2004 (96) ECC 595 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri P.G. Chacko, Member (J) and Shri Jeet Ram Kait, Member (T)

Motherland Laboratories

Versus

Commissioner of Central Excise, Chennai-II

No. E/MS/249/2004 & E/EH/339/2004 in E/290/2003

Misc. Order No. 400-401/2004, dt. 5.7.04, Certified on 12.7.2004

Waiver

Pre-deposit -- Prima facie case relating to classification of a product is in favour of assessee though not strong enough for full waiver -- The pre-deposit of Rs. 5.00 lakhs already made by them is enough for the purpose of Section 35F of the Central Excise Act in place of 30 lakhs.

PRESENT :

Shri S. Murugappan, Adv. for the appellant.

Smt. Bhaghya Devi, SDR for the respondent.

Case Cited :

Sunny Industries Pvt. Ltd. v. CCE, Calcutta, 2003 (86) ECC 517 (SC).................... [Para 1]

Per : P.G. Chacko (Oral)

By order dated 30.3.2004, this Bench had directed the appellants to pre-deposit an amount of Rs. 30.00 lakhs (out of a total amount of over Rs. 1.24 crores demanded by the authorities below) within a period of 8 weeks and report compliance on 17.6.2004. The party did not deposit the amount. On the other hand, they filed the present application for modification of the above order and for grant of total waiver of pre-deposit and stay of recovery, pleading financial hardships and also claiming that they had a strong prima facie case on merits. When this application came up before the Bench on 17.6.2004, we directed the appellants' counsel to file the latest Profit and Loss Account [for the year ending 31.3.2004] but on condition that an amount of Rs. 5.00 lakhs, which was agreed by the counsel to be deposited, be deposited within 15 days. Today, the proof of deposit of Rs. 5.00 lakhs is on record. Also on record, are copies of the latest Profit and Loss Account of the appellants. Ld. Counsel for the appellants submits that they have a strong prima facie case on the basis of the literature on the subject product, already available on record, Ld. SDR submits that, on the facts of the case, the Apex Court's decision in Sunny Industries Pvt. Ltd. v. CCE, Calcutta, 2003 (86) ECC 517 (SC) : 2003 (153) ELT 259 (SC) goes against the appellants. Ltd. Counsel seeks to distinguish the cited case.

2. After examining the records and submissions, we find that the appellants' claim for classification of the product in question [Franch Oil NH] under sub-heading 3003.20 of the CETA Schedule is supported by the literature available on record. Going by the product label, we observe that it is a mixture of extract from "Ricinus Communis Linn" [Castor Oil Plant] and "Ocimum Sanctum" [Tulsi]. The preparation is composed of 98% of extracts from seeds and roots of castor oil plant and the rest (2%) Tulsi extract. The product label further says that it is "for external use only". It also declares the product as "ayurvedic proprietary medicine". Relevant extracts from Indian Materia Medica [by Dr. K.M. Nadkarni], available on record, indicate that castor oil is used for medicinal purposes all over the world. The ayurvedic uses of the oil have also been listed in this literature. These uses are found to be therapeutic. The purgative use of the oil has also been mentioned in this book but the same is not relevant to the instant product which is for external use only. In these literature, we have not been able to locate any cosmetic use of the goods. The authorities below have held the product to be a cosmetic and, accordingly, classified it under heading 33.04. The appellants' consistent claim is that the oil is meant for therapeutic and prophylactic purposes and not for cosmetic purpose. The Apex Court's judgement, relied on by Ld. SDR, deals with "massage oil" which was found to have been used essentially for `care of skin' rather than `cure of skin'. Prima facie, it appears, this decision is distinguishable on facts. In the cited case, "massage oil" had cosmetic use only, whereas in the instant case the "Franch Oil NH" is claimed to have therapeutic and prophylactic uses only. After considering the product literature and the counsel's submissions based thereon, we are of the view that the appellants have a prima facie case, though not strong enough for full waiver of pre-deposit. The pre-deposit of Rs. 5.00 lakhs already made by them is enough for the purpose of Section 35F of the Central Excise Act. Our order dated 30.3.2004 will stand modified accordingly.

3. There is another application before us, which seeks early disposal of the appeal. As the case involves high stake, it must be in the interest of both sides that the case be disposed of as early as possible. The appeal is posted to 4.10.2004 for hearing.

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