Customs Duty Exemption on Edible-Grade Oils Used in Cosmetics: CESTAT

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that customs duty exemption available to refined edible-grade oils cannot be denied merely because the imported products are intended for use in cosmetics, personal care, or pharmaceutical formulations. The bench of Dr. Suvendu Kumar Pati (Judicial Member) and M.M. Parthiban (Technical Member) has dismissed the Revenue's appeal against Pioma Chemicals and upheld the benefit of concessional customs duty under Notification No. 50/2017-Customs. The dispute arose after Mumbai-based Pioma Chemicals imported various refined edible-grade oils, including peanut oil, sunflower oil, walnut oil, almond oil, and macadamia nut oil from Germany. The importer classified the products under the relevant Customs Tariff headings and claimed customs duty exemption under Serial Nos. 64 and 71 of Notification No. 50/2017-Customs dated June 30, 2017. During scrutiny of the Bill of Entry, customs authorities noticed that the imported oils were intended for use in cosmetic and skincare products rather than food applications. Based on this declared end-use, the Department denied the exemption and reassessed the goods, holding that the products could not be treated as “edible grade” oils eligible for concessional duty. Pioma Chemicals challenged the decision before the Commissioner (Appeals), who ruled in its favour. The Revenue subsequently carried the matter before the CESTAT. The Department argued that the exemption notification contemplated oils that were not only classified under the specified tariff headings but were also intended for human consumption. Since the importer had declared that the oils would be used in cosmetics, skincare products, hair oils, and pharmaceutical formulations, the authorities contended that the goods were not meant for food use and therefore failed to satisfy the condition of being “edible grade.” The Revenue also relied on CBEC Circular No. 40/2001-Customs, which interpreted edible oils as oils meant for human consumption, and argued that products destined for industrial or cosmetic applications should not receive the exemption benefit. Pioma Chemicals maintained that the notification prescribed only two requirements: First, the goods must fall under the specified tariff headings; and second the goods must be refined and of edible grade. According to the importer, both conditions were fulfilled. The company emphasized that laboratory testing conducted by Doctors’ Analytical Laboratories Pvt. Ltd., an FSSAI and NABL-approved laboratory, confirmed that the imported oils conformed to edible-grade standards prescribed under food safety regulations. The importer further argued that the notification did not contain any end-use condition. Therefore, once the oils satisfied the prescribed tariff classification and edible-grade requirements, the benefit could not be denied merely because the products would be used in cosmetics or pharmaceutical formulations. The CESTAT observed that there was no dispute regarding the tariff classification of the imported oils. The sole issue was whether the products qualified as “edible grade” for the purpose of claiming the exemption. The Tribunal noted that samples of the imported oils were tested by a government-approved laboratory. The laboratory reports confirmed that the oils conformed to edible-grade standards under FSSAI regulations. The overseas supplier certified that the products were refined edible-grade oils suitable for human consumption. The exemption notification contained no end-use condition requiring actual food consumption. Referring to the supplementary note to Chapter 15 of the Customs Tariff and the applicable food safety standards, the Tribunal held that laboratory certification establishing compliance with edible-grade standards was sufficient evidence to determine eligibility. The Bench relied on its earlier decision in Ritika Pharmatech v. Commissioner of Customs, where it had ruled that refined edible-grade oils remain eligible for exemption even when used in cosmetic manufacturing because the notification does not prescribe any end-use restriction. The Tribunal also referred to the Gujarat High Court’s landmark judgment in Inter Continental (India) v. Union of India, later affirmed by the Supreme Court. In that case, the courts held that customs authorities cannot read additional conditions into an exemption notification when such conditions are not expressly provided by the notification itself. The Tribunal reiterated the principle that administrative circulars cannot override the plain language of an exemption notification and that authorities cannot impose end-use requirements where none exist. The Tribunal emphasized that once the imported oils satisfy the specified tariff classification and are proven to be refined and edible grade, exemption cannot be denied solely because the importer intends to use them in cosmetics or pharmaceutical products. It further observed that customs authorities cannot introduce additional restrictions through interpretation or circulars that are absent from the notification itself. The CESTAT upheld the order of the Commissioner (Appeals) and confirmed that Pioma Chemicals was entitled to customs duty exemption under Serial Nos. 64 and 71 of Notification No. 50/2017-Customs for the imported edible-grade oils. Case Details Case Title: Commissioner of Customs (Import), NS-I Versus Pioma Chemicals Citation: JURISHOUR-1576-CES-2026(MUM) Case No.: CUSTOMS APPEAL No. 87686 of 2024 Date: 01.06.2026 Counsel For Appellant: M.Y. Patil, Authorized Representative Counsel For Respondent: Chirag Shetty, Advocate Click Here To Read Order Read More: CENVAT Credit Available Even If Returned Machinery Not Sent Back to Same Buyer: CESTAT

Customs Duty Exemption on Edible-Grade Oils Used in Cosmetics: CESTAT

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