D.M. Vasavada, Member (J)

1. We heard this appeal on 3-8-1989 and passed the following order:

"Order-in-Appeal set aside with consequential relief to the appellants. This order will have no bearing in relation to the Central Excise Tariff Act, 1985. Announced in the Open Court." Hereunder, we set out our reasons for the same:

Facts stated briefly are:

The appellants manufacture Ayurvedic Maka Oil, Ayurvedic Amla Oil and Ayurvedic Brahmi Oil, hereinafter referred to as oils, since 1964 by using herbal ingredients. After the oil is manufactured, as per the process stated in Appeal Memo, a small quantity of 0.3% of sandal wood oil is added in order to preserve aroma and to prevent the oil from becoming rancid. In the year, 1971, perfumed hair oil was included in T.I.14F and that product was brought under excise net, but as the appellants were not manufacturing perfumed hair oil, even though they were made to obtain the manufacturing licence, they were paying duty under protest. But, subsequently, relying upon evidence and reports of the experts, produced by the appellants, the excise authority cancelled the licence and refunded the amount paid by way of duty.

2. Then, Superintendent of Central Excise, issued a show cause notice dated 18-11-1985 demanding amount of Rs. 486848/46 for the period from May, 1985 to October, 1985 and issued another notice dated 13-3-1986 demanding duty of Rs. 87,747.80 for the period from 1-11-1985 to 14-12-1985 mentioning in both these notices that what is being manufactured by the appellants is hair oil which is excisable under T.I.14F (ii) of C.E.T. Matter was adjudicated by the Assistant Collector who confirmed the demands and the appeal preferred by the appellants was rejected by the Collector of Central Excise (Appeals), Bombay which has given rise to the present appeal.

3. We had heard L.A., Shri H.S. Joshi for the appellants and Shri M.S. Arora, Ld. J.D.R. for the respondent.

4. The process of manufacture of three different types of hair oils, manufactured by the appellants, is not in dispute and accordingly, they are prepared out of herbal ingredients of forest origin. The appellants are manufacturing these products since more than 25 years and they were subject to control of Food and Drugs Administration of Maharashtra State under Drugs and Cosmetics Act, 1940. As the said Administration classified the products as 'cosmetics' and as Central Excise duty on cosmetics and toilet preparations and perfumed hair oil was imposed by Finance Bill of 1971, by covering them under Tariff Item 14F (ii) (b), the appellants were compelled to take out central excise licence by the Central Excise authorities and were made to pay duty on the same. In the year 1976, the Commissioner, Food & Drugs Administration, agreed to classify the said products as Ayurvedic medicines and issued the licence dated 3-7-1976 to that effect. The appellants brought this fact to the notice of Central Excise authorities and started paying duty under protest. The appellants also prayed for exemption from paying C.E. duty and contended that what they were producing was not 'perfumed' hair oils. After investigating the matter, by his order dated 1-2-1977, Assistant Collector, provisionally, approved the classification list of the appellants, classifying the products under heading 'Ayurvedic' medicines and pending further enquiries held them to be no excisable . Copy of this classification list is produced at Sl. No. 6 of the paper book. Copy of licence issued by the Food & Drug Administration is produced at Sl. No. 13. Thereafter, the products were examined by the Dy. Chief Chemist of Central Excise Deptt. and by a letter dated 26-8-1977, which was in reply to the query raised by the Assistant Collector (C.E.), opined that the product, in question, might be considered as ayurvedic preparations. Copy of this letter is produced at Sl. No. 18. Similar query was addressed to the Director (Ayurved), Maharashtra State by the Assistant Collect