2008 (8) TMI 262 - AT - Central Excise

Appellant receiving Clove oil and Sandalwood oil in bulk packing and repacking in the small packings - No process was undertaken by the appellant which amounts to manufacture and there is no chapter note under chapter 33 of the tariff which states that the packing and repacking of goods classifiable under sub-heading 3301.00 amounts to manufacture therefore demand is not sustainable Saunf ka ark is manufactured exclusively and the same has been sold as medicine therefore it is classifiable under SH 3001.31

Summary

Issues involved: Classification of Clove Oil and Sandalwood Oil, Classification of Saunf Ka Ark

Classification of Clove Oil and Sandalwood Oil:
The dispute revolved around the classification of Clove Oil and Sandalwood Oil under tariff headings 3301.00 and 3303.20 respectively. The appellant argued that repacking the oils from bulk to retail packaging did not amount to manufacture, thus not liable for duty. The revenue contended that repacking made the oils marketable, justifying duty imposition. The Tribunal noted the absence of evidence showing any manufacturing process by the appellant and the lack of a chapter note stating repacking constitutes manufacture under heading 33.01. Consequently, the Tribunal sided with the appellant, setting aside the duty demand.

Classification of Saunf Ka Ark:
Regarding Saunf Ka Ark, the revenue sought classification under tariff heading 3301.00, while the appellant argued for sub-heading 3003.31. The appellant demonstrated manufacturing as per specified books under the Drugs & Cosmetics Act, supported by prescriptions from ayurvedic practitioners and a license for manufacturing the product. The revenue referenced chapter notes to argue against classification under chapter 30 or 33. The Tribunal found that the appellant manufactured Saunf Ka Ark as per authorized books, marketed it as medicine, and held a valid drug license. Consequently, the Tribunal upheld the appellant's classification under sub-heading 3003.31, dismissing the revenue's appeals.

This judgment emphasizes the importance of adherence to specified formulas for classification under the tariff, supported by authoritative books and relevant licenses. It highlights the need for clear evidence of manufacturing processes and market usage to determine the appropriate classification for excise duty purposes.