2004 (2) TMI 467 - AT - Central Excise

Summary

Issues:
Central Excise classification of "Parachute Dandruff Solution Coconut Hair Oil" - Chapter sub-heading No. 3305.10 vs. 3305.99, consequent demand for duty, interest, and imposition of penalties.

Detailed Analysis:

1. Classification Dispute:
The manufacturer-assessee claimed classification under Chapter sub-heading No. 3305.10 for the "Parachute Dandruff Solution Coconut Hair Oil" as it is a perfumed hair oil. However, the impugned order classified it under Chapter sub-heading 3305.99, leading to demands for duty, interest, and penalties.

2. Appellant's Contentions:
The appellant argued that since the product is a hair oil perfumed with coconut oil, it should be classified under the specific heading 3305.10 for perfumed hair oils, not under the general heading 3305.99. They emphasized that incidental medicinal properties, like dandruff control, should not alter the classification under Chapter 33 for cosmetics.

3. Revenue's Arguments:
The Revenue contended that the product is marketed as a "dandruff solution" by M/s. Marico Industries Ltd., making its primary function dandruff control, not just a perfumed hair oil. They cited the principle that the primary function of a product determines its classification, as established in previous legal precedents.

4. Judgment and Analysis:
The Tribunal analyzed the Central Excise Tariff scheme, noting that pharmaceutical products fall under Chapter 30, while cosmetics belong to Chapter 33. Incidental medicinal properties do not affect the classification under Chapter 33. The presence of anti-dandruff properties in the product did not warrant classification under Chapter 30. The product's ingredients and identity as a perfumed hair oil supported its classification under 3305.10, as specific classifications should prevail over general ones.

5. Conclusion:
The Tribunal ruled that the "Parachute Dandruff Solution Coconut Oil" should be classified under 3305.10 as a perfumed hair oil, not 3305.99. The demands for duty, interest, and penalties based on the incorrect classification were deemed unsustainable. The appeals were allowed in favor of the appellants, granting consequential relief.

This detailed analysis highlights the key arguments, legal principles, and the Tribunal's reasoning in resolving the classification dispute over the "Parachute Dandruff Solution Coconut Hair Oil."