Coconut oil sold in small quantities is classified as edible oil under Heading 1513 unless packaging meets specific criteria for classification as hair oil under Heading 3305.

JUDGMENT :

SANJAY KUMAR, J

1. The issue for consideration in these appeals filed by the Revenue is whether pure coconut oil, packaged and sold in small quantities ranging from 5 ml to 2 litres, would be classifiable as ‘Edible oil’ under Heading 1513, titled ‘Coconut (Copra) oil, etc.’, in Section III-Chapter 15, or as ‘Hair oil’ under Heading 3305, titled ‘Preparations for use on the hair’, in Section VI-Chapter 33, of the First Schedule to the Central Excise Tariff Act, 1985.

2. The Bench which heard these appeals earlier was divided in its opinion on the issue. Justice Ranjan Gogoi, as the learned Judge then was, was of the view that such coconut oil in small packings was more appropriately classifiable as edible oil under Heading 1513. Justice R. Banumathi, on the other hand, concluded that coconut oil, packed in small sachets/containers suitable for being used as hair oil, was classifiable as such under Heading 3305. In view of their difference in opinion, these appeals have been placed before us.

3. Insofar as Civil Appeal No. 1766 of 2009 is concerned, this issue is raised in relation to the duty payable for the period 01.04.2005 to 31.08.2007. As regards Civil Appeal Nos. 6703-6710 of 2009, it is contextual to the period 28.02.2005 to 28.02.2007. Taking note of this aspect and in view of the statement of the learned counsel for the respondents that the total revenue involved in these cases, excluding interest and penalties, would be about Rs.40 crore, this Court requested the learned Additional Solicitor General, on 18.01.2023, to obtain instructions whether the issue would survive for consideration and whether the Revenue still wanted to press these appeals. On 25.01.2023, the learned Additional Solicitor General averred that the matters required to be resolved on merits. He produced letter dated 24.01.2023 addressed by the Additional Commissioner, Directorate of Legal Affairs, Central Board of Indirect Taxes and Customs, Government of India, stating that the amount involved in these appeals, viz., the excise duty, penalties, redemption fine and interest, would aggregate to over Rs.159 crores. According to him, the issue remained relevant due to pendency of similar cases at various levels. In its written submissions also, the Revenue asserted that the issue is not rendered academic as on date as matters relating to this issue were still pending and show- cause notices had also been issued in this regard under the GST regime, which presently holds the field.

4. Before we proceed to consider the issue on the facts obtaining and on merits, it would be apposite to take note of the statutory milieu germane thereto, both past and present.

Prior to 28.02.2005, i.e., before amendment of the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter, ‘the Act of 1985’), vide the Central Excise Tariff (Amendment) Act, 2004 [Act 5 of 2005], irrespective of the size of its packaging, coconut oil was treated as a ‘vegetable oil’ exigible to excise duty under Heading 15.03 in Chapter 15 in Section III of the First Schedule to the Act of 1985. Section III, Chapter 15 and the relevant Chapter Notes therein along with Heading 15.03, as they then stood, are extracted hereunder: