2004 (5) TMI 331 - AT - Central Excise

Summary

Issues:
Classification of hair care products under Central Excise duty - Correct classification of 'Jolen Country Born Styling Gel Hair Fixer' - Alleged evasion of Central Excise duty - Appellant's resistance to the charge - Appeal against the Commissioner's order.

Analysis:
The appellant, a manufacturer of cosmetics and hair care products, faced a challenge regarding the correct classification of 'Jolen Country Born Styling Gel Hair Fixer' under Central Excise duty. The dispute arose when a show cause notice accused the appellant of misclassifying the product, leading to alleged evasion of duty. The appellant contended that the product should be classified under the specific sub-heading for 'hair fixer' (3305.91) instead of the residual heading for 'other' preparations for use on the hair (3305.99). The appellant argued that the product is known, bought, sold, and used as a hair fixer, supported by market evidence and technical composition details.

During the proceedings, the appellant emphasized that similar goods may be sold differently in various markets, warranting classification under the appropriate tariff heading. The appellant highlighted the uniqueness of the 'hair fixer' heading in the tariff, suggesting that products known in trade and commerce as hair fixers should be classified accordingly. Reference was made to a Supreme Court decision emphasizing the importance of specific tariff entries over the residuary item for classification.

The respondent contended that the appellant's classification method, differentiating the same product as a hair styling gel for export and a hair fixer for domestic sales, was an attempt to evade duty. The respondent argued that the distinction was artificial and aimed at circumventing Central Excise duty obligations.

After reviewing the records and submissions, the Tribunal observed that the Central Excise Tariff included a separate heading for 'hair fixer,' indicating a distinct treatment for such products. Given the absence of a statutory definition, the classification was to be determined by the common parlance test. The Tribunal found that the product in question met the criteria for classification as a 'hair fixer' based on commercial identity, technical composition, and market understanding. It was concluded that the original classification was correct, and the revision under the impugned order was unjustified. Consequently, the appeal was allowed on this ground, with any necessary consequential relief.

In conclusion, the Tribunal upheld the appellant's classification of the product as a 'hair fixer,' emphasizing the significance of specific tariff headings and rejecting the notion of evading duty through artificial distinctions. The decision focused on the commercial parlance test, technical composition, and market acceptance in determining the appropriate classification under Central Excise duty regulations.