Mere Broad-Basing Of Entries Under Central Excise Tariff Act, Cannot Justify Re-Classification, Without Change In Nature, Character Or Use Of The Product: Supreme Court

The Supreme Court has ruled that the classification of a product under the Central Excise Tariff Act, 1985, cannot be changed merely on the ground of change of tax structure or tariff entries, without showing a change in the nature and character of a product or a change in the use of the product. The Adjudicating Authority opined that the product being a “Hair oil”, was required to be classified as ‘cosmetic’ under Tariff Item 3305 90 19 under Chapter 30. While dismissing the contention of the department that the product was classifiable under Chapter 33 as a ‘cosmetic or toilet preparations’ merely because its label carried the expression “Hair Oil”, the court remarked that anything which is prepared for being used on the hair and carries the name “Hair Oil”, would not lose its character as medicament if otherwise it has been prepared for therapeutic or prophylactic uses. The product consists of Homeopathic medicines.” While dealing with the observations of the Adjudicating Authority that, if the intention was to identify the product as medicament, there was no need to label it as “Hair Oil”, the court said, “While the expression “Hair Oil” does appear on the label, the other integral expressions “Homeo” and “Arnica” preceding the expression “Hair Oil” could not have been ignored and could not have been left aside.” The court further held that the Tribunal had rightly observed that when hair fall or baldness is recognised as a medical condition, the Adjudicating Authority could not have taken a different view, which was not recognized by any branch of medicine. “For what has been discussed hereinabove, answers to the points arising for determination are that the product in question, AHAHO, merits classification as ‘medicament’ under Chapter 30 and not as ‘cosmetic or toilet preparations’ under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985; and the change in tariff structure by way of amendment brought about in the year 2012 did not justify any re-look at the classification of the product in question.” Case Title: Commissioner of Customs, Central Excise and Service Tax, Hyderabad vs Ashwani Homeo Pharmacy Citation : 2023 LiveLaw 397 Counsel for the Appellant: Mr. Vikramjit Banerjee, ASG Mr. Akshay Amritanshu, Adv.