Parachute Oil Excise Case Law [ Marico Industries ]

Read the Amazing story of the well known Parachute Hair Oil (Sorry, Coconut Oil) and how the company has been going around the excise department in an intelligent way. Parachute Hair Oil has been a household name for the past few decades, among the Indian families. All we know is that, Parachute is a Hair Oil. However, the company does not claim so. See the amazing trick company is playing on the excise Department.

Did you notice that the bottle of Parachute  Hair Oil does not write “hair oil” on it?

Coconut oil is an edible product, and it was not liable for excise duty.

It just writes “coconut oil”, even though majority of consumers use it like a hair oil. Actually –

Coconut oil is an edible product, and it was not liable for excise duty. Hair oil is a cosmetic product, and it is liable for excise duty.

Tell me, is Parachute Oil an edible product or a cosmetic product?

For years, the government and the company have been fighting over it. The government said that this product is a cosmetic item and therefore should be liable for tax. As a counter, the company (Marico) said that the packaging does not mention this product as a hair oil and is actually intended to be used as an edible item.

So when the Government claimed that parachute coconut oil is in fact a hair oil (which, by the way, for all practical purposes, it is); the company refuted the claim by saying that it is neither branded nor marketed as a hair oil. And the company is not accountable for how the consumers are actually using it.

The Government further raised a question that if indeed the coconut oil was an edible product, then why would the company package it in sachets, such as these:

The Government further raised a question that if indeed the coconut oil

I mean, who uses cooking oils in such small packets? The government therefore wanted to prove that the product is indeed intended to be sold as a hair oil.

What happened then?

The government came out with a simple solution: they changed the law!

New law said that any coconut oil with a packaging lesser than 200 ml would be treated as a cosmetic product; and any size above that would be treated as an edible item.

This circular affected the company a lot, since a big portion of their sales was in the below 200 ml segment, which was now liable for tax. Obviously, the company decided to appeal against this circular to the higher authorities.

There were a lot of cases in the Tribunal and also the courts, which said that merely because the packing is smaller, it cannot be classified as a hair oil. In view of the same, the Government then withdrew that circular., and we are back in the game!

[This Article has been originally authored by Mr.CA Palkesh Asawa]

Updated: April 15, 2018 — 5:54 pm

19 Comments

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  1. I wonder why the Excise Department couldn’t stay strong enough in this particular case.
    1. Various advertisements by the company always focusing on hair growth & maintenance.
    2. If the company claims it to be a cooking oil, then why the company has not got FSSAI certification.
    3. The product comes in various fragrant such as jasmine etc. Which can not be used for cooking at all.
    4. In various sites like Amazon, flipkart etc, the product has been grouped and is following the terms for beauty products.
    5. The product’s different packages depicts women & hair. Which is implied that it is a hair-oil and not cooking oil.

    All these makes it very clear – that it’s target segment is beauty & hair, not edibility.

  2. why excise dept has taken it lightly. Is it because Excise Dept assumes, company is big and politically strong., afraid to object.

    1. Company dipicted a woman photo giving prominance to hair care
    2. Few bottles, they have made very elegant and declared as hair oil (Parachute Advanced)
    3. Consumers in most of the states except Kerala uses coconut oil as hair oil, brand is popular and trust is created among consumers.
    4. FSSAI will not be in the picture, if it is for hair oil purpose but FSSAI stipulates, manufacturer has to indicate it is non edible on the container.
    5. If it is for edible purpose, then FSSAI stipulates label norms including mentioning licence number. and as edible oil
    6. It is strange to believe how excise dept forgot to check on the above points 4 & 5.

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