TaxTMI 
TaxTMI 
2018 (4) TMI 721
X X X X Extracts X X X X
X X X X Extracts X X X X
....shy;6710 of 2009. The relevant period of assessment in all the appeals under consideration is subsequent to the amendment of the First Schedule to the Central Excise Tariff Act, 1985 by the Amendment Act of 2004 (5 of 2005) which came into force on 28.2.2005. 3. The facts, in brief, may be noted at the outset: The respondent­asessee in Civil Appeal No.1766 of 2009 i.e. M/S Madhan Agro Industries Private Limited is/was a manufacturer of 100% pure coconut oil marketed under the brand name "Shanthi". In Civil Appeal Nos.6703­6710 of 2009 the assesses are four job­ workers of M/S Marico Limited who had received 100% pure coconut oil from Marico Limited in bulk and thereafter had packed the same in small packages which were supplied back to Marico as per dispatch schedules issued. The packages in question carried a declaration that they contain 100% pure coconut oil. The trademark "Parachute" is also inscribed on the packs. In Civil Appeal No.1766 of 2009, the packings also included pouches of 5 ml. All the packs are marked as "edible oil". 4. It may also be noticed at this stage that the packing sizes conform to the requirement of Clause 5 of Schedule I of the Edib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l, sal oil, mahua oil, kusum oil, rubber seed oil, mango kernel oil, kokum oil, dhupa oil, undi oil, maroti oil, pisa oil and nahor oil, and their fractions. 8% 15.03 1503.00 Fixed vegetable oils, other than those of heading No.15.02 8% 15.04 1504.00 Vegetable fats and oils and their fractions, partly or wholly hydrogenated, interesterified, reesterified or elaidinised, whether or not refined but not further prepared. 8% 15.05 33.03.00 Omitted 8% 15.06 1506.00 Glycerol, Crude, Glycerol Waters and Glycerol lyes 16% 15.07 1507.00 Vegetable waxes (other than triglycerides), beeswax, other insect waxes and spermaceti, whether or not refined or coloured; degras; residues resulting from the treatment of fatty substances of animal or vegetable waxes 16% 15.08 Margarine; edible mixtures or preparations of animal or vegetables fats; animal or vegetable fats and oils, boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified; inedible mixtures or preparations of fats and oils of this Chapter 16% 1508.10 Linoxyn 16% &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and barrier creams to give protection against skin irritants. 6. Heading No.33.05 applies, inter alia, to the following products; brilliantines, perfumed hair oils, hair lotions, pomades and creams, hair dyes (in whatever form), shampoos, whether or not containing soap or organic surface active agents. 7. The expression "odoriferous substances" in heading 33.02 refers only to the substances of heading No.33.01 to odoriferous constituents isolated from those substances or to synthetic aromatics. Chapter 33 Cosmetic or toilet preparations, essential oils etc. Heading No. Sub­heading No Description of goods Rate of duty 33.05 Preparations for use on the hair 3305.10 ­Perfumed for use on the hair ­Other 16% 3305.91 ­Hair fixer 16% 3305.99 ­Other 16% POST AMENDMENT CHAPTER 15 Animal or Vegetable fats and Oils and their cleavage products; prepared edible fats; Animal or Vegetable Waxes NOTES 1. This Chapter does not cover : (a) pig....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tariff Item Description of Goods Unit Rate of duty 1513 Coconut (copra), plam kernet or babassu oil and fractions thereof, whether or not refined, but not chemically modified ­Coconut (copra) oil and its fractions : 1513 11 00 ­Crude oil kg. 8% 1513 19 00 ­Other ­Palm kernel or babassu oil and fractions thereof: kg. 8% 1513 21 ­Crude oil : 1513 21 10 ­Palm kernel oil kg. 8% 1513 21 20 ­Babassu oil kg. 8% 1513 29 ­Other 1513 29 10 ­Palm kernel oil and its fractions kg. 8% 1513 29 20 ­Babassu oil and its fractions edible grade kg. 8% 1513 29 30 ­Babassu oil and its fractions, other than edible grade kg. 8% 1513 29 90 ­Other kg. 8% POST AMENDMENT CHAPTER 33 Essential Oils and Resinoids, Perfumery, Cos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....30 00 ­Hair lacquer 3305 90 ­Other : - Hair oil : 3305 90 11 - Perfumed kg. 16% 3305 90 19 ­­Other kg. 16% 3305 90 20 - Brilliantines (spirituous) kg. 16% 3305 90 30 - Hair cream kg. 16% 3305 90 40 - Hair dyes (natural, herbal or synthetic) kg. 16% 3305 90 50 - Hair fixers kg. 16% 3305 90 90 - Other kg. 16% 7. We may now take note of the arguments advanced on behalf of the rival parties: Shri Panda, learned Senior Counsel appearing for the appellant­Union of India has urged that a process of interpretation and consideration of the Rules of General Interpretation and relevant Chapter Notes contained in the Act alongwith the results of the market survey undertaken by the Revenue would lead to the conclusion that classification claimed by the Revenue is fully justified and learned Tribunal (CESTAT) was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es and hence the proposed changes do not involve revenue implication". 9. Referring to the provisions of General Rules for Interpretation and the Chapter and Section Notes relied upon by Shri Panda and drawing the attention of the Court to the Chapter Note 3 and Explanatory Note to Chapter Note 3 in the Harmonised System of Nomenclature (HSN), Shri Bagaria has submitted that there is no manner of doubt that coconut oil, regardless of the size of packings, is classifiable under Chapter 15 of the Tariff Act and by no means, even remotely, under Chapter 33, specifically Heading 33.05 which deals with "preparations for use on the hair". In this regard Shri Bagaria has contended that there is no dispute on the fact that on all the packages of coconut oil cleared by or on behalf of the respondents­assesses, the inscription "edible oil" has been clearly affixed and there is no advertisement/declaration/ representation to the effect that the coconut oil is meant or intended for used as hair oil. In this regard, Shri Bagaria has also drawn the attention of the Court to Central Excise Notification No.145/56/95­CX dated 31.08.1995 whereby the following points were clarified by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2014 has been dismissed by this Court by Order dated 07­12­2014 following which the CBEC has issued another circular bearing no.1007/14/2015­ CX dated 12­10­2015 withdrawing the earlier Circular dated 03­06­2009 and directing that the issue of classification may be decided by the field officers "taking into consideration the facts of the case read with the judicial pronouncements". 12. Disputes with regard to classification may arise in different situations and circumstances. Whether a particular item/product would fall under one or the other Chapter/Heading of a Chapter is one such situation. A dispute may also arise on a claim that though the item falls within a particular Heading, owing to multifarious reasons, some part of the same item may fall under another Heading of the same Chapter or a different Chapter altogether. All disputes with regard to classification of goods manufactured and cleared has to be primarily decided and resolved within the frame work of the Act and on the basis of Rules for Interpretation and the various Chapter Notes and Supplementary Notes contained in the Tariff Act. The understanding of the CBEC and other authorities ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... resolve the dispute of classification this Court was dealing with the question as to whether hypodermic clinical syringes could be regarded as "glass ware" under Entry No.39 of the First Schedule to the U.P. Sales Tax Act, 1948. 16. Similarly, in Asian Paints India Ltd. vs. Collector of Central Excise 1988 (35) E.L.T. 3 (S.C.) the question before this Court was whether "Decoplast" manufactured by the Asian Paints India Ltd. was classifiable under Tariff Item No. 14(1)(3)(iv) of the First Schedule of the Central Excise Tariff as "plastic emulsion paint" or under Tariff Item No.14(1)(v) as "paints not otherwise specified". 17. In Shree Baidyanath Ayurved Bhavan Ltd. vs. Collector of Central Excise, Nagpur (1996) 9 SCC 402 the issue before this Court was as to whether Dant Manjan Lal manufactured by the Assessee was medicine so as to be covered by Exemption Notification No.62/78­CE dated 1st March, 1978 or a toilet preparation. 18. In Alpine Industries vs. Collector of Central Excise, New Delhi (2003) 3 SCC 111 the question that arose for consideration before this Court was whether "Lip Salve" is classifiable under Heading 33.04 of the Central Excise Tariff Act, 1985 as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsumer or the customer but on the basis of the headings and sub­headings and on an interpretation of the provisions of the relevant Chapter Notes, if required. Issues of classification have to be resolved within the framework of the statutory provision. "Coconut oil" packed in small packages/containers does not cease to be "coconut oil" and become "hair oil" though such "coconut oil" may be capable of being used for both purposes. The understanding of the product in the market or amongst the consumers will always have a limited role in this regard. The above has been the view of this Court in O.K. Play (India) Ltd. Vs. Commissioner of Central Excise, Delhi­III, Gurgaon (supra) (para 13) and Commissioner of Customs and Central Excise, Goa Vs. Phil Corporation Ltd. (supra) (para 17). 21. We may now turn to examine the General Rules for Interpretation and the Chapter Notes relied upon by the Revenue. "[THE FIRST SCHEDULE] - EXCISE TARIFF RULES FOR THE INTERPRETATION OF THIS SCHEDULE 1. The titles of Sections and Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e classified under the heading appropriate to the goods to which they are most akin. 5. For legal purposes, the classification of goods in the sub­headings of a heading shall be determined according to the terms of those sub­ headings and any related sub­heading Notes and, mutatis mutandis, to the above rules, on the understanding that only sub­headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. Chapter Note 1(e) to Chapter 15 CHAPTER 15 Animal or Vegetable fats and Oils and their cleavage products; prepared edible fats; Animal or Vegetable Waxes NOTES 1. This Chapter does not cover : (a) xxxxxx (b) xxxxxx (c) xxxxxx (d) xxxxxxxx (e) fatty acids, prepared waxes, medicaments, paints, varnishes, soap, perfumery, cosmetic or toilet preparations, sulphonated oils or other goods of Section VI; or" ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­&s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s : 1513.11 ­ Crude oil 1513.19 ­ Other ­ Palm kernel or babassu oil and fractions thereof: 1513.21 ­ Crude oil 1513.29 ­ Other" 25. Heading 33.05 of the HSN is in the following terms: "33.05 ­ PREPARATIONS FOR USE ON THE HAIR 3305.10 ­ Shampoos 3305.20 ­ Preparation for permanent waving or straightening 3305.30 ­ Hair lacquers 3305.90 ­ Other The Heading covers : (1) Shampoos, containing soap or other organic surface­active agents (see Note 1(c) to Chapter 34), and other shampoos. All these shampoos may contain subsidiary pharmaceutical or disinfectant constituents, even if they have therapeutic or prophylactic properties (see Note 1(d) to Chapter 30) (2) Preparations for permanent waving or straightening (3) Hair lacquers (sometimes known as "hair sprays") (4) Other hair preparations, such as brilliantines, hair oils, creams ("pomades") and dressings: hair dyes and bleaches used on the hair, cream­rinses. 26. After coming into force of the amendment, Headings 1513 and 3305 in Chapters 15 and 33 virtually incorporated the contents....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te 3 to this Chapter). The products of headings 33.03 to 33.07 remain in these headings whether or not they contain subsidiary pharmaceutical or disinfectant constituents, or are held out as having subsidiary therapeutic or prophylactic value (see Note 1(d) to Chapter 30). However, prepared room deodorizers remain classified in heading 33.07 even if they have disinfectant properties of more than a subsidiary nature. Preparations (e.g. varnish) and unmixed products (e.g., unperfumed powdered talc, fuller's earth, aceton, alum) which are suitable for other uses in addition to those described above are classified in these headings only) when they are : (a) In packings of a kind sold to the consumer and put up with labels, literature or other indications that they are for use as perfumery, cosmetic or toilet preparations, or as room deodorisers; or (b) Put up in a form clearly specialised to such use (e.g. nail varnish put up in small bottles furnished with the brush required for applying the varnish). " 29. Explanatory note to Chapter Note 3 of HSN makes the contents of the Chapter Note more clear. In order to classify a product under tariff Item....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself. The definition of a term in the ISI Glossary, which has a different purpose, cannot, in case of a conflict, override the clear indication of the meaning of an identical expression in the same context in the HSN. In the HSN, block board is included within the meaning of the expression "similar laminated wood" in the same context of classification of block board. Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian tariff of a different intention." 30. The views expressed by this Court as to when the HSN can be ignored including the view in Camlin Limited Vs. Commissioner of Central Excise, Mumbai (2008) 9 SCC 82 are not contrary to what has been expressed herein; rather the said views have been expressed in situations where the legislative intention to depart from the HSN is clear and unambiguous. Illustratively, the HSN would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... different Chapters, a position that does not exist in the present case. At the same time, Chapter Note 1(e) to Chapter 15 and Note 2 to Section VI would be applicable only if the product i.e. coconut oil would unambiguously fall under any of the Headings under Section VI, a position that cannot be accepted. 33. A contention has been advanced on behalf of the Revenue that "Parachute" is a registered trademark of Marico and goods are being marketed under the aforesaid trade mark for use as hair oil. The issue of registered trade mark and classification for the purpose of levy of Central Excise Tariff are unrelated and unconnected to each other. Registration of a trademark under any particular class cannot be determinative of the classification of the product for purposes of Central Excise Tariff. Moreover, in the present case, Marico had/has obtained registration of its trade mark "Parachute" under different classes including edible oil (Class 29) as well as hair oil lotions, hair preparations under Class 3. 34. The contents of Circular bearing No. No.145/56/95­CX dated 31.08.1995 at a point of time when Chapter Note II of Chapter 33 was in force has already been noticed a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which the present dispute with regard to classification has arisen is more appropriately classifiable under Chapter 15, Heading 1513 and not under Chapter 33, Heading 3305. Consequently while dismissing the appeals filed by the Revenue, we affirm the Orders to the above effect passed by the learned Appellate Tribunal. J. (Ranjan Gogoi) JUDGMENT R. Banumathi, J. I have gone through the judgment by His Lordship Justice Ranjan Gogoi and I am unable to agree with the reasonings and the conclusion. I am of the view that in view of the amended provisions of Chapter Note 3 to Chapter 33 and Section Note 2 to Section VI, 'Coconut Oil' packed in small sachets/containers, as they are suitable for use on hair are classifiable under Chapter 33 and not under Chapter 15. Following are the reasonings for my conclusion. 2. Whether 'Coconut Oil' manufactured and packed in small containers and sachets by the respondent, is classifiable under Chapter Heading 3305 ("Hair Oil", "Other") as claimed by the Revenue or under Chapter 15 Heading 1513 : Coconut (Copra) oil as claimed by the respondent, is the point falling for consideration in these appeals. 3. The competing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r Note 1(e) to Chapter 15 * Section Note 2 to Section VI (after amendment w.e.f. 28.02.2005) * Chapter Note 3 to Chapter 33 (after amendment w.e.f. 28.02.2005) As discussed infra, cumulative construction of the above would lead to the conclusion that "if the impugned goods are classifiable under Tariff Item 3305 90 19, then the impugned goods are automatically excluded from classification under Tariff Item 1513 11 00 (or) 1513 19 00". 7. The Tariff itself has provided five rules for the interpretation. The First Rule of the General Rules for the Interpretation of the First Schedule, is generally referred to as the cardinal principle for classification. If the classification can be done from the Heading, Section or Chapter Notes, the rules of interpretation need not be resorted to. Interpretative rules are applicable only where the classification of a product cannot be determined in accordance with the Headings or relative Sections or Chapter Notes. The First Schedule-Excise Tariff Rules for the interpretation of this Schedule, reads as under:- "1. The titles of Sections and Chapters are provided for ease of reference only; for legal purposes, classi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. ......" 8. The First Rule has two components, namely: i. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; ii. for legal purposes, classification shall be determined according to the terms of the Headings and any relative Section or Chapter Notes and, provided such Headings or Chapter Notes do not otherwise require, according to the provisions thereinafter contained. The classification of goods will be as per the point (ii) as per which, the classification demands the following conditions to be taken into consideration:- i. Classification shall be done according to the terms of the Headings, and ii. According to any relative Section or Chapter Notes, and iii. Provided such Headings or Chapter Notes do not otherwise require according to the provisions contained thereon that is Rules 2 to 6 It is clear from the above that:- (i) the Heading and (ii) relative Section or Chapter Notes must be considered before classification is done. Only if after thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bject to Note 1 above, goods classifiable in separate constituents, some or all of which fall in this Section and are intended to be mixed together to obtain a product of Section VI or VII, are to be classified in the heading appropriate to that product, provided that the constituents are; (a) ....... (b) ....... (c) ...... heading 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3707 or 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of this Schedule. 2. Chapter Note to Chapter 33 Note 2: Heading Nos.33.03 to 33.07 apply, inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings with labels, literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialized to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic const....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e put up in packings of a kind sold by retail for such use; d. Headings 33 03 to 33 07 may also apply for other goods not being covered by this Chapter Note (as indicated by the phrase 'inter alia") 14. It is important to note that the Chapter Note is not phrased in an exclusive manner. It merely reiterates the conditions which are required to be satisfied for a certain product to merit classification under Heading Tariff Items 33 03 to 33 07. The expression, 'suitable for use as goods of these headings' and 'put up in packings of a kind sold by retail for such use' as used in Note 3 of Chapter 33 indicate that oils suitable for use as Hair Oil are classifiable under Heading ...33 05... even if they are not so used. What matters, is the 'suitability for such use' and 'packings of a kind sold by retail for such use'. In view of the amended position, if the conditions as specified in Note 3 to Chapter 33 for classification as 'Hair Oil, Other' are satisfied, then the product has to be classified only under Heading ...33 05... and no other classification is permissible. The above is further made clear by amended Section Note 2 to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee is that the description of 'Coconut Oil' under Chapter 15 is specific and hence applicable to the subject goods in terms of Rule 3(a) of the Interpretative Rules. It is well- settled that Rule 3(a) of "General Rules for the Interpretation" is invokable only if the Headings and the relevant Sections and the Chapter Notes are not clearly determinative of the classification. Claim of the assessee is that the description 'Coconut Oil' under Chapter 15 is specific and hence, applicable to their goods in terms of Rule 3(a) of the Interpretative Rules, though appears attractive, the same does not merit acceptance. This is because the classification of the impugned goods is based on the terms of Headings, relative Chapter Notes and Section Notes which are paramount in this regard under the primary and main Rule 1 of the Interpretative Rules. 18. M/s. Moreshwar and other job workers:- In the light of the above amended provisions and the interpretation thereon, let me consider whether the impugned goods are classifiable under the Heading 33 05 or under Chapter 15 Item 15 13. For convenience, firstly, I refer to the facts in C.A. Nos.6703-10 of 2009. Assessees/respo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iz., 5 ml, 50 ml, 100 ml, 200 ml, 500 ml, and 1000 ml pouches, 50 ml, 100 ml, 200 ml and 500 ml plastic bottles, 100 ml, 200 ml, and 500 ml wide mouthed bottles, 200 ml tins, one litre and 2 litre cans and sold in the market. According to Revenue, MAIPL, tests the products of their competitor's such as 'Parachute Hair Oil' and compare the results of their products to ensure the marketability of their product. Case of Revenue is that plastic bottles have the provision for making a small hole on the top and when the bottle is tilted and pressed lightly, only a small quantity of oil comes out, which can be applied on the hair and those coconut oil manufactured by M/s. MAIPL is suitable for use as 'Hair Oil'. The very nature of packing shows that the product is meant to facilitate such use as 'Hair Oil' and the same is classifiable under Chapter 33. It is alleged that with an intention to evade payment of duty, M/s. MAIPL have mis-declared the excisable coconut oil (un-perfumed Hair Oil) as 'edible grade/oil' filtered 100% pure coconut oil. 20. Findings of the Tribunal:- The tribunal set aside the order of the Commissioner by holding that Chapter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther materials as to depicting how the market has understood, 'Parachute' as the 'Hair Oil'. It was further submitted that in case of conflict, the Notes contained in the Tariff Schedule to the CESTAT will prevail over that of the HSN and the impugned order cannot be sustained. 22. Contention of the respondent(s)/Assessee(s): Contention of the respondents/assessees is that 100% pure 'Coconut Oil' cover all varieties of coconut (Copra oil) marked as 'edible oil' and manufactured under Prevention of Food Adulteration (PFA) licence the same cannot be classified "preparation for use on hair" to be classified as 'Hair Oil' under Chapter 33 Tariff Item 33 05 merely because of the small size of the packings. Learned Senior Counsel Mr. Bagaria submitted that under the statutory provision of the Edible Oils Packaging (Regulation) Order, 1988 read with Sl. No.10 of Schedule III of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977, edible oil shall be packed in the specified sizes of 50 ml, 100 ml, 200 ml, 500 ml, 1 litre or 2 litres which are fully in accordance with the mandatory requirement of the aforesaid statutory provision....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing that Chapter 15 covers all varieties of coconut oil, edible as well as non-edible, the Tribunal erred in not keeping in view that the object of the legislature in bringing about the amendment. 24. As discussed earlier, the process carried on by M/s. Moreshwar and other job workers are:- (i) oil received from M/s. Marico is unloaded and stored in storage tanks in the unit and it undergoes the process of mechanical filtering and stored in another tank, then sent through pipeline for filling in the small containers by the filling machines; (ii) oil obtained by leakage, waste, overflow etc. are collected and fed into the salvage oil tank and the same is recycled and blended with 9 MT coconut oil in tanker for two hours or 16 MT coconut oil tanker for three hours; (iii) for manufacture of HDPE containers, HDPE granules and master batch in the required ratio is mixed and fed into the mould and blue colour container is obtained; the fit container is sent to heating and then screen-printing with blue, green and white colour printing ink for printing the trademark and logo and other details as required by M/s Marico Ltd.; (iv) waste grind materials and 8% of pellets are mixed with vi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....200 ml, 500 ml and one litre pouches and also containers in 50 ml, 100 ml, 200 ml, 500 ml and one litre cans and sold under the brand name 'Shanthi'. Here again, these pouches/containers in such small packings by construing them in the sense as to how in the trade, dealers and consumers understood it. The Commissioner was right in holding that they were 'Hair Oil' suitable for use on hair. 28. Insofar as 'Parachute' is concerned, the Revenue relies upon various materials as to how consumers and others engaged in the trade understood "Parachute" for 'Nature Care for Hair' including the registration of Trademark No.1033842 Class-3-Parachute associated with Hair Oil. Contention of Revenue is that the market identity of the subject goods- coconut oil is 'Hair Oil' and not as 'Edible Grade Oil'. The Revenue has also referred to the website of 'Parachute' (vide Order-in-Original No.06/2008-(C) dated 28.02.2008) where 'Parachute' is described as 'Hair Oil' and the same reads as under:- "Nature Care Division (55% of turnover): Parachute was the first branded coconut oil in the Indian market and has become a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll along marketed its entire range of products using the green label only. We find that in the absence of any label which could be identified with a hair oil, this aspect of the label does not advance the Revenue's case for classification of the coconut oil as hair oil. Use of a trademark or a label has no bearing on classification." The Tribunal is not right in saying that the Show Cause Notice issued to the respondent-M/s. Moreshwar and other job workers was absent on using green coloured labels for marketing hair oil exclusively. Para (3.4.2) of the Show Cause Notice refers to Screen-printing as under:- ".....HDPE granules and master batch in the required ratio is mixed and fed into the mould and blue colour container is obtained. Runners and raisers are removed and the container is examined and if it is not fit, the same is sent for grinding. The fit container is sent to heating and then screen-printing with blue, green and white colour printing ink for printing the trademark and logo and other details as required by Marico Ltd....."[Underlining added] That apart para (3.4.5)(4.1) of the Show Cause Notice contains scanned copy of the application for registrat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be effected as follows:- (a) the heading which provide the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in the numerical order among those which equally merit consideration. Rule 3(b) provides the manner of classification of mixtures, composite goods consisting of different materials or made up of different components and goods put up....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of words and expressions describing an article in a tariff schedule, one principle which is fairly well-settled is that those words and expressions should be construed in the sense in which they are understood in the trade, by the dealer and the consumer. Whether a particular article will fall within a particular tariff heading or not, has to be decided on the basis of as to how that article is understood in 'common parlance' or in 'commercial world' and not as per scientific or technical meaning. In the case of Asian Paints India Ltd. v. Collector of Central Excise (1988) 2 SCC 470, it has been held that when definition of a word has not been given, it must be considered in its popular sense and not according to scientific or technical sense. 37. After referring to various judgments, in Plasmac Machine Manufacturing Co. (P) Ltd. v. Collector of Central Excise, Bombay 1991 Supp (1) SCC 57, it was held by this Court as under:- "15. ..... It is an accepted principle of classification that the goods should be classified according to their popular meaning or as they are understood in their commercial sense and not as per the scientific or technical meani....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Chapter 30 or not is whether the product is understood as a pharmaceutical product in common parlance [see CCE v. Shree Baidyanath Ayurved Bhavan Ltd. (2009) 12 SCC 419 and CCE v. Ishaan Research Lab (P) Ltd. (2008) 13 SCC 349]. Further, the quantity of medicament used in a particular product will also not be a relevant factor for, normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. [Puma Ayurvedic Herbal (P) Ltd. v. CCE (2006) 3 SCC 266, State of Goa v. Colfax Laboratories Ltd. (2004) 9 SCC 83 and B.P.L. Pharmaceuticals Ltd. v. CCE 1995 Supp (3) SCC 1.] 35. However, there cannot be a static parameter for the correct classification of a commodity. This Court in Indian Aluminium Cables Ltd. v. Union of India (1985) 3 SCC 284 has culled out this principle in the following words: (SCC p. 291, para 13) "13. To sum up the true position, the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y to point out as to how 'Coconut Oil' is understood and treated in the market. 42. In Jain Exports Pvt. Ltd. v. Union of India 1987 (29) ELT 753 Del, the High Court of Delhi dealt with the use of 'Coconut Oil' and in the context of importability of 'Coconut Oil', held as under:- "25. ....it is well known that the coconut oil is not at all used as an edible oil in a very large part of our country. Almost all the parts of India up to Vindhyas do not use coconut oil as edible medium. Even in rest of the country though it is in use extensively in some very small part, its use in most of the other part is small average. So ordinarily if a person was to go to the market and ask for coconut oil, the normal question he would be asked will be whether he needs it as hair oil or shampoo. No one normally will understand coconut oil to mean only edible variety because such is not the normal major use. A person would have to specifically clarify that by asking for coconut oil he is asking for edible variety in order to make his intention clear. Thus by itself and in ordinary parlance coconut oil in the import policy would be understood to include both edible ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ir. 45. The appellant has relied upon the following write up on coconut oil by the Coconut Development Board (a statutory body under the Ministry of Agriculture):- "Coconut oil is used in the country as a cooking fat, hair oil, body oil and industrial oil..... Coconut oil is marketed in bulk as well as in packs ranging from sachets containing 5 ml to 15 kg tins. The branded coconut oil in small packs is mainly marketed as hair oil and body oil." 46. A taxing statute is being one levying a tax on goods must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance. In Commissioner of Sales Tax, Madhya Pradesh, Indore v. Jaswant Singh Charan Singh, AIR 1967 SC 1454, it was held as under:- "5. The result emerging from these decisions is that while construing the word "coal" in Entry I of Part III of Schedule II, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute is being one levying a tax on goods must in the absence of a techn....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 49. As held in Jain Exports Pvt. Ltd., the factum of overwhelming use of 'Coconut Oil' as 'Hair Oil' in most parts of the country cannot be ignored. No one will normally understand 'Coconut Oil' to mean only as 'edible oil' because such is not the major use of 'edible oil'. Applying the common parlance test and also 'end use of the product', coconut oil is predominantly understood by the users namely dealers/consumers only as 'Hair Oil' and not as 'edible oil' and hence, classifiable only under Chapter 33 and not under Chapter 15. 50. After the amendment (w.e.f. 28.02.2005) what is relevant is 'suitability of the goods for being used as Hair Oil' for classifying the same under 33.05. 'Coconut Oil' packed in small sachets/containers suitable for being used as 'Hair Oil' is classifiable under Chapter Tariff Item 3305. When a good is classifiable under tariff item 3305, by virtue of amended Section Note 2 to Section VI, no other classification is permissible. By consideration of the materials placed on record and also applying the 'Common Parlance Test', coconut oil packed in small sach....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er, as approved by the WCO Council, they constitute the official interpretation of the Harmonized System at the international level and are an indispensable complement to the System. [World Customs Council, retrieved from: http://www.wcoomd.org/ en/topics/nomenclature/instrument-and-tools/tools-to-assist- with-the-classification-in-the-hs/explanatory-notes.aspx]. 53. The Central Excise Tariff Act, 1985 (CETA) is based on the Harmonized System of Nomenclature (HSN), which is an internationally accepted product coding system formulated under the auspice of the General Agreement on Tariffs Trade (GATT). In Commissioner of Customs and Central Excise, Goa v. Phil Corporation Ltd. (2008) 17 SCC 569, this Court explained the HSN as under:- "29. ...The Central Excise Tariff Act is broadly based on the system of classification from the international convention called the Brussels Convention on the Harmonized Commodity Description and Coding System (Harmonized System of Nomenclature) with necessary modifications. HSN contains a list of all the possible goods that are traded (including animals, human, hair, etc.) and as such the mention of an item has got nothing to do whether it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see Note 1(d) to Chapter 30). However, prepared room deodorizers remain classified in heading 33.07 even if they have disinfectant properties of more than a subsidiary nature. Preparation (e.g. varnish) and unmixed products (e.g. unperfumed powdered talc, fuller's earth, acetone, alum) which are suitable for other uses in addition to those described above are classified in these headings only when they are:- • In packings of a kind sold to the consumer and put up with labels, literature or other indications that they are for use as perfumery, cosmetic or toilet preparations, or as room deodorizers; or • Put up in a form clearly specialized to such use (e.g. nail varnish put up in small bottles furnished with the brush required for applying the varnish). 33.05 -PREPARATIONS FOR USE ON THE HAIR ................ This heading covers:- 1. ........ 2. ......... 3. .......... 4. Other hair preparations, such as brilliantines, hair oils, creams ("pomades") and dressings, hair dyes and bleaches used on the hair;....
X X X X Extracts X X X X
X X X X Extracts X X X X
....After amendment 2. Subject to Note 1 above, goods classifiable in Heading Nos. 30.04, 30.05, 30.06, 32.12, 33.03, 33.04, 33.05, 33.06, 33.07, 35.06, 37.07 or 38.08 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of the Nomenclature. Notes: ........... 2. Subject to Note 1 above, goods classifiable in Headings 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3707 or 3308 by reason of being put up in measured doses or for retail sale are to be classified in those headings and in no other heading of this schedule. 3. Goods put up in sets consisting of two or more separate constituents, some or all of which fall in this Section and are intended to be mixed together to obtain a product of Section VI or VII, are to be classified in the heading appropriate to that product, provided that the constituents are:- (a) having regard to the manner in which they are put up, clearly identifiable as being intended to be used together without first being repacked; (b) presented together; and (c) identifiable, whether by their nature or by the relative proportions in which they....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of Central excise tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, in case of any difference between the meaning of the expression given in the HSN and the meaning of that term given in the Glossary of Terms of the ISI." 60. However, in Camlin Ltd. v. Commissioner of Central Excise, Mumbai (2008) 9 SCC 82, this Court held that if the entries under HSN and the entries under the Central Excise Tariff Act are different then reliance cannot be placed upon HSN Notes for the purposes of classification of goods under the Central Excise Tariff. The rele....
X X X X Extracts X X X X
X X X X Extracts X X X X
....39; showing its use as 'Hair Oil' as per Note 2 to Chapter 33. The relevant part of the Circular dated 31.08.1995 is as under:- "6. .....In the CET Heading 3305 covers "preparations for use on the hair". ...... 9. Therefore, keeping in view of Chapter Notes, HSN Notes, the Tariff Conference of 1991, the report of D.G. (A.E.) and the opinion of Chief Chemist, CRCL, it is felt that coconut oil whether pure or refined and whether packed in small or large containers merits classification under Heading No.1503 as long as it satisfies the criteria of 'fixed vegetable oil' laid down in Chapter Note 3 of Chapter 15. It is also clarified that if the containers bear labels/literature, etc., indicating that it is meant for application on hair, as specified under Note 2 of Chapter 33 and/or if the coconut oil has additives (other than BHA) or has undergone processes which made it a preparation for use on hair as mentioned in Chapter Note 6 of Chapter 33 then the coconut oil may merit classification under Chapter 33." 63. In exercise of powers under Section 37B of Central Excise Act, 1944, CBEC issued Circular No.102/05/2006-CX-3 dated 03.06.2009 wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udgment of the Tribunal in Raj Mills Ltd. case, the appeals preferred by the Revenue in CA Nos. 2023-37 of 2014 were dismissed on 17.12.2014 by holding as under:- "1. We have heard learned Additional Solicitor General appearing for the Revenue. 2. Delay condoned. 3. We find no merit in the Civil Appeals. The Civil Appeals are dismissed." After the judgment of the Supreme Court, the Circular dated 03.06.2009 was withdrawn by another Circular No.103/01/2015-CX-3 dated 12.10.2015. Now, the issue of classification of 'Coconut Oil' as per the Circular dated 12.10.2015 is to be decided by the field by taking into consideration the facts of the case read with the judicial pronouncements. Merely because the 'Coconut Oil' of retail pack of 200 ml or less are not classifiable under Chapter 33 of the Central Excise Tariff and the civil appeals preferred by the Revenue were dismissed by the Supreme Court, it does not mean that it has attained finality. As pointed out earlier, civil appeals preferred by the Revenue were dismissed by a non-speaking order at the admission stage and hence, the "Doctrine of Merger" is not applicable. When the order pass....