2018 (4) TMI 213 - AT - Central Excise

Classification of goods - Dhathri Hair Oil - The original authority has classified the same under the Cosmetic Category but the Commissioner (Appeals) has given the benefit being Ayurveda based hair oil - Held that - In the case of Dabur India Ltd, vs. Cc, Jamshedpur 2005 (4) TMI 57 - SUPREME COURT OF INDIA , the Hon ble Supreme Court has decided the matter in favor of the appellant-assessee and considered the Hair Oil as Ayurvedic product - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of "Dhathri Hair Oil" under Central Excise Act/1944 - Cosmetic Category or Ayurveda based hair oil.

Analysis:
The appeals were filed against Order-in-Appeal Nos. 57 & 58/2008 dated 31/03/2008. The matter had previously been remanded to the adjudicating authority by the Tribunal, and the original authorities upheld the classification in favor of the assessee. The Department, being aggrieved by the classification, filed the present appeals.

Smt. Kavita Poduval, representing the appellant, argued that the "Dhathri Hair Oil" should be classified under the Cosmetic Category as per the Central Excise Act/1944. She relied on the Supreme Court cases of Kerala Ayurveda Pharmacy Ltd. and CCE, Surat Vs. Zandu Pharmaceutical Works Ltd. to support her argument. She contended that even though the hair oil is manufactured under the Drugs Act, it falls under the category of Cosmetic and should be classified accordingly.

On the other hand, Shri Shivadass, representing the respondent, supported the order of the Commissioner (Appeals). He mentioned that the Commissioner had considered the CBEC Circular and examined the Drug License and ingredients of the product before granting the classification.

After hearing both sides and examining the record, it was noted that different companies manufacture Hair Oil with varying components and flavors. The Supreme Court had previously delivered judgments favoring both the appellant and the Department in similar cases. The Commissioner (Appeals) had referred to various Supreme Court judgments in his order, including the case of Dabur India Ltd. vs. Cc, Jamshedpur, where the Hair Oil was considered an Ayurvedic product.

In the present case, it was observed that the Commissioner (Appeals) had thoroughly examined the ingredients and classified the product under Chapter 30 of the Central Excise Tariff Act, 1986. The product was intended for treating dandruff, premature graying, and split ends, and was considered Ayurvedic medicine by the Drug Controller and Licensing Authority. Additionally, it was highlighted that the oil was exclusively supplied to a Government Hospital.

Considering all the facts and circumstances of the case, the Tribunal found no reason to interfere with the impugned order. Therefore, the appeals filed by the Department were dismissed, and the order was sustained along with the reasons mentioned therein.