Marico wins legal battle in SC over classification of pure coconut oil as edible oil

Consumer goods firm Marico Ltd announced that it has successfully defended its position in a long-running excise duty dispute after the Hon'ble Supreme Court of India dismissed an appeal filed by the Commissioner of Central Excise (CCE) against the company and its job workers.

The case, which dates back to 2009, concerns the classification of pure coconut oil for excise duty purposes during the period from 2005 to 2007.

The CCE had initially sought to classify the oil under the category of hair oil, which would have subjected Marico to a duty of ₹66.77 crore. However, the job workers involved in the case had classified the oil as edible, which was exempt from excise duty under the applicable regime. The dispute had been previously decided in favour of the job workers by the Customs Excise and Service Tax Appellate Tribunal (CESTAT), prompting the CCE to challenge the decision in the Supreme Court.

In a favourable ruling for Marico, the Supreme Court upheld the CESTAT's decision, reaffirming the classification of the coconut oil as edible oil and dismissing the CCE's appeal. The ruling provides clarity on the tax classification for the period in question and resolves the legal uncertainty surrounding the matter.

The company noted that the outcome of the litigation does not have any material impact on its financial position or statements. No penalty or compensation was imposed as part of the judgment.

Marico reported a 20.3% rise in consolidated net profit to ₹433 crore for the quarter ending September 2024, up from ₹360 crore in the same period last year, as per its exchange filing on Tuesday.

Total income increased to ₹2,746 crore in the reporting period, up from ₹2,514 crore a year ago. Revenue from operations rose by 7.6% to ₹2,664 crore, compared to ₹2,476 crore in the same quarter last year.

The earnings before interest, taxes, depreciation, and amortization (EBITDA) also showed a modest increase of 5%.

The FMCG firm’s quarterly expenses grew to ₹2,194 crore, up from ₹2,038 crore in the previous year.

Shares of Marico Ltd closed at ₹642.55, up 0.3% on the BSE prior to the announcement of the favourable ruling.