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The SC ruling clarifies a long-standing ambiguity on whether coconut oil sold in small packages (typically below 200 ml or 500 ml) should be categorised as edible oil or cosmetic oil.
The SC ruling has settled a 15-year-old dispute on coconut oil classification.
The Supreme Court has ruled that coconut oil in small packages can be classified as edible oil, thus settling a 15-year-old dispute, according to a CNBC-TV18 report.
“The SC ruling on small pack coconut oil classification is a defining moment for the FMCG sector, regulatory frameworks and consumer markets. Beyond taxation, the ruling will offer much-needed clarity on how dual use products are classified and marketed, potentially reducing ambiguity and fostering industry growth. As businesses adapt to the outcome this decision will resonate across industries, shaping tax policy, consumer pricing and compliance protocols for years to come,’ Rahul Sundaram, partner at IndiaLaw LLP.
Sukrit Kapoor, Partner, King Stubb & Kasiva, Advocates and Attorneys, said, “This is a much welcomed relief by manufacturers. A judgement otherwise would have had catastrophic effects in terms of the financial implications on the whole industry. It shall be interesting to the application of the reasoning of the Supreme Court to such similarly placed classification matters.”
As of 11:08 am, shares of Marico on Wednesday were up by 1.09 per cent at Rs 640.05 apiece, while Bajaj Consumer Care was trading marginally down by 0.36 per cent at Rs 209.4.
What Does It Mean?
The ruling clarifies a long-standing ambiguity on whether coconut oil sold in small packages (typically below 200 ml or 500 ml) should be categorised as edible oil or cosmetic oil.
Edible oils typically attract lower GST or VAT rates compared to non-edible oils, which may be taxed as cosmetics or industrial products. This decision might lead to lower taxes on small-package coconut oil, benefiting manufacturers and consumers.
Coconut oil producers, especially in Kerala and Tamil Nadu (major coconut-producing states), have faced legal and financial challenges due to different state interpretations of the product’s classification. A uniform classification means simpler compliance, possibly reducing disputes with tax authorities.
(The story will be updated)
