1999 (1) TMI 97 - AT - Central Excise

Bath oil - eligible for exemption under Notification No. 385/86-C.E. - Interpretation of taxing statute

Summary

Issues Involved:
1. Classification of "OLEMESSA BATH OIL" under the Central Excise Tariff Act (CETA), 1985.
2. Eligibility for exemption under Notification 385/86-C.E., dated 29-7-1986.
3. Quantification of duty and redetermination of assessable value.

Issue-wise Detailed Analysis:

1. Classification of "OLEMESSA BATH OIL":
The primary issue was whether "OLEMESSA BATH OIL" should be classified under sub-heading 3307.30 of the CETA, 1985. The Department argued that the product was not a "Thailam" as it did not contain traditional ingredients like gingelly oil boiled with natural herbs, flowers, and roots, and was instead composed of liquid paraffin, soyabean oil, arachis oil, isopropylmyristate, perfume, and color. The lower authorities upheld this view, distinguishing that while all Thailams are bath oils, not all bath oils are Thailams. The Department's stance was supported by the judgment in Union of India v. M/s. T.S.R. & Co., Kumbakonam, where Thailams were recognized as traditional preparations with medicinal qualities. The Tribunal agreed with this interpretation, stating that the product in dispute did not meet the judicially interpreted definition of Thailam and thus was not eligible for the exemption under Notification 385/86-C.E.

2. Eligibility for Exemption under Notification 385/86-C.E.:
The appellants claimed that "OLEMESSA BATH OIL" should be exempt from duty under Notification 385/86-C.E., which provides exemption for Thailams. The Tribunal, however, held that the product did not qualify as a Thailam based on its composition and lack of medicinal qualities. The Tribunal also noted that the term Thailam had been judicially defined, and there was no need to refer to dictionary meanings. The argument that the product should be exempt because it was not a cosmetic or toilet preparation was rejected, as the present tariff covered a broader range of products, including bath preparations.

3. Quantification of Duty and Redetermination of Assessable Value:
The appellants argued that the assessable value should be redetermined by deducting the duty element from the cum-duty price, as per Section 4(4)(d)(ii) of the CESA, 1944. They provided a calculation showing that the duty payable would be Rs. 12,05,314.20 instead of Rs. 15,06,068.53. The Tribunal agreed with this argument, citing precedents like Seraikella Glass Works P. Ltd. v. CCE, Patna, and directed the authorities to redetermine the assessable value accordingly.

Separate Judgments:
- Member (Judicial) Jyoti Balasundaram: Held that the product was not a Thailam and thus not entitled to the exemption. Confirmed the demand of duty subject to its requantification.
- Vice President S.K. Bhatnagar: Disagreed, stating that the term Thailam should be interpreted broadly to include the product as a bath oil, thus making it eligible for the exemption.
- Third Member G.A. Brahma Deva: Agreed with the Vice President, concluding that the product should be considered a Thailam and thus eligible for the exemption.

Final Order:
In view of the majority opinion, the appellants were entitled to the benefit of Notification No. 385/86-C.E., dated 29-7-1986, and the appeal was accepted.