Customs, Excise and Gold Tribunal - Delhi
Wockhardt Limited vs Collector Of Central Excise on 8 September, 1998
Equivalent citations: 1999(108)ELT425(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal is whether the product "Ossidos" is a product falling under Tariff Item IB of the erstwhile Central Excise Tariff as claimed by M/s. Wockhardt Ltd. or is patent or proprietary medicine falling under Tariff Item 14E as decided by the Department.
2. Shri C.S. Lodha, ld. Advocate for the Appellants submitted that the label of the product "OSSIDOS" clearly mentioned the composition of the product and also the fact that the product was sold in unit container of 180 ml; that the impugned product was based on protein and carbohydrates; that the addition of minerals such as Calcium, Iron and Vitamins were for the promotion of natural growth of children and nutrition for women during pregnancy; that the Aurangabad Municipal Corporation and Food and Drug Administration had certified the impugned products to be food supplement; that according to the report of the Deputy Chief Chemist, Ossidos is to be taken as a Tonic to provide Calcium and Vitamin etc. and not as a food by itself; that, however, Dy. Chief Chemist did not categorically report that the product is a drug; that in respect of the similar products, the Appellate Authorities had held that the products were food supplements classifiable under Item IB. He relied upon the Collector (Appeals), Bombay order dated 7-2-1986 In Re : Aaron Pharmaceuticals, and Bombay High Court's order dated 21-4-1983 in W.P. No. 2161 of 1982 in the case of Alkem Laboratories Pvt. Ltd. v. U.O.I. The ld. Advocate further submitted that the Collector (Appeals) in the impugned order, had taken an extremely narrow and myophic view of the expression "Food"; that as long as a manufacturer could demonstrate that a product was prepared or preserved food, that is to say, it entered the human metabolism for giving strength and sustenance, it had to be regarded as a food; that the Food and Drug Administration had examined the product and came to the conclusion that the impugned product was not a drug but a food supplement and no contrary evidence had been led by the department; that in the case of Indo-Pharma Pharmaceutical Works Ltd. v. C.C.E., Bombay - Order No. 146/90-C, dated 27-2-1990, the Tribunal held that the product "Energex" should be classified under Item IB. The Id, Counsel also mentioned that the indication of dosage could not be a criterion to decide whether a product should be classified under Item IB or not; that there were various products like baby food products and other specialised proteins which show dosages on the pack itself but these were not regarded as medicines but as articles of foods. He referred to Order No. 735/91-C in the case of C.C.E., Pune v. Li-Taka Pharmaceuticals Ltd. in which the product "Prolita Syrup" was classified under Item IB despite the argument of the Revenue that the product was made of protein fortified with Vitamins and iron and the product was sold on a prescription by a Medical practitioner and the doses were to be taken as per the direction given by the Medical practitioner. He also mentioned that a similar product namely Trobofex' manufactured by the appellants themselves had been classified as a food supplement falling under Item IB by the Collector (Appeals) vide Order No. KVV-158/91, dated 13-5-1991 which was upheld by the Tribunal as reported in 1998 (100) E.L.T. 486 (Tribunal). He also relied upon the decision in Adonis Laboratories v. C.C.E. - Order No. 109/92-C in which "Amino Globin" was classified under Item IB. The ld. Counsel heavily relied upon the decision of Madhya Pradesh High Court in Ramesh Chemical Industries v. U.O.I.-1980 (6) E.L.T. 598 (M.P.) in which it was held that drug includes substances other than food intended to affect the structure or any function of the human body. Things which can fall within the category of food are expressly excluded from the definition of drug. The assistance of the Drugs and Cosmetics Act can be taken for understanding the scope of Tariff Item No. 14E for there cannot be any manufacture of Patent or proprietary medicines unless they are in accordance with the Drugs and Cosmetics Act. The High Court held that glucose having been separately classified as an article under the Heading "Food" in Tariff Item IE, it was not intended to be included in Item No. 14E which comes under the head "Chemicals". He finally relied upon the decisions in the case of Glindia Ltd. v. U.O.I. - 1988 (36) E.L.T. 479 (Bom.) and Sun Export Corporation v. C.C.E., Bombay - 1997 (93) E.L.T. 641 (S.C.) in which Animal feed supplements -Vitablend W.M. Forte and Premix of Vitamin Ad. 3 (feed grade) were held to be not P or P Medicine.
3. Countering the arguments, Shri Satnam Singh, ld. SDR submitted that in comparison to other products namely Probfex, Energex and Protein which were subject matters of decisions relied upon by the Counsel, impugned product "Ossidos" was more rich in vitamins which is evident from the chart of composition of various products given by the ld. Advocate. Product Ossidos, besides containing vitamins B12, like all other products, does contain Vitamin B1, B2, A, D3, E acedate and Calcium Gluconate which are having therapeutic value. He further mentioned that in most of the decisions relied upon, there were certificate from Drug Authority that these were not drug and no such evidence was there in the present case. He referred to the report dated 20-12-1985 of the Dy. Chief Chemist, Bombay according to which Calcium Gluconate and Vitamin A, D, E & B Complex Group vitamins are reported to have therapeutic properties and were present in sufficient quantities in the impugned product. He also mentioned that calcium is for restructuring of bones; that a perusal of Item IB would show that the Tariff item referred to Products which could be readily consumed with or without any elementary cooking; that the impugned product could not be taken as a substitute for food. He referred to the decision in the case of State of Bombay v. Veer Kumar - AIR 1952 SC 335, in which it was observed that:
"So far as the word "food" is concerned, it can be used in wide as well as narrow sense and in my opinion, it depends upon the context and background. Even in popular sense when one asks, another whether you had your food, one means the composite .preparation which normally go to constitute a meal, curry, rice, cooked vegetable and so forth one does not usually think separately of the different preparations which enter into their making of various condiments and spices and vitamins, any more than one would think of separating in his mind the purely nutritive elements or what is eaten from their non nutritive elements."
4. The ld. SDR referred to the decision in the Bee Malt (I) P. Ltd. v. Government of India -1986 (23) E.L.T. 411 (Delhi) and mentioned that to claim classification under Tariff Item IB, the product should have the essence of food. He relied upon the decision in the case of C.C.E. v. EskayefLtd. -1990 (45) E.L.T. 490 (T) in which the Appellate Tribunal held the products/namely Bifuran and Neflin as P or P medicine as given in Item 14E. The Tribunal did not accept the argument of the assessee that those products did not have a Therapeutic effect having regard to the dosage prescribed in their literature for the products to counter its stress effects such as dehousing, debeakeing, deworming and extremes of weather. He also relied upon the decision in the case of C.C.E. v. Aaron Pharmaceuticals (P) Ltd. - 1994 (74) E.L.T. 241 (T) in which the product "Aprot" was held not to be falling under Item IB as it was not a prepared or preserved food; that the product was in the nature of a tonic normally taken as food supplement.
In rejoinder, the ld. Advocate for the appellants submitted that the said decision Was given by the Tribunal as the various decision, relied upon by him, were not brought to the notice of the Tribunal which also did not have the benefit of Supreme Court's decision in Sun Export Corporation (supra). He also mentioned that it is not correct to say that the appellants have not produced the certificate of Food and Drug Administration. The FDA under their letter dated 20-6-1986, has stated that the impugned product did not come under the purview of "Drugs" under the Drugs & Cosmetics Act. The ld. SDR contended that FDA has made this observation on scrutiny of the labels and cartons of the products only.
5. We have considered the submissions of both the sides. The Appellants have contended that the impugned product consists of Calcium Gluconate which repairs and builds bones and other tissues to participate in the contraction of heart and other muscles and carbohydrates are to provide energy for various activities. The vitamins were meant for the promotion of natural growth of children and nutrition of women during pregnancy. We also observe that the Food and Drugs Administration, State of Maharashtra, has certified that the product does not come tinder the purview of "Drugs" under the Drugs and Cosmetics Act. The Revenue has not adduced any expert opinion to controvert the certificate given by the FDA. The Dy. Chief Chemist has not stated in his Test Report categorically that the impugned product is a P or P Medicine. He has only mentioned that calcium gluconate and vitamins have therapeutic properties and the form and nature of the product indicates that it is to be taken as a tonic. The Appellate Tribunal in a similar situation in the case of C.C.E. v. Li-Taka Pharmaceuticals Ltd. - Final Order No. 735/91-C has held as under:
"...Are these factors sufficient to reverse the lower authorities findings that the item is food supplement? It is well settled that the onus to prove classification is on the Revenue. It is also well settled that the Trade parlance and commercial understanding of a product is a pre-requisite for a classification of a item, in the absence of any definition in the Tajriff item. The Revenue in this case has not placed any evidence in support of the contention that the product in question is a P & P medicine and that it is marketed as a drug and not as a food supplement. On the other hand, the assessee has placed before the Revenue the evidence of the product not being considered as a drug by the drug authorities... about the fact that it is considered as a food and regularized by the Municipal authorities by grant of licence. The Trade notice and the Ministry's letter cannot be lost sight of as a piece of evidence with regard to the manner in which the Government has understood the product also. The CCN notes and HSN Notes clearly indicate that vitamin syrups are food supplements and not drugs. The ruling of the M.P. High Court cited before us clearly indicates that for considering a product as a drug, the licence granted by the Drug Controller is an indicative feature. This Bench has also considered a similar product as a food Supplement under TI-1E of GET."
6. We are in agreement with the decision which was based on the judgment of the Madhya Pradesh High Court in the case of Ramesh Chemical Industries v. U.O.I., and Appellate Tribunal's decision in the case of Indo Pharma Pharmaceuticals Ltd. (supra). We also observe that in the case of another product of the Appellants themselves namely probofex, the Appellate Tribunal in the case reported in 1998 (100) E.L.T. 486 (Tribunal) has held that the product is classifiable under Item IB having regard to the totality of the evidence, a certificate issued by the Food and Drug Administration of Maharashtra and the precedent decisions. The ld. Counsel for the Appellant has rightly relied upon the decision of the Bombay High Court in the case of Glindia Ltd. v. U.O.I. - 1988 (36) E.L.T. 479 in which the High Court did not-accept the contention that the products must be considered as medicine because by feeding vitamins animals' ailments are prevented. The High Court observed that the preparation, namely, vitablend W.M. Forte and vioral "are used to supplement animal feed. Sometimes animal feed or poultry feed is already fortified with these vitamins when sold. Sometimes, however, farmers prefer to add the vitamins either to animal feed or poultry food separately. The products strengthen the nutritional .quality of animal feeds... In-a general sense every kind of nourishment strengthens the body against ailments. But such nourishment cannot be considered as a medicine or a drug." The Supreme Court confirmed the view taken in Glindia Ltd. case in their judgment in the case of Sun Export Corporation Ltd. (supra). In view of these facts and circumstances and following the ratio of the decisions, referred to above, we are of the view that the impugned product is classifiable under Tariff Item IB of the erstwhile Central Excise Tariff. Accordingly we allow the appeal.