Effect of a Notification?
SOME more decisions from the recent Central Excise Tariff Conference.
The Coconut Oil Controversy:
DDT had covered the archaic coconut oil controversy several times. There are two contending classifications of Coconut Oil under the Central Excise Tariff. Chapter 15 covers various types of Vegetable Oils including Coconut Oil and Chapter 33 covers Cosmetics including Hair Oil. The dispute with regard to classification of the product i.e. Coconut Oil arose after the Board's clarification vide Circular no. 145/56/1995-CX dated 12.10.1995, wherein the Board clarified that the Coconut Oil being marketed in small containers could not be a basis for classifying the product as Hair Oil. For classification under Chapter Heading 3305, product should be suitable for use on hair and the product should be put up in a packing of a kind sold in retail for such use. Further, the Board vide Circular no. 890/10/2009-CX, dated 3/6/2009 issued under Sec. 37 B clarified that the Coconut Oil packed in small containers up to 200 ml shall be classified under Chapter Heading No. 3305 by treating it as Hair Oil.
The conference noted that the issue has been resolved by the Board by issue of Circular no. 1007/14/2015-CX dated 12.10.2015. (). The circular takes note of the judgments in case of Raj Oil Mills Ltd. vs. Commissioner, Central Excise - , where Tribunal held that edible Coconut Oil in retail packing of 200 ml or less is classifiable under Chapter 15 covering Animal or Vegetable Fats and Oils and not under Chapter 33 covering Cosmetics and Toilet Preparation. Similar view was taken by Tribunal in case of Capital Technologies Ltd. & Ors Vs CCE, Tirupati reported in 2011-TIOL-775-CESTAT-BANG.
The Conference decided that the issue of classification can now be decided by the field taking into consideration the facts of the case read with the judicial pronouncements.
What did that mean? - Effect of a Notification :
There is often litigation on what the notifications issued by the Government really mean. The DGFT at the end of its notifications give an explanation, 'Effect of this notification'. In the Tariff Conference, Chennai zone raised a point that to avoid disputes owing to interpretations, all amendment notifications should be appended with a clarification in the notification itself or a circular should be subsequently issued to explain the effect of the amendment.
The Conclusion was that while clarification may be issued where necessary but not in all cases particularly where the language of the notification or amendment in the rule is quite clear.