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There was dispute was going on between the trade and the Central excise department on the exemption on Heena Paste. This exemption was given in last year budget but there was ambiguity in drafting on such notification. We have written an article on the this issue  just after the presentation of the budget. Now the Government has come with the clarification in the next budget. This article tries to analysis this issue.

The history:-

The notification no. 12/2012-CE dated 1.3.2012 exempted the Henna powder not mixed with any other ingredient” by its entry number 134. In next year budget, this entry was amended by notification 12/2013 and heena paste was also exempted. But the entry read as follow:-

S. No.

Chapter or
heading or
sub-heading or
tariff item of
the First

of excisable goods





Henna powder or  paste, not mixed with any other ingredient



Thus the aforesaid entry exempted the Heena paste but the word "not mixed with any other ingredient" also travelled with the Heena paste. It was pointed out by us at that time also that heena paste cannot be made without adding the liquid into the powder. But the department will view it as mixing other ingredient into it. But no clarification was issued by the CBEC at that time.

Later on, the audit wing raised the audit objection on the same lines. The demand of lakhs of Rupees was issued to the manufacturers. Pleading was made that if such interpretation was taken then the benefit of this notification will not extended to any manufacturer. Following the Rule of homogenous construction, the benefit of this notification should be allowed.  However, the department was of stringent in view that there should be no ingredient in the henna paste which at no stretch of imagination was possible.

The post budget era:-

In this budget 2014, a clarification was issued by the department which read as follows:-

The clarification given by the budget, 2014 would have given relief to the poor manufacturers of heena paste which finally were exempted of tax if the powder is mixed with any liquid.  But the exclusion of powder mixed with heena dye and any other cosmetics again gave the birth to new dispute era. Revenue shall again allege the assessee those who mix heena dye in the powder or any other cosmetic will not be entitled to claim the exemption. For this purpose, the samples will be taken and will be given to CRCL. Unless and until  the report of the same is received, the manufacturer will not be allowed to clear the goods without payment of duty.

This Henna paste is very cheap selling marketable goods are of strong social values too:-

a. No social function is completed without the application of henna on the hands and feet – whether the function is of engagement, marriage, baby shower, etc.

b. When there is birth of any child at home, there is tradition of distributing the henna to all the neighborhood and relatives. This tradition is still alive in many parts of Rajasthan including Jodhpur. 

c. It is considered as a symbol of “Akhand Saubhagya” in Hindu culture and it is to be essentially applied hands and feet on various fasts like “karva chauth”, “gangaur”, “teej”, etc. It is even required during the pooja in these fasts.

d. It is an essentially to be there in the items of “pooja” of goddesses like laxmi, parvati, etc. In all the temples of these goddesses, henna is an important item which is applied on the hands and legs of statues of these deities, particularly on the festivals. 

e. No hawan/yagya is complete without applying henna.

f.   It is applied by Indian girls and ladies on all the occasions and festivals. On the Diwali pooja, it is considered customary to sit there with henna on the hands.

The application of henna is not merely limited to Hindu culture, rather it is an essential part of Muslim festivals like Eid-ul-Fitr and Eid-ul-Azha.

Nobody can afford to add any other dye or any other cosmetic value in such cheaper product.

However, again new round of litigations will start wherein revenue who has always taken up the legal language in the raw form and as it is. Now the department will allege every mixture as made of heena dye or of any of the cosmetic product. Further the cosmetic definition holds its own ambiguity in itself. Every mixture would be sent for testing in laboratories, paras would be raised and representations shall be made. It is the same battle but with dissimilar fuel. Not the least, even the Henna grown in different locations contain certain ingredients from the land itself but the same cannot separated. the department will term it as "other ingredient than liquid. But the manufacturer will say that these are not dye or an ingredient having cosmetic nature.

Winding up:-

Yes the government gave the clarification to the relief of heena manufacturer but with a half hearted approach. Heena is a cheap selling commodity carrying huge social implications as seen above which at no incidence should be brought in the ambit of service tax. The exemptions with if’s & but’s is not justifiable and should be completely be exempted from the tax.

An article by:-

CA. Pradeep Jain

Prayushi Jain


Published by

Pradeep Jain
Category Others   Report

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