Marico Gets Relief As Coconut Oil In Small Packs To See Reduced Tax Rates

Pure coconut oil sold in small packages would be classified as edible oil for taxation purposes as opposed to hair oil, the Supreme Court has held.

Nevertheless, the court has clarified that if the coconut oil packed in such small packages is labelled to be used as hair oil, then the same will be classified as hair oil only.

Since the duty on hair oil is higher than the duty on edible oil, this distinction is crucial for the manufacturers selling coconut oil. The decision is bound to bring relief to consumers of pure coconut oil as well.

The erstwhile excise duty regime has now been subsumed under the Goods and Services Tax regime post 2017, and the GST on edible oil is 5%, whereas the rate of tax on hair oil is 18%.

This means that the tax burden has essentially been reduced on small packages containing pure coconut oil.

The top court’s ruling has put an end to a 15-year-long dispute between the excise department and coconut oil manufacturers.

The top court’s ruling has been pronounced in favour of Madhan Agro Industries Ltd., which manufactures its coconut oil under the brand name 'Shanti,' and Marico Ltd., the producer of Parachute coconut oil.