NEW DELHI: A three-judge bench of Supreme Court on Wednesday solved a 20-year-old riddle that plagued levying of excise duty - whether pure coconut oil is to be classified as an edible oil or under cosmetics as hair oil?
This question had got a split verdict from the bench of the then CJI and Justice R Banumathi. While Justice Gogoi, who retired as CJI in Nov 2019, was of the view coconut oil in small packaging was appropriately classified as edible oil, Justice Banumathi opined that coconut oil packed in small containers are to be classified as hair oil.
A bench of CJI Sanjiv Khanna, and Justices Sanjay Kumar and R Mahadevan, aware of the dual use of coconut oil in different parts of the country, said the classification would depend on the branding of the oil as edible to meet the criteria under food safety regulations, and conform to a different criterion under Drugs and Cosmetics Act to be classified as hair oil.
Writing the judgment, Justice Kumar rejected argument of revenue dept that pure coconut oil should invariably be classified as hair oil and said, "We are of the opinion that pure coconut oil sold in small quantities as 'edible oil' would be classifiable as edible oil". Revenue dept had said the bunch of appeals involved Rs 160 crore in terms of excise duty, penalties, redemption fine and interest.
SC said, "The fact that such edible coconut oil was sold in smaller containers would not, by itself, be indicative of it being packaging of a kind fit for use as 'hair oil'."
"One may choose to buy one's cooking oil in small quantities, be it for economic or for health reasons or due to inclination to use fresh oil in food preparation, and the smaller size of the packaging of such oil cannot be taken to mean that it is to be used as 'hair oil' without any pointer to that effect, be it by way of a label or literature or by any other indication that it is to be used as 'hair oil'," it said.
"Small-sized containers are common to both 'edible oils' and 'hair oils'. Therefore, there must be something more to distinguish between them for classification of such oil, other than size of the packaging," the bench said.