The Chennai Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Hindustan Unilever Ltd, by holding that its skin care variants Petroleum Jelly Baby and Petroleum Jelly Aloe Vera were rightly classified as “Cosmetics” under Tariff Item 3304 9990 and accordingly set aside the excise duty demand of ₹3,03,965 along with interest and penalty.

Hindustan Unilever Ltd,appellant-assessee,was engaged in manufacturing skin care preparations under Chapter 33 and pure petroleum jelly under Chapter 27 of the Central Excise Tariff Act. The petroleum jelly, sold under the brand name "Vaseline," was classified under Tariff Item 2712 10 90, and duty was paid accordingly.

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In 2009, the assessee introduced two new variants, Petroleum Jelly Baby and Petroleum Jelly Aloe Vera, and classified them as cosmetics under Chapter 33, paying duty under Tariff Item 3304 9990. These products were also covered under the company’s existing FDA licence, which was later updated in 2010 to include the new variants.

A Show Cause Notice dated 06.04.2015 proposed to reclassify the two products under Tariff Item 2712 10 90 and demanded ₹3,03,965 in duty for the period March 2014 to January 2015, along with interest and penalty. The assessee filed a reply justifying the cosmetic classification, but the Original Authority confirmed the demand through an order dated 05.03.2012. This decision was upheld by the Commissioner (Appeals) on 22.12.2016.

The assessee then filed the present appeal before the Tribunal. The main issue was whether the classification of Petroleum Jelly Baby and Petroleum Jelly Aloe Vera under Tariff Item 3304 9990 was correct.

The two member bench comprising P.Dinesha (Judicial Member) and M.Ajit Kumar (Technical Member) heard both sides and examined the records and judicial pronouncements cited during the arguments. It noted that the classification issue regarding Petroleum Jelly Aloe Vera and Petroleum Jelly Baby had already been decided in the assessee’s own case for an earlier period, vide Final Order No. 40856/2024 dated 15.07.2024.

The appellate tribunal observed that Heading 3304 covers cosmetic or toilet preparations, while Heading 2712 under the HSN includes petroleum jelly but specifically excludes variants meant for skin care. It held that if the product’s primary function is “care” rather than “cure,” it should be treated as a cosmetic and not as a medicament.

Applying the tests laid down by the Supreme Court in CIENS Laboratories and other cases, the tribunal concluded that these products were intended for skin care and not for treating any medical condition. It found that the addition of fragrance and the intended use as a barrier cream to prevent dry skin cracking further supported their classification as cosmetics under CTH 3304.

The CESTAT also relied on HSN Explanatory Notes and held that petroleum jelly used for skin care is specifically excluded from CTH 2712 and included under CTH 3304. Since no contrary facts, higher court rulings, or stays were placed on record, the tribunal found no reason to depart from its earlier view.

Accordingly, the impugned order was set aside and allowed the appeal.

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