Commissioner of Central Excise, Tirunelveli Versus Ramesh Flowers (P) Ltd.>2008(12)LCX0088

2008(12)LCX0088

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

Ms. Jyoti Balasundaram, Vice-President and Shri P. Karthikeyan, Member (T)

Commissioner of Central Excise, Tirunelveli

Versus

Ramesh Flowers (P) Ltd.

Final Order Nos. 1439-1446/2008, dated 16-12-2008 in Appeal Nos. E/1329-1336/2004

Advocated By -

Shri N.J. Kumaresh, SDR, for the Appellant.
Shri Muthu Venkatraman, Advocate, for the Respondent.

[Order per: Jyoti Balasundaram, Vice-President]. -

The respondents herein are a 100% EOU engaged in the manufacture of potpourris, scented sachets, scented candles and floral arrangements as well as processors of dried flowers and parts of plants. They effected export as well as sold these goods in the domestic tariff area (DTA) after obtaining permission from the Development Commissioner, NEPZ, Chennai and the jurisdictional Asst. Commissioner of Central Excise, Tuticorin Division, classifying these goods as 'dried flowers/parts of plants' under Chapter Heading 06.03/06.04 of the Customs Tariff Act, 1975 and claiming them to be non-excisable under Chapter 6 of the 1st Schedule to the CETA, 1985. Show-cause notices were issued to them on the ground that potpourris and scented sachets were classifiable under Chapter Heading 33.07 and scented candles under Chapter Heading 34.06 of the CETA 1985, proposing recovery of excise duty, together with interest and also proposing imposition of penalty; the adjudicating authority confirmed the demands and also imposed penalties; the assessees challenged classification of "potpourris"; the Commissioner (Appeals) accepted their contention of classification under Chapter Heading 6 of the Customs Tariff Act and the CETA; hence these appeals by the Revenue.

2. We have heard both sides.

3. The process of manufacture of potpourris is as under :-"Dried leaves, flowers, nuts and other botanicals procured locally are manually cleaned and segregated as per their quality/texture. Then the materials are bleached with chemicals. Some of them are also dyed with pigments of colours like yellow, blue violet, black, orange, red etc. Then one of the imported fragrances like White Gardenia, Bouquet of Roses, Mulberry Medley, Wild Jasmine, Spiced Apple and Peach Blossom is added to the botanicals to the required extent. The scented botanicals are then packed in pouches, boxes and special packing like House, Apple, Teddy Bear etc. and are called 'potpourri'. These products are sold under the (brand name 'Sixth Sense"

Webster's Dictionary defines "potpourris" as follows :-

"Dried flower petals and flavouring herbs stored in jars or displayed in bowls to scent a room'. The purpose of potpourri is to scent a room."

The packing and labels used for potpourris cleared by the respondents clearly mentioned the name of fragrance used and that they were intended to be used to scent/deodorize a room, wardrobe, cupboard or any closed environment such as car, with a shelf-life of thirty days.

4. Heading 3307.90 of the Customs Tariff Act, 1975 covers "Pie-shave, shaving or after-shave preparations, personal deodorants, bath preparations, depilatories and other perfumery, cosmetic or toilet preparations, not elsewhere specified or included, prepared room deodorizers, whether or not perfumed or having disinfectant properties."

5. CTH Headings 06.03 and 06.04 read as follows :-

06.3 Cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise prepared.

06.4 Foliage, branches and other parts of plants, without flowers or flower buds, and grasses, mosses and lichens, being goods of a kind suitable for bouquets or ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise prepared.

6. The contention of the department is that potpourris are prepared room deodorizers. They rely upon brochures and pamphlets of the product which describe it as "a unique and eco-friendly substitute to environment damaging aerosol sprays", "the perfect substitute to replace the conventional ozone depleting aerosol room fragrance spray", "a classy substitute for synthetic air fresheners - aerosol based or incense sticks". According to the Revenue, the primary purpose of the potpourris is to spread fragrance contained in them and not for use as decorative item. The users of potpourris are advised to run their fingers through them once in a day to spread the subtle aroma, Which confirms that use of potpourris lies in the uniqueness of the fragrance that comes with them and not the looks that they possess.

7. We note that flowers have two integrated features - the aesthetic beauty which is natural to it and the fragrance or smell which is inherent in it. The natural beauty is retained or enhanced, together with added fragrance, in potpourris. There is no dispute that even when flowers are subjected to chemical treatment such as bleaching and dyeing they retain their natural beauty or their natural beauty is enhanced and that they can be used as decorative items. The ' Revenue however objects to the scenting of potpourris with various fragrances, submitting that once fragrance is added, dried flowers and parts of plants acquire a new and distinct identity as room fresheners. HSN Explanatory Notes under Heading 06.03 states that this heading excludes flowers, petals and buds of a kind used primarily in perfumery, in pharmacy, or for insecticidal, fungicidal or similar purposes, provided that, in the condition in which they are presented, they are not suitable for bouquets or for ornamental use. We find that potpourris are considered to be decorative floral arrangements meant to add or create exquisite beauty to a room or a place. Their visual appeal can in no way be masked by the fragrance which is added to the dried flowers and parts of plants. The Revenue also does not dispute that 'potpourris' have visual appeal but only submits that the addition of fragrance takes them out of Heading 06.03/06.04. However, the term "otherwise prepared" in CTH Heading 6 is wide enough to cover the process of addition of aromatic oils or perfumes and as long as they continue to retain their character and shape, they will fall for classification only under Chapter 6. Heading 33.7 is a residuary entry. When specific entry namely Heading 06.03/06.04 exists for "Cut flowers of kind suitable for ... or for ornamental purposes," they cannot be relegated to the residuary entry.

8. In the light of the above discussion, we uphold the finding of Commissioner (Appeals) that "potpourris" are classifiable under Chapter 6 of the Customs Tariff Act, 1975. Equivalent heading in the Central Excise Tariff is Chapter 6 which is blank. Hence they are non-excisable.

9. In the result, we uphold the impugned order and reject the appeals. (Operative part of the order was pronounced in open court on 16-12-2008)

Equivalent 2009 (236) ELT 0366 (Tri. - Chennai)

Equivalent 2009 (092) RLT 0034 (CESTAT-Che.)