2018 (8) TMI 944 - AT - Central Excise

Classification of goods - Dhatri Brand Hair Care Herbal Oil and Dhatri Brand Massage Oil - Department sought to classify the Hair Oil and the Massage Oil under Central Excise Tariff Heading 3305 and 3304 respectively as cosmetics - Held that - This very Bench in the case of Haridev Formulations (the job workers of the respondents) have concluded that the products manufactured by the respondents fall under Chapter 30 of the Central Excise Tariff Act, 1986 - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of "Dhatri Brand Hair Care Herbal Oil" and "Dhatri Brand Massage Oil" under Central Excise Tariff Headings 3305 and 3304 respectively as cosmetics or Ayurvedic medicaments.

Analysis:
1. The Department alleged that the manufacturer did not obtain Central Excise Registration, maintain records, or pay duty after exceeding the SSI exemption limit. A show cause notice was issued demanding duty and penalties. The Joint Commissioner confirmed the demand, levied penalties, and classified the products as cosmetics.

2. On appeal, the Commissioner remanded the case for re-quantifying duty and penalty after deciding the product's classification. The Commissioner held the products fell under drugs and cosmetics under Chapter 30 of the Central Excise Tariff, meeting conditions set by the Supreme Court in previous cases. The Commissioner relied on precedents to support the classification.

3. The Department appealed against the Commissioner's orders.

4. The respondents argued that the Drug Control Department certified the products as drugs, not cosmetics. They had agreements with manufacturers holding drug licenses and supplied raw materials to job workers. The Department discontinued the contract and started its production based on a Drug License. The respondents claimed the products were Ayurvedic medicaments under Chapter 30 of the Tariff, supported by various certificates and orders.

5. The Departmental Representative supported the original order.

6. After hearing both sides and reviewing the records, the Tribunal found a strong case in favor of the Department. Previous judgments and the Commissioner's analysis supported the classification of the products as Ayurvedic medicaments.

7. The Tribunal noted that previous decisions favored both appellants and the Department, citing specific cases where the Supreme Court ruled in favor of Ayurvedic products. The Tribunal found no new compelling reasons to overturn the Commissioner's order and rejected the Department's appeal.

In conclusion, the Tribunal upheld the classification of "Dhatri Brand Hair Care Herbal Oil" and "Dhatri Brand Massage Oil" as Ayurvedic medicaments under Chapter 30 of the Central Excise Tariff, rejecting the Department's appeal.