2018 (4) TMI 821 - AT - Central Excise

Exemption under N/N. 12/2013 - CE dated 1.3.2013 - heena powder - Notification requires that heena powder or paste, not mixed in any other ingredients falling under Chapter 33 are liable to nil rate of duty - Held that - the facts of the present case did not reveal that any other ingredients at all has been added in making the henna paste - the clove oil is all quid used to make henna paste from powder and make it marketable as such paste in cones. The said process is for making the paste marketable/useable much later by the customers - benefit to be allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of exemption under Sl.No.134 of Notification No.12/2013 - CE dated 1.3.2013 for heena powder and paste under Chapter 33.
2. Whether henna paste containing clove oil qualifies for the exemption.
3. Determination of whether the henna paste in question had any other ingredients added.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI dealt with the interpretation of the exemption provided under Sl.No.134 of Notification No.12/2013 - CE dated 1.3.2013 for heena powder and paste under Chapter 33. The respondent, engaged in manufacturing henna products, had not paid central excise duty on heena powder cleared by them, claiming exemption under this notification. The Tribunal noted that the exemption applied to heena paste "not mixed with any other ingredients." The Board's clarification specified that the exemption includes heena powder mixed with a liquid to form paste but excludes products like heena dye. The Revenue argued that henna paste containing other ingredients did not qualify for the exemption.

During the proceedings, the Revenue contended that henna paste with additional ingredients was not covered by the exemption. In response, the respondent's counsel explained that clove oil was added to the henna paste primarily for longevity and preservation, essential for marketing the product. They emphasized that no other usable ingredients were added to the henna powder to create the paste. The Tribunal acknowledged the Revenue's position that no other ingredients should be added to claim the exemption. However, upon review of the facts, it was found that only clove oil was used to make the henna paste marketable for later use, without the addition of any active ingredients besides the oil or liquid.

Based on the Board's clarification and the evidence presented, the Tribunal concluded that the henna paste in question, made with clove oil as the sole additional component, met the criteria for the exemption under Sl.No.134. It was established that the process of adding clove oil was solely for marketing purposes and did not introduce any other active ingredients to the heena powder. Consequently, the Tribunal upheld the findings of the impugned order, dismissing the Revenue's appeal. The cross objection filed by the appellant was also disposed of as not pressed, resulting in the appeal being dismissed.