2006 (3) TMI 17 - AT - Central Excise

Classification - Coconut Oil under heading 1503.00 - Whether coconut oil is of an edible grade with addition of only Vitamin B - HELD THAT - We find that the Commissioner (Appeals) has given a categorical finding that coconut oil is of an edible grade with addition of only Vitamin B. Other items which convert the coconut oil to hair oil have not been added in the said goods. Tribunal in the case of Kothari Products Ltd., 2001 (10) TMI 146 - CEGAT, COURT NO. III, NEW DELHI after considering the Board's Circular, held the coconut oil as classifiable under Chapter 15. We also take note of another decision of the Tribunal in the case of Srikanth Sachets Pvt Ltd., v. CCE, 2004 (10) TMI 215 - CESTAT, BANGALORE holding an identical product as classifiable under heading 1503 of the Central Excise Tariff as fixed vegetable oil. We find no reason to take a view different from the decisions above referred. Accordingly, the appeal filed by the revenue is rejected.

Summary

Issues:
Classification of Coconut Oil under Chapter 15 or Chapter 33 based on the addition of Vitamin E and advertising claims.

Analysis:
1. The appeal was filed by the revenue against the order of the Commissioner (Appeals) regarding the classification of Coconut Oil under heading 1503.00 instead of Chapter 33.

2. The respondents manufactured edible grade coconut oil with added Vitamin E, marketed under the brand name "Para-care." The product was repacked in small plastic bottles and briefly advertised as enriched with Vitamin B for skin and hair benefits. The Food & Drug Authorities objected to this claim, leading to its removal.

3. The Commissioner (Appeals) determined that the addition of Vitamin E did not change the product's edible nature, as it complied with the Prevention of Food Adulteration Act, 1955. The appellate authority noted that the product's packaging did not indicate cosmetic or toiletry use, meeting the conditions under Note 2 of Chapter 33 for classification.

4. The appellate authority emphasized that the product, being in its natural form with only Vitamin E added, did not qualify as a cosmetic or hair preparation under Chapter 33. Reference was made to a Tribunal decision and a trade notice to support the classification under Chapter 15 as fixed vegetable oil.

5. The revenue argued for classification under Chapter 33 based on common parlance, asserting the product's primary use as hair oil. They referenced a Tribunal decision involving nail polish thinner to support their stance.

6. The Tribunal emphasized the importance of common parlance in product classification but noted the lack of evidence from the revenue to support the product being known as hair oil. The Commissioner's finding that the coconut oil remained edible with only Vitamin B added was upheld.

7. Referring to previous decisions and Circulars, the Tribunal reiterated that repacking coconut oil did not create a new product for classification under Chapter 33. The absence of labeling or literature indicating cosmetic use supported the classification under Chapter 15.

8. Considering past Tribunal decisions, the Tribunal upheld the classification of Coconut Oil under Chapter 15 as fixed vegetable oil, rejecting the revenue's appeal.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and precedents considered in the decision regarding the classification of Coconut Oil under specific tariff headings.