2018 Supreme(SC) 338

SUPREME COURT OF INDIA
RANJAN GOGOI, R. BANUMATHI, JJ.
Commissioner of Central Excise – Appellant
Versus
M/s. Madhan Agro Industries (I) Pvt. Ltd. – Respondent
Civil Appeal No. 1766 of 2009
With
Commissioner of Central Excise, Pondicherry – Appellant
Versus
M/s. Aishwarya Industries & Ors. – Respondents
Civil Appeal Nos. 6703-6710 of 2009
Decided On : 13-04-2018

IMPORTANT POINT
In view of difference of opinion between the judges, tye matter referred to larger Bench.

Headnote:Per Ranjan Gogoi, J.

       (a) Interpretation of statute – Central Excise Tariff Act, 1985 – Rules for Interpretation and the Chapter Notes – Understanding of CBEC and other authorities can be an useful aid in understanding and resolving disputed issues of classification – Harmonised System of Nomenclature (HSN) and the Chapter Notes and Explanatory Notes thereto repeatedly acknowledged by Supreme Court to be a safe guide. (Para 12)

       (1995) 3 SCC 454; (2008) 17 SCC 569; (2005) 2 SCC 460 – Relied upon

       (b) Central Excise Tariff Act, 1985 – Chapter Headings 1513 and 3305 – Coconut oil – Falling under CH 1513 – When packed in small containers/sachets – Will not cease to be coconut oil and become hair oil – Held, would continue under CH 1513. (Para 20)

       (2005) 2 SCC 460; (2008) 17 SCC 569 – Relied upon

       1981 (8) E.L.T. 325 (S.C.); 1988 (35) E.L.T. 3 (S.C.); (1996) 9 SCC 402; (2003) 3 SCC 111 – Distinguished

       (c) Central Excise Tariff Act, 1985 – Chapter Heading 1513 and 3305 – Coconut oil – Included in 1513 – Coconut oil as a preparation for use as hair oil – Not included in Heading 3305 or any of its Sub-Headings – 3305 applicable to products “which are suitable for use as goods mentioned in the Heading and if they are put up in packings of a kind sold by retail for such use” – Instantly, in the packings coconut oil mentioned as ‘edible oil’ in the inscription – Nothing on the packing indicating it to be meant to be used as hair oil – Held, the coconut oil in dispute would be more appropriately classifiable under Chapter 15, Heading 1513. (Para 26, 27, 32)

       (2005) 2 SCC 460; (1995) 3 SCC 454; (2008) 17 SCC 569; (2008) 9 SCC 82 – Relied upon

       (d) Excise law – Registration of a trademark under any particular class – Cannot be determinative of the classification of the product for purposes of Central Excise Tariff. (Para 33)

       (e) Administration of justice – doctrine of merger – Order appealed against merges with the appellate order even if non-speaking but on merit. (Para 35)

       (2000) 5 SCC 373 – Relied upon

       Per R. Banumathi, J. (Differing)

       (f) Central Excise Tariff Act, 1985 – Cardinal rule for interpretation of Schedule – Classification of goods – Heading and relative Section or Chapter Notes must be considered – If conflict in classification still persists, resort to other rules to be made. (Para 8)

       (g) Central Excise Tariff Act, 1985 – Chapter heading 1513 and 3305 – Coconut oil – Packed in small containers/ sachet – Section Note 2 to Section VI – ‘Suitability for use as hair oil’ and 'put up in packings of the kind sold by retail for such use’ – Held instant product cannot be classified under Chapter 15 as 'fixed vegetables oils' or 'coconut oil'. (Para 16)

       2002 (139) ELT 633 (T); 2005 (180) ELT 401 (T); 2006 (200) ELT 342 (T) – Distinguished

       (h) Central Excise Tariff Act, 1985 – Rule 3(a) of "General Rules for the Interpretation" – Invokable only if the Headings and the relevant Sections and the Chapter Notes are not clearly determinative of the classification – Instantly Rule 1 applies. (Para 17, 32)

       (i) Excise Tariff Act, 1985 – Chapter heading 3305 – 'Coconut Oil' instantly put up in packing of a kind sold in retail suitable for use as application on hair – Would merit classification under tariff entry 33.05. (Para 23)

       2006 SCC onLine Raj 446; (2015) 78 VST 423 – Referred

       (j) Central Excise Tariff Act, 1985 – Chapter heading 3305 – Common parlance test – Pure coconut oil packed in small containers – Understood by dealer and consumer and in the market as 'Hair Oil' – Expression "suitable for use as goods in these headings" – Not necessary that the product is used as such – ‘Suitability for such use’ is what matters. (Para 26, 50)

       (k) Central Excise Tariff Act, 1985 – Classification – Product referable to two specific headings – The one occurring subsequently would prevail. (Para 34)

       (2002) 8 SCC 410 – Relied upon

       (l) Interpretation of statute – Classification under Central Excise Tariff Act – Classification of a product – On the basis of as to how that article is understood in 'common parlance' or in 'commercial world' – Not as per scientific or technical meaning – Held, coconut oil predominantly understood only as 'Hair Oil' and not as 'edible oil' – Hence, classifiable only under Chapter 33 and not under Chapter 15. (Para 36, 49)

       (1988) 2 SCC 470; 1991 Supp (1) SCC 57; (2005) 4 SCC 9; (2012) 5 SCC 585; (2006) 5 SCC 596; AIR 1967 SC 1454; (2012) 13 SCC 639; (2003) 3 SCC 111 – Relied upon

       1987 (29) ELT 753 Del – Cited with approval

       (m) Central Excise Tariff Act, 1985 – Classification of goods – Harmonized System of Nomenclature (HSN), explanatory notes; and Chapter Headings – Held, instantly HSN Chapter Note, though a safe guide, cannot be relied upon to determine the classification – Rather the CETA Tariff Chapter Note must be considered. (Para 56, 59)

       (2008) 9 SCC 82 – Relied upon

       (1995) 3 SCC 454; (2008) 17 SCC 569; (2005) 2 SCC 460; (1995) 3 SCC 454 – Referred

       (n) Administration of justice – Dismissal of an appeal by Supreme Court – By non-speaking order – Not correct to assume that all questions have been implicitly decided – "Doctrine of Merger" will not apply. (Para 64)

       2014 (314) ELT 541 (Tri. - Mumbai); CA Nos. 2023-37 of 2014 – Referred

       Facts of the case:

       This appeal has been filed by the Revenue against the orders passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) holding that the coconut oil manufactured and packed in “small containers” by the respondent(s)-assessee(s) is classifiable under Heading 1513 and not under Heading 3305 of the Central Excise Tariff Act, 1985.

       Finding of the Court:

       The Hon’ble Judges differed in their opinions.

       Result: Matter referred to larger Bench.