It has been brought to the notice of the Board that field formations are demanding duty on the compound preparation arising during the course of manufacture of Aggarbatis classifying them under heading 3302.90 of the Central Excise Tariff as odoriferous compound.

2.     The matter has been examined in the Board. The Aggarbatis manufacturing process involves simple mixing of a few aromatic chemicals with a base oil in a container in liquid form which is mixed directly with the dough or applied on Aggarbatis in the required proportion and such dough, mixed with the aromatic compound; is used for rolling of Aggarbatis. The Aggarbatis manufacturers normally carry out the whole process in a continuous manner in the course of manufacture of Aggarbatis.

3.     Moreover, each brand of Aggarbatis has a different fragrance, which is on account of the different formulation used by the manufacturers, which is specific to that particular brand. Preparation of such odoriferous compound, substances applied on the Aggarbatis varies from one Aggarbatis manufacturer to another. Such preparations are not sold by them in the market so as to keep their respective trade secrets. As the constituents, their proportions and formula of preparation are kept as secret, such compounds cannot be considered to be marketable in the commercial parlance.

4.     Accordingly, it is clarified that the odoriferous compound or Aggarbatis dough mixed with odoriferous substances, not being capable of being bought and sold in the market in the normal course of trade, is not an excisable product and no duty is therefore, leviable on such compound arising during the course of manufacture of Aggarbatis.

5.     Trade and field formations may be suitable informed.

6.     Receipt of this circular may please be acknowledged.