1997 (1) TMI 179 - AT - Central Excise

Summary

Issues: Classification of product under Central Excise Tariff Act, 1985

Detailed Analysis:

1. Issue of Classification: The appeal involved a dispute over the classification of the product manufactured by M/s. M.M. Khambhatwala under the Central Excise Tariff Act, 1985. The appellants claimed that their product, 'M-37,' should be classified under Heading 3302.90, while the Collector of Central Excise (Appeals) had classified it under Heading 3305.10.

2. Competing Entries in Chapter 33: The main issue revolved around the competing entries in Chapter 33 of the Central Excise Tariff Act, specifically under Heading 3301.00, 3302.10, 3302.90, and 3305.10. The dispute centered on whether the product should be classified as essential oils, mixtures of odoriferous substances, or preparations for use on the hair.

3. Appellants' Arguments: The appellants contended that their product, 'M-37,' was a concentrate for the preparation of hair oil and should be classified under Heading 3302.90. They argued that the Assistant Collector's reclassification through a Show Cause Notice (SCN) dated 5-1-1988 was without authority and demanded duty for the previous period.

4. Collector (Appeals) Decision: The Collector (Appeals) upheld the reclassification under Heading 3305.10, stating that the product was a mixture of essential oils, aromatic chemicals, and perfumes, requiring dilution with vegetable oil before use as hair oil. The Collector rejected the appellants' argument that the initial classification could not be revisited without sufficient cause.

5. Legal Arguments: The legal arguments presented focused on the authority of the Assistant Collector to issue a fresh SCN for reclassification, the retrospective effect of such reclassification, and the applicability of specific tariff headings based on the nature and use of the product.

6. Judgment and Decision: The Tribunal held that the Assistant Collector had the authority to issue a fresh SCN for reclassification, and the revised classification would apply prospectively. The product 'M-37' was deemed correctly classifiable under Heading 3305.90 as a preparation for use on hair, rather than under Heading 3305.10 as a perfumed hair oil. The Tribunal modified the impugned order accordingly and directed the Assistant Commissioner to revise the duty in accordance with the modified classification.

7. Conclusion: The Tribunal dismissed the appeal on all other grounds, affirming the classification of the product under Heading 3305.90 and providing clarity on the principles of classification and reclassification under the Central Excise Tariff Act, 1985.