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C.C., C.E. & S.T- Trivandrum v/s Warriers Hospital & Panchakarma Centre, Alleppey Dist, Kerala

    E/158 of 2009 in-Appeal No. 85-2008 & Final Order No. 20962 of 2018

    Decided On, 17 July 2018

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore

    By, THE HONOURABLE MR. S.S GARG
    By, JUDICIAL MEMBER & THE HONOURABLE MR. P. ANJANI KUMAR
    By, TECHNICAL MEMBER

    For the Appellant: Kavita Podwal, AR. For the Respondent: Sandhya Sarvode, Lakshmi Kumaran, Sridharan, Advocates.



Judgment Text

P. Anjani Kumar, Technical Member.

1. M/s. Warrier’s Hospital & Panchakarma Centre (The Respondents) are manufacturers of 'Dhatri Brand Hair Care Herbal Oil' and 'Dhatri Brand Massage Oil'. The Department contended that the respondents have not obtained Central Excise Registration and have not maintained records and have not paid duty even after crossing the SSI exemption. The Department sought to classify the Hair Oil and the Massage Oil under Central Excise Tariff Heading 3305 and 3304 respectively as cosmetics. A SCN seeking to demand Central Excise duty of Rs.13,91,873 and

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Rs.4,75,589/- was proposed to demand and seeking to confiscate the goods and levying penalties was issued to the respondents; the Joint Commissioner vide Order-in-Original No. 7/2005 dated 30.11.2005 has confirmed the demand of Rs.13,91,873/- along with the interest and also levied penalties.

2. On an appeal filed by the respondents, the learned Commissioner (A) vide order No. 04/2007 has remanded the case back to the original adjudicating authority for passing fresh orders re-quantifying the duty and penalty after deciding the classification of the product. The Commissioner (A) held that the respondents were liable to pay duty on clearances made under invoices no. 101 to 111 during the period from 08.03.2004 to 31.03.2004. The Joint Commissioner vide OIO No. 01/2008 in denovo as of confirmed the duty of Rs.13,91,873 along with the interest imposing equal penalty under Section 11AC of the Central Excise Act is also put a redemption fine of Rs.30,000/- and imposed the penalty of Rs.20,000/- on Dr. Saji Kumar, MD. On an appeal filed again by the respondent, the Commissioner (A) has held that the products 'Dhatri Hair Oil' and 'Dhatri Massage Oil' fall under drugs and cosmetics falling under Chapter 30 of Central Excise Tariff as they have fulfilled the following conditions laid down by the Hon’ble Supreme Court in the case of Dabur India Vs. C.C.E. 2005 (182) ELT 290 (SC); (i) All the ingredients in the product are mentioned in Ayurvedic Text Book (ii) Have a Drug Controller licence (iii) Produced a prescription from Ayurvedic Doctors; whereas the revenue could not produce any evidence that in common parlance, the product is not understood as a medicament. The learned Commissioner (A) has also relied upon the following cases:

(i) Natural Health Product Vs. CCE 2003 (158) ELT 257 (SC).

(ii) Puma Ayurvedic Herbal Vs. CCE 2006 (196) ELT 3 (SC).

3. Aggrieved by the above orders, the Department has filed an appeal.

4. The learned counsel for the respondents has submitted that the Drug Control Department, Govt. of Kerala has issued a Loan License No. 30/25E/2003 dated 13.05.2003 to M/s. Haridev Formulations under the Drugs and Cosmetics Act to manufacture and sale Ayurvedic drugs; the Drug Control Department has also certified that the products 'Dhatri Hair Care Oil' and 'Dhatri Massage Oil' are drugs and not cosmetics. The respondents have entered into an agreement with M/s. Haridev Formulations for manufacture of the impugned goods. The entire raw materials required for manufacture for the impugned goods for supply to the job workers by the respondents and job charges were paid; the respondents are brand owners and are producing the entire products from the job workers. The total clearances of impugned goods during 2003-04 was only Rs.91.91 lakh and therefore, the job workers correctly claimed the exemption under SSI Scheme and no excise duty was paid by them w.e.f 07.03.2004. The Department discontinued their contract with M/s. Haridev Formulations and started their own production on the basis of Drug License no. 24/25D/2004 dated 08.03.2004 issued by the Drug Controller. In view of the following, the impugned products are rightfully classifiable as Ayurvedic medicaments falling under Chapter 30 of the Tariff.

(i) Drug licence No. 24/24 D04 issued by Kerala State Drug Licencing Authority.

(ii) Certificate dated 11.03.2004 issued by Deputy Drug Control and Licencing Authority, Kerala.

(iii) Order dated 29.04.2006 issued by Commissioner of Commercial Taxes, Thiruvanthpuram holding the impugned product to be an Ayurvedic medicament.

5. The Departmental Representative has reiterated the findings of the OIO.

6. Heard both sides and perused the records of the case.

7. We find that the Department has made out a strong case in their favour. We find that this very Bench in the case of Haridev Formulations (the job workers of the respondents) have conclude that the products manufactured by the respondents fall under Chapter 30 of the Central Excise Tariff Act, 1986 as the Commissioner(A) has already examined and discussed the ingredients and ratio of various case law. This Bench has observed at Para-4 that it appears that the Hair Oil with the different flavor and different components is manufactured by different companies. The matter has reached to the Supreme Court where the Hon’ble Supreme Court has decided in some cases in favour of the appellant and in some cases in favour of the Department. In the case of Dabur India Ltd. Vs. CCE, Jamshedpur-2005 (182) ELT 290, the Hon’ble Supreme Court has decided the matter in favour of the appellant and considered the Hair Oil as Ayurvedic product. Similarly, the Commissioner (A) has discussed number of case-laws decided by the Hon’ble Supreme Court in his order [Puma Ayurvedic Herbal Pvt. Ltd. Vs. CCE, Nagpur- 2006 (196) ELT 3 (SC)] where it was considered Ayurveda medicine. So there are the judgments available on both sides.

8. In view of the above, we find that the case is squarely covered by the decision of this very Bench. We do not find any convincing and cogent reasons or any new facts put forth by the Department. Therefore, we find that there are no reasons to interfere with the impugned order of Commissioner (A). Accordingly, the appeal filed by the Department is rejected.
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