usage, purpose, formulation, ingredients, size etc. Classification can be determined on the basis of these parameters/factors.

You are to draw a line between edible oil and hair oil (cosmetic). The usage of pure coconut oil can be edible as well as cosmetic (hair) oil but cosmetic coconut oil cannot be edible. Pure coconut oil is classifiable under Chapter 15 and formulated coconut oil (Cosmetic) is classifiable under Chapter 33. Container should bear the remarks, "For Hair use only"or "For Cosmetic purpose only" "For edible purpose only". If you print the words, "For edible only" on the container and the same is used for hair also, it will not invite audit objection because you have already drawn a line between the two.

Thus the usage/purpose should be the the major factor to determine the classification of coconut oil and this is also in letter and spirit of Board's circular dated 7.12.15 based on the latest judjement of the Supreme Court and Tribunals.My views are based on the idea given by Sh. Rajagopalan Ranganathan, Sir, in his reply dated 8.3.16. I fully endorse his views which are best and there is no other way out, especially keeping in view the frequent change of the stand by the Board. The factor of 'size' loses its relevance in view of usage/purpose/formulations.

AI Summary

Product classification of coconut oil depends on composition and intended use, with labeling and formulation determining taxable treatment. Classification of coconut oil depends on composition, intended use and labeling: pure coconut oil used for human consumption is classed as edible oil, while oil formulated with cosmetic additives or primarily promoted for hair/cosmetic use is classed as a cosmetic/hair oil. Administrative guidance requires case-by-case determination based on facts - formulation, ingredients, usage, purpose, labeling and promotional material - and labeling that clearly states 'for edible use only' or 'for hair/cosmetic use only' assists in distinguishing classifications.