1. These Appeals involving same issue and dispute of units belonging to same Appellants are directed against following Order Nos. 40/2012/Adjn. dt. 27.05.2013, 86/2013 Adjn. dt. 31.10.2013, HYD-EXCUS-002-COM-044-14-15 dt. 30.03.2013, HYD-EXCUS-002-COM-03-16-17 dt. 31.05.2015, HYD-EXCUS-004-COM-018-14-15, HYD-EXCUS-004-COM-042-15-16 dt. 16.10.2015 and HYD-EXCUS-04-COM-028-16-17 dt. 07.09.2016. Hence all the appeals are taken up together for disposal.
2. The relevant fact that arises for consideration are that the Appellant M/s. Aswini Homeo Pharmacy and Ayurvedic Products Pvt. Ltd. (previously known as Aswini Homeo Pharmacy) are engaged in the manufacture of product viz. Aswini Homeo Arnica Hair Oil (AHAHO) in their units located at Moosapet, Maheshwaram and Bala Nagar. The Appellant has classified the said product as Medicament falling under chapter sub heading No. 30039014 and were claiming concessional rate of duty under Notification No. 18/2012 CE dt. 17.03.2012 and other analogous notifications or the tariff rate from time to time as applicable to Homeopathic medicine falling under chapter 30 respect of clearances made by them. The Appellant Units were issued show cause notices from time to time alleging that the aforesaid goods are preparation for use on the hair and are classifiable under chapter sub heading No. 33059019 and are liable to duty accordingly as Cosmetic. Therefore the SCN demanded differential duty and also proposed to impose penalty under section 11AC read with Rule 25 of Central Excise Rules, 2002. The demands were confirmed by the impugned orders as above and penalties were imposed. Hence the present appeals before us.
3. Ld. Counsel appearing on behalf of the appellant submit that the product in question is mixture of four Homeopathic medicine namely Arnica, Canthris, Pilocarpin and Cinchona in coconut oil base. The ingredients are listed in Homeopathic Pharmacopia of India and Materia Medica. The Oil is therapeutic use for the disease conditions of hair loss, insomnia and other diseases. The ingredients drugs have been mentioned in the Materia Mendica for treatment of alopecia hair fall/baldness, dandruff, headache and sleeplessness. It is manufactured under Drug Licence issued under Rule 25C of Drugs & Cosmetic Rules 1945 by the Director, Indian Medicine & Homeopathy renewed by Addl. Director & Under Rule 25(C) of Drugs & Cosmetics Rules 1945 in terms or Rule 85 D ibid by the Director, Indian Medicine & Homeopathy and is renewed by the Additional Director & Drug Controller (Homeo), Department of Ayush, Govt. of Telangana. The product is a medicament, as per analysis report
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and the certificate issued by the Additional Director & Drug Controller, Department of Ayush. It is covered Rule 35 of Schedule K of Drugs & Cosmetic Rules (Homeopathic Hair Oil having active ingredients upto 3 x potency). The said Schedule K covers only drugs and not cosmetics. The label of the product indicates that the product is homeopathy medicine under Schedule K, ingredients and composition, indications and contra indications and mode of application. The contents of the label clearly indicate that it is understood in common parlance by users and traders as homeopathic (under Schedule-K). He also produced copy of order passed by the Hon'ble Andhra Pradesh High Court, in reference to APGST Act, wherein the Hon'ble High Court relying on the composition, description on the label, common parlance and decisions of Hon'ble Supreme Court in matters relating to determination whether a product is a drug or medicament or cosmetic held that the goods are medicines and not cosmetics. The Advance Ruling Authority of Commercial Taxes, Govt. of Tamil Nadu also held the product to be a homeopathic for the purpose of TNVAT Act, 2006. He also submits that since 1994, the goods were held to be medicine and was examined four times by different officers including two Commissioners (Appeals) and sub-ordinate officers. He submits that the issued involved of hair oil being medicament as squarely covered by the Tribunal decision in case of Bakson Homeo Pharmacy (P) Ltd. Vs. CCE, New Delhi - 2001 (136) ELT 485 (Tri, Del). He submits that there is no change in tariff act/ingredients or process of manufacture to revise the classification of goods in question, which was settled by the previous order. He submits that the goods even after change in tariff structure would remain classified under Chapter 30 since it a medicament. He submits that only for the reason that the goods are in retail packing or mention of hair oil cannot mean that the goods are out of chapter 30 or are cosmetics. He submits that the licence by the Drug Controller is also important to classify the product. He submits that without change in the nature or use of the product the classification made by them cannot be set aside. He also field written submission to the effect and judgment of Hon'ble Supreme Courts in case of CCE Vs. Sharma Chemical Works : 2003 (154) ELT 328 (SC) and CCE Vs. Pandit D.P. Sharma : 2003 (154) ELT 324 (SC). Further he relies upon the Judgment of Hon'ble Apex Court in case of Sujanil Chemco Industries Vs. CCE, Pune : 2005 (181) ELT 206 (SC) and Tribunal order in case of Bakson Homeo Pharmacy (P) Ltd. Vs. CCE, New Delhi 2001 (136) ELT 485 (TR-DEL).
4. The Ld. AR appearing for the revenue supports the impugned order and reiterates the findings of the adjudicating authority.
5. We have considered the submissions made by both sides and perused the records.
6. We find that the adjudicating authority has mainly confirmed demand on the ground that since the AHAHO is not prescribed by a medical practitioner for the purpose of curing any disease and it is available in the medical shops as well as general stores and any persons desirous using it can purchase across the counter, hence the same is not Homeopathic medicine. He also held that the label does not indicate the condition of sale by the authorized medical distributor or retailer under prescription from medical practitioner even though it is mandatory requirement under section 97(1) of the Drugs & Cosmetic Act, 1940. It also does not contain the dosage to be used or that the dosage as directed by the physician. That it does not contain any that it can cure any particular disease like alopecia (loss of hair) or insomnia (sleep loss). Further he also held that previous orders passed by the Appellate Authority were on the basis of tariff entry before 2012 and after the said period the entries has changed hence needs relook.
7. We find from the impugned order that the label mentions that it controls hair fall, prevents dandruff and that on the hind side it states indication : Improves blood circulation to the hair roots, thereby stops hair fall and promotes hair growth. Also controls dandruff, removes headache, induces good sleep and maintained natural colour of hairs. We find that only for the reason that it does not mentions the name of particular disease i.e. alopecia or insomnia, the goods do not get categorized as non-medicines. Nothing was brought to our notice that it is mandatory that to fall under the category of medicine or to merit classification under chapter 30, each medicine should mention the technical or medical name of all diseases for which it is prescribed as the same is very absurd preposition which would make all medicine to be out of the purview of chapter 30. The label clearly indicates that the goods in question are Homeopathic medicine falling under schedule K and for treatment of hair loss, loss of sleep and other ailments. It is not necessary that it should mention the medical name of such disease. We find that the label of the product nowhere promotes the goods in question as only for Hair, falling into category of cosmetic or toilet preparations. It does not indicate that it beautifies the hair or enhances the beauty. It is not even perfumed. There is no indication on the label of the product to publicize it as Cosmetic product neither it is known in market as Cosmetic product in common parlance. The label of the product clearly shows the different conditions i.e. ailments for which it is used and a normal hair oil would not be put to such use. We find that nowhere the show cause notice or the impugned order it is demonstrated that the product in question was projected as cosmetic or toiletry product by the Appellant or known in the market as such. We also find that the Appellant has submitted certificates issued by the Practitioners in the field that the product in question is used as medicine. Only for the reason that it is sold by the medical shop as well as general stores or that it is not sold under the prescription of doctors would not take it out from the category and classification as medicine. Our views are based upon the judgment of Hon'ble Apex Court in case of Commissioner v. CIENS Laboratories : 2013 (295) ELT 3 (SC). The relevant excerpts of the order are as under:
14. Another contention advanced by the appellant-Central Excise is that the product is sold not under any medical prescription but the same is available across or under the counter and, hence, the same cannot be treated as medicament. This contention also has been rejected by this Court in Commissioner of Central Excise, Calcutta v. Sharma Chemical Works : 2003 (154) ELT 328 (S.C.). To quote:?
12. Mere fact that a product is sold across the counters and not under a Doctors prescription, does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumarn that merely because the percentage of medicament in a product is less, does also ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda text books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it....
15. In 'Puma Ayurvedic Herbal (P) Ltd. v. Commissioner of Central Excise, Nagpur : 2006 (196) ELT 3 (S.C.), it was held that the purpose of cosmetic product is to improve the appearance of a person and for enhancing the beauty whereas a medicinal product or medicament is meant to treat some medical condition. It was also held that merely because a product is sold not under a doctors prescription, the same does not cease to be a medicament. In both these cases, it was held that minimal presence of medicinal element does not detract the product from being classified as a medicament. To quote:
20. It will be seen from the above definition of cosmetic that the cosmetic products are meant to improve appearance of a person, that is, they enhance beauty. Whereas a medicinal product or a medicament is meant to treat some medical condition. It may happen that while treating a particular medical problem, after the problem is cured, the appearance of the person concerned may improve. What is to be seen is the primary use of the product. To illustrate, a particular Ayurvedic product may be used for treating baldness. Baldness is a medical problem. By use of the product if a person is able to grow hair on his head, his ailment of baldness is cured and the persons appearance may improve. The product used for the purpose cannot be described as cosmetic simply because it has ultimately led to improvement in appearance of the person. The primary role of the product was to grow hair on his head and cure his baldness.?
21. The extent or the quantity of medicament used in a particular product will also not be a relevant factor. Normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. The medical ingredients are mixed with what is in the trade parlance called fillers, or vehicles in order to make the medicament useful. To illustrate an example of Vicks Vaporub is given in which 98% is said to be paraffin wax, while the medicinal part i.e. Menthol is only 2%. Vicks Vaporub has been held to be medicament by this Court in C.C.E. v. Richardson Hindustan Ltd. - 1989 (42) E.L.T. A100. Therefore, the fact that use of medicinal element in a product was minimal does not detract from it being classified as a medicament.?
22. In order to be a medicinal preparation or a medicament it is not necessary that the item must be sold under a doctors prescription. Similarly availability of the products across the counter in shops is not relevant as it makes no difference either way.
19. Thus, the following guiding principles emerge from the above discussion. Firstly, when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive. What is of importance is the curative attributes of such ingredients that render the product a medicament and not a cosmetic. Secondly, though a product is sold without a prescription of a medical practitioner, it does not lead to the immediate conclusion that all products that are sold over/across the counter are cosmetics. There are several products that are sold over-the-counter and are yet, medicaments. Thirdly, prior to adjudicating upon whether a product is a medicament or not, Courts have to see what the people who actually use the product understand the product to be. If a products primary function is care and not cure, it is not a medicament. Cosmetic products are used in enhancing or improving a persons appearance or beauty, whereas medicinal products are used to treat or cure some medical condition. A product that is used mainly in curing or treating ailments or diseases and contains curative ingredients even in small quantities, is to be branded as a medicament.
8. In case of CCE, Rajkot v. Ban Labs Pvt. Ltd. 2009 (236) ELT 542 (TRI), the Tribunal held that the oil with ingredients specified in the authoritative books and manufactured with licence from Drugs Control Authority are classifiable as ayurvedic medicine under sub-heading 3003.99 of Central Excise Tariff and not as hair oil under sub-heading 3305.99. The relevant portion of the order are as under:-
3. By taking the above facts and circumstances and the Larger Bench decision of the Tribunal in the case of Himtaj Ayurvedic Udyog Kendra v. CCE, Allahabad : 2002 (139) ELT 610 (TRI-LB) he has held the goods to be Ayurvedic medicine.
4. As against the above we find that the Revenue in their grounds of appeal has again reiterated the same stand that the product cannot be considered to be a medicine inasmuch as medicine is always prescribed for a limited period to cure a particular disease. Further, there is no mention of dose or doses to be directed by the physician. As such they have contended that it cannot be held to be Ayurvedic medicine.
5. We find that all the above submissions were raised by the Revenue before the Tribunal in the case of Himtaj Ayurvedic Udyog Kendra and the same were not accepted by the Tribunal. Apart from the Larger Bench decision in the above case we also take note of the Hon'ble Supreme Courts decision in the case of Sharma Chemicals reported in : 2003 (154) ELT 328 (SC) laying down that the product should be manufactured in accordance with the various ingredients specified in the authoritative ayurvedic books and under a licence from the Drug Control authority have to be classified as Ayurvedic medicine. We find that apart from the various facts enumerated above the assessee has also produced affidavit/certificate/clinical trial report showing that the product is formulated to cure various hair diseases like Alopecia, Graying of hair, Dandruff, Itching of skull and to improve blood circulation to hair follicles. Hence, the product has to be held as having therapeutic and prophylactic value. As such we do not find any infirmity in the view taken by the Commissioner. Accordingly, appeal filed by the Revenue is rejected.
9. The above judgments of the Hon'ble Apex Court and the Tribunal clearly spells out that even though the goods are sold over the counter and not on a medical prescription, it would not lead to the goods being out of the category of medicine. The adjudicating authority has held that since the hair growth is cosmetic necessity and the product label shows the lady with long hair the goods are cosmetic product. We are not in agreement with the above views of the adjudicating authority. Firstly when the different branches of medicine and the Licensing authorities recognize the baldness or hair fall as disease in that case the adjudicating authority cannot take a different view which is not recognized by the branches of medicine. Secondly the product clearly mentions that the product in question is used for other ailments also such as sleep loss, increase of blood circulation and it nowhere depicts itself as for hair care or enhancing beauty of hair. The label indicates the product as Homeopathic medicine under schedule K, ingredients and their composition, indications, contra indications and mode of application. The content of label thus itself shows that even in common parlance it is understood by the users and the traders as Homeopathic medicine. There is no advice on the label nor does it suggests that it can be used as hair oil. It is not disputed about the fact that the product is made of four Homeopathic medicines as ingredients namely Arnica Mount, Cantharis, Pilocarpin and Cinchona and is used to treat the hair loss, insomnia, dandruff, headache and other ailments. It is manufactured under Drug Licence issued under Rule 25 C of Drugs & Cosmetic Rules 1945 and in terms of Rules 85D by the Director, Indian Medicine & Homeopathy. The licence has been renewed from time to time by the Additional Director & Drug Controller (Homeo), Department of Ayush, Government of Telangana State. Even as per analysis report & Drug Controller, Department of Ayush the product is medicine. The product is covered by serial No. 35 of Schedule K of Drugs and Cosmetic Rules (Homeopathic Hair oils having active ingredients upto 3X potency) and the said schedule covers only drugs and not Cosmetics. The product has already been held to be Drug by the Hon'ble Andhra Pradesh High Court in reference to APGST as well as Commercial taxes. The Advance Ruling authority of Commercial Taxes, Government of Tamilnadu for the purpose of TNVAT Act 2006 held that product to be a homeopathic medicine. We find that even before the subject cases, on many occasions in the past, Appellant were issued show cause notices for classification of goods as cosmetic and the Appellate Authority after going into all the aspects of common parlance as well as contents of the product and its usage held that the product is Homeopathic medicine. The adjudicating authority has relied upon the judgment of Hon'ble Supreme Court in case of CCE, Nagpur Vs. M/s. Shree Baidyanath Ayurved Bhavan Ltd : 2009 (237) E.L.T. 225 (S.C.) to state that the product in question does not satisfy the common parlance test. We find that the ratio of said judgment is not applicable as in the said case, the product Lal Dant Manjan was known as toilet preparation in common parlance and not as Ayurvedic medicine. Whereas in the present case the facts are entirely different as the Appellant has sold the goods as Homeopathic medicine and it is known as Homeopathic medicine in the common parlance. Even as apparent from facts the label of the product clearly shows the product as Homeopathic medicine, its content and usage. It also says that it should be left overnight. We are of the view that when the product is being sold as Homeopathic medicine and known as homeopathic medicine in the market the goods pass test of common parlance test as Homeopathic medicine. In the light of our observations made in preceding paras, we hold that the reliance placed upon the judgment of Shree Baidyanath case supra is misplaced as the facts are entirely different. Further the adjudicating authority reliance upon the order of the Tribunal in case of Naturence Research Labs (P) LTD. Vs. CCE, DELHI-II. : 2003 (154) E.L.T. 672 (Tri. - Del.) is not correct as in said case the product Forest Flower was sold as nourishment to the scalp and hair roots as per the matter mentioned on the packing and it also helped control hair loss and prevents scalp infection, encourages luxurious growth of hair whereas in the present case the Drug/licensing Authorities and even the Hon'ble High Court, the Vat authorities and the medical practitioners all have certified the product to be falling under the category of schedule K as Drug and even the product is sold as medicine as known as medicine in common parlance. The judgment of Alpine Industries : 2003 (152) E.L.T. 16 (S.C.) as relied upon by the revenue is also not applicable as in the said case the drug licence obtained by the assessee under the Drugs and Cosmetics Act, 1940, itself mentioned that it is a licence for ointment and cream for external application as a non-pharmacopoeia item whereas in the present case the product is registered as Homeopathic Medicine by the Additional Director, Indian Medicine and Homeopathy Department, Government of Andhra Pradesh. Even the Hon'ble High Court of Andhra Pradesh held the product to be falling under the category of Drug and Medicine and is sold as medicine. The ratio of judgment in case of CCE Vs. ZANDU PHARMACEUTICAL WORKS LTD : 2006 (204) E.L.T. 18 (S.C.) is also not applicable as the product label clearly shows the product as Homeopathic medicine. The Judgment of Hon'ble Apex Court in case of Sujanil Chemco Industries Vs. CCE, Pune : 2005 (181) ELT 206 (SC) and Tribunal order in case of Bakson Homeo Pharmacy (P) Ltd. Vs. CCE, New Delhi 2001 (136) ELT 485 (TR-DEL) are absolutely applicable to the present case in view of our above findings and we do not find any reason to differ with those decisions.
10. We also find that the adjudicating authority at the one hand has held that the classification done before amendment in Central Excise Tariff in the year 2012 would require relook into the classification of the product in question and thus refused to accept the settled classification of goods under chapter 30 in terms of Appellate Orders passed in favour of Appellant. However on the other hand the adjudicating authority has relied upon the judgments rendered in the context of Central Excise Tariff before year 2012 and the Board Circular issued in year 1997 which clearly shows that there is no uniformity adopted by him to decide the issue. The adjudicating authority has relied upon the Circular No. 333/49/97 CX dt. 10.09.1997 to hold that the medicine is prescribed by a medical practitioner, used for limited time and not every day unless it is prescribed to deal with specific disease. He also relied upon the judgments in case of Alpine Industries Vs. CCE, Delhi : 1997 (92) ELT 53 (TRI), CCE, Mumbai Vs. M/s. Muller & Phipps, Richardson Hindustan Ltd. 1998 (35) ELT 424 (TRI) to hold that the word must be construed in popular sense i.e. the meaning as understood by the people conversant therewith. The adjudicating authority has held that though the there is no rationale behind applying the 1997 circular in the year 2012 but since the said circular has not been withdrawn or held to be inapplicable in these matter by any court or law, the same would be applicable as it was relied upon by the Courts of law in numerous cases and in the light of said circular the product is not prescribed by a medical practitioner for any disease. We find that the adjudicating authority has chosen to apply pick and choose approach wherever it suited him for confirming demand against Appellant. We are not in agreement with the above approach and views of the adjudicating authority. We find that the Appellant were earlier issued demand notice on four different occasions and on each occasion the issue stands decided in favour of Appellant by the Appellate Authorities holding the goods to be Homeopathic medicine and liable to duty accordingly. The revenue has placed its reliance upon the judgment of Hon'ble Apex Court in case of M/s. Shree Baidyanath case supra to confirm the demands. However it is to be observed that the Hon'ble Apex Court in said case has relied upon its judgment in case of B.P.L. PHARMACEUTICALS LTD. Vs. COLLECTOR OF C. EXCISE, VADODARA : 1995 (77) E.L.T. 485 (S.C.). wherein it was held that Merely because there is some difference in the tariff entries, the product will not change its character. Something more is required for changing the classification especially when the product remains the same. In the present appeals the product has remained same and the classification issue stands decided in favour of the Appellant in all four previous proceedings against the Appellant. In case of CCE Nagpur Vs. Vicco Laboratories : 2005 (179) ELT 17, the Hon'ble Apex Court has held that classification cannot be changed without a change in the nature of a product or a fresh interpretation of the tariff heading by such decision. In the present case the goods in question has remained same and there is no change of tariff heading. Thus the contention of the Ld. Adjudicating authority that the change in tariff entry would require relook into classification is absolutely erroneous as the product has remained same and it would remain classified as Homeopathic medicine.
11. After careful appreciation of the facts as narrated above we find no reason to classify the product as Cosmetic under Chapter 33 of the CETA, 1985. We thus hold that the goods are classifiable under chapter 30 of the Central Excise Tariff as Homeopathic medicine and liable to duty accordingly. There is no reason to demand the duties and penalties adjudged against the Appellant.
12. In view of the foregoing on merits, we find that the impugned orders are unsustainable and liable to be set aside, we do so. Since we have come to conclusion on the merits of the case, we are not recording any findings on various other submissions made by both sides.
13. The impugned orders are set aside and all the appeals are allowed with consequential reliefs, if any