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CCE & ST, Dehradun V/S Multani Pharmaceuticals


Company & Directors' Information:- MULTANI PHARMACEUTICALS LIMITED [Active] CIN = U24230DL1986PLC023539

Company & Directors' Information:- CCE PHARMACEUTICALS P. LTD [Strike Off] CIN = U24231TN1987PTC015122

Company & Directors' Information:- MULTANI PHARMACEUTICALS P. LTD. [Not available for efiling] CIN = U99999DL2000PTC903533

    Appeal No. E/51520/2017-EX (DB) (Arising out of the Order-in-Original Appeal No. DDN-EXCUS-000-APPL-I-11-12-2017-18 dated 11/04/2017 passed by Commissioner of Central Excise-Dehradun) and Final Order No. 50800/2018

    Decided On, 26 February 2018

    At, Customs Excise Service Tax Appellate Tribunal New Delhi

    By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA (PRESIDENT) & THE HONORABLE JUSTICE: V. PADMANABHAN
    By, MEMBER

    For Petitioner: Amit Jain, Advocate And For Respondents: R.K. Mishra, DR



Judgment Text


1. The present appeal is filed against the Order-in-Appeal No. 11-12/2017-18 dated 11/04/2017. The respondent is located in Haridwar, (UK) and is engaged in the manufacture of various Ayurvedic, Unani and Veterinary medicines falling under Chapter heading 3003 to 3006 to the Central Excise Tariff. The dispute in the present case is with reference to two products manufactured by the appellant.

i. "Rovan Poshak Tail"

ii. "Rooh-e-Gulab Sharbat"

2. The respondent classified both items under Tariff Item 3004 9011, as medicaments and availed the benefit of area based exemption under Notification No. 49/2003-CE dated 10/06/2003. The Department was of the view that the two products "sharbat" and "tail" were wrongly classified by the respondent under Chapter 30 as medicaments. The show cause notices were issued alleging that the "sharbat" is rightly classifiable under CETH 21069011 as food preparations and "tail", under 3305 9019 as preparations for use on the hair. Since these two chapters fall within the negative list under the Notification No. 49/03, the original authority ordered for denial of the Notification which resulted in demand of Central Excise duty along with interest and penalties. When the issue was carried before the Ld. Commissioner (Appeals), the impugned order was passed in which he upheld the classification of the two items under 3004 as claimed by the respondent and set aside the demand duty. Aggrieved by the impugned order the present appeal has been filed.

3. With the above background we heard Shri R.K. Mishra, Ld. DR for the Revenue and Shri Amit Jain, Ld. Advocate for the respondent.

4. The Ld. DR submitted that Revenue challenged the impugned order. His main arguments are summarized below:-

i. The Ld. Commissioner (Appeals) has erred in considering the technical meaning given to the goods under manufacture in the Drugs and Cosmetics Act. He referred to the Board Circular dated 03/12/1997 in which the opinion of the Ministry of Law and Justice has been circulated in which it is clarified that a product is to be considered as drug or cosmetics only with reference to the Central Excise Act and not as per Drugs and Cosmetics Act.

ii. The classification is to be decided in terms of the Sections and Chapters of the Central Excise Tariff. Chapter Note 1(e) of Chapter 30 has specified that the preparations of Heading 3303 to 3307, even if they have therapeutic or prophylactic properties will remain classified in Chapter 33.

Accordingly, the "sharbat" as well as "tail" will not be classifiable under Chapter 30 but will fall in Chapter 21 and Chapter 33 respectively.

5. The Ld. Advocate representing the respondent justified the impugned order. His arguments are summarized below:-

i. The Ld. Commissioner (Appeals) has painstakingly gone through all the requirements which are essential for holding that the products in question were medicaments, classifiable under CETH 3004.

ii. The impugned order has been passed only after the Ld. Commissioner (Appeals) has considered the CBEC Circular No. 25/91 as well as 360/76/1997 and also after considering the products against the yardstick of the "twin test" upheld by the Apex Court in the case of Naturalle Health Products (P) Ltd. v. CCE, Hyderabad : 2003 (158) ELT 257 (SC) and Puma Ayurvedic Herbal (P) Ltd. v. CCE, Nagpur : 2006 (196) ELT 3 (SC).

iii. The products in question contained ingredients mentioned in various authoritative Ayurvedic Texts and are known in common parlance as Ayurvedic Medicines. These satisfy the twin test laid down by the Apex Court.

iv. He has also relied upon various case laws in which similar goods have been held to be Ayurvedic medicines.

6. We have heard both sides and perused the record.

7. The dispute is with reference to the classification of two products manufactured by the respondent in their factory situated in Haridwar. Goods manufactured in Haridwar enjoy area based exemption under Notification No. 49/2003 but the products classifiable under Chapter 21 and 33 fall within the negative list of the notification and will not be entitled to the benefit. Both the disputed products were classified under Chapter 30 by the respondent, but were reclassified under Chapter 21 as well as Chapter 33 by Revenue and the benefit of the Notification was denied by the Original Authority, but held as eligible by the Ld. Commissioner (Appeals).

8. Both the "tail" as well as "sharbat" are claimed by the respondent to be Ayurvedic Medicines. They are said to contain ingredients which find mention in Ayurvedic Authoritative Texts. The products are also said to have therapeutic or prophylactic usages. But the view taken by the Revenue is that the "tail" is nothing but a cosmetic which is meant for care of the hair and merits classification under Chapter 33. In respect of the "Sharbat" the submission of the Revenue is that it contains fruit juice and a high dose of sugar and hence is nothing but non-alcoholic sweetened beverage classifiable under CETH 2106.

9. Both the products under dispute have medicinal properties as well as other common place properties. The classification of such items is required to be made in the light of the pronouncement of Hon'ble Supreme Court in the case of Naturalle Health Products (P) Ltd. as well as Puma Ayurvedic Herbal (P) Ltd. (Supra). In respect of similar products CBEC has also issued a Circular No. 25/91 dated 31/10/1991. The Apex Court in the case of Puma Ayurvedic Herbal (P) Ltd. (Supra) has observed that in order to determine whether a product is a cosmetic or a medicament a "twin test" (in which common parlance test is one of them) has been laid down as under:-

"I. Whether the item is commonly understood as medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it will not be an item of common use. A user will use it only for treating a particular ailment and will stop its use after the ailment is cured. The approach of the consumer towards the product is very material. One may have to buy any of the ordinary soaps available in the market. But if one has a skin problem, he may have to buy a medicated soap. Such a soap will not be an ordinary cosmetic. It will be medicament falling in Chapter 30 of the Tariff Act.

II. Are the ingredients used in the product mentioned in the authoritative textbooks of Ayurveda?"

The CBEC vide Circular No. 25/91 dated 31.10.1991 has also clarified as under:

"3. The Government have further examined the matter in the light of parameters prescribed by the Tribunal in their Order No. 116/88-C, dated 10.02.1988 in the case of M/s. Richardson Hindustan Ltd. v. C.C.E., Hyderabad. The Tribunal held that a preparation would merit classification as an Ayurvedic medicine, if in the common parlance, it is known as an Ayurvedic medicines. It has also been observed that the aforesaid two tests have been upheld by Hon'ble Supreme Court in the case of Civil Appeal No. 2127 of 1988-C.C.E., Hyderabad v. M/s. Richardson Hindustan Ltd. - Supreme Court's Order dated 10.01.1989.

4. The Government have accepted the above referred two tests for determining the classification of the products claimed to be as Ayurvedic medicine (excluding herbal or ayurvedic cosmetic) and these may accordingly, be kept in view while deciding similar cases". Thus, the Board also has also accepted twin tests laid down by the Hon'ble Tribunal, as affirmed by the Hon'ble Supreme Court. Accordingly, for a product to be classifiable as Ayurvedic medicament, it has to satisfy the above two tests."

10. On perusal of the impugned order we note that Commissioner (Appeals) has analyzed the properties of the items in relation to the twin tests prescribed by the Hon'ble Supreme Court as above. In respect of the "sharbat" he has recorded that it contains various ingredients such as Gulab Ark, SITA (sugar) & Jal (water) which are mentioned in various Ayurvedic Authoritative Texts as having therapeutic use. It is also mentioned in the containers of sharbat that it is to be had as per the dozes of 50ml in a glass of 250 ml of water or as directed by the physician. We are in agreement with the observations of the Commissioner (Appeals) and hold that the sharbat merits classification under Chapter heading 3003 as a medica

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ment and not under CETH 3305. 11. In respect of the tail, Commissioner (Appeals) has recorded that it contains items such as Keshraj, Madhuyashti, Karshphal, Dhatriphal, Nimba, Sarasawati, Nil Pushpa, Indravaruni, Rose Mary Oil, Nimbu Ark, etc. These ingredients are found mentioned in Ayurvedic Authoritative Texts. We also note that in the container for tail there is a clear disclaim to the effect that it is not a cosmetic and toiletry preparation but is an Ayurvedic Medicine for curative and preventive therapy. It is also on record that both the products have approval granted by State Drug Licensing Authority and also the Directorate of Ayurvedic and Unani Services, certifying the products to be Ayurvedic Proprietary Medicine. 12. In view of the above discussions we find no reason to interfere with the impugned order which is sustained for the reasons mentioned therein. In the result, the appeal filed by Revenue is dismissed.
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