Customs, Excise and Gold Tribunal - Delhi
Procter And Gamble India Ltd. vs Commissioner Of C. Ex. on 22 April, 2004
Equivalent citations: 2004(174)ELT409(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In these five appeals, filed by M/s. Procter & Gamble Ltd. and M/s. Richardson Hindustan Ltd., the common issues involved are whether the products namely Vicks Vaporub, Vicks Inhaler, Vicks Medicated Cough Drops, Vicks Herbal Throat Drops and Vicks Blue/Hunnies Drops are classifiable under sub-heading 3003.30 or 3003.19 of the Schedule to the Central Excise Tariff Act and whether the product namely Chatpat Churanets is classifiable under sub-heading 3003.30 or 1704.90 of the Tariff.
2.1 Shri V. Lakshmikumaran, learned Advocate, mentioned that the main raw materials used for the manufacture of Vicks Vaporub are:-
(i) Pudinah Ke Phool,
(ii) Karpoor,
(iii) Ajowan ke Phool,
(iv) Tarpin ka Tel,
(v) Jataephal Tel (Oil Nutmeg),
(vi) Nilgiri Tel,
(vii) Ointment Base.
2.2 He submitted that all these ingredients are mentioned in authoritative books on Ayurveda notified under Schedule to the Drugs and Cosmetics Act; that all these ingredients were also used in Vicks Vaporub manufactured in the Appellants Hyderabad unit; that the Commissioner (Appeals), after the matter was remanded to him by the Appellate Tribunal in the case of Richardson Hindustan Ltd. v. CCE, 1988 (35) E.L.T. 424 (T) for considering whether the Vicks Vaporub satisfies the two tests namely, (i) that the ingredients are mentioned in the Ayurvedic Text books, and (ii) whether the product is known as Ayurvedic medicament in common parlance, has held vide Order-in-Appeal No. 44/93 dated 12-3-93 that all these ingredients are mentioned in authoritative text books and Vicks Vaporub is classifiable under sub-heading 3003.30 of the Tariff; that the Appeal filed by the Revenue against the said Order has been dismissed by the Tribunal vide Final Order No. 25/97-C, dated 27-11-1996 [2001 (135) E.L.T. 1116 (T)] - that thus the classification of Vicks Vaporub has been finally settled.
2.3 The learned Advocate, further, submitted that for a product to be classified as Ayurvedic Medicament, it should satisfy the provisions of Section 3(a) or Section 3(h) of the Drugs and Cosmetics Act; that the Ayurvedic medicaments which are classifiable under Section 3(a) of the Drugs and Cosmetics Act would be the classical Ayurvedic medicaments which are manufactured in accordance with the formula prescribed in the authoritative books of Ayurvedic systems of medicine; that the Provisions of Section 3(h) would cover such Patent or Proprietary medicines which contain ingredients mentioned in Ayurvedic text books and which are manufactured in accordance with the formula of the manufacturer and not in accordance with the formula prescribed in the authoritative text books; that the Vicks Vaporub which is manufactured by them is a proprietary medicine manufactured according to the formulations of the Appellants; that since all the ingredients are mentioned in the Authoritative Text books, Vicks Vaporub would merit classification as Ayurvedic medicaments. He relied upon the decisions in the case of Himtaj Ayurvedic Udyog Kendra v. CCE, 2002 (139) E.L.T. 610 (LB) and CCE v. Sharma Chemical Works, 2003 (154) E.L.T. 328 (S.C.) and contended that Vicks Vaporub is thus classifiable under sub-heading 3003.30 which covers both Generic Ayurvedic Medicaments and Patented Ayurvedic Medicaments. He also mentioned that the Board vide Circular No. 196/30/96, dated 3-4-1996 has clarified that use of the non-Ayurvedic, non-therapeutic ingredients would not take away the product from the Generic Ayurvedic medicaments.
2.4 The learned Counsel referred to the twin tests laid down by the Tribunal for classifying a product as Ayurvedic medicament in Richardson Hindustan Ltd., supra, and mentioned that the appeal filed by Revenue has been dismissed by the Supreme Court [CCE, Hyderabad v. Richardson Hindustan Ltd., 1989 (42) E.L.T. A100 (S.C.)] holding that the Tribunal had, in the facts of the case, proceeded on a correct basis and that "the Order of the Tribunal does not call for any interference"; that the Board has accordingly issued the Circular No. 25/91, dated 31-10-1991 mentioning therein that "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 cosmetics) and these may accordingly, be kept in view while deciding similar cases." He also contended that the Tribunal has already confirmed in its earlier Order [1988 (35) E.L.T. 424] that the Vicks Vaporub is known as Ayurvedic medicine in common parlance.
3.1 The learned Advocate placed heavy reliance on the judgment of the Supreme Court in the case of Naturalle Health Products (P) Ltd. v. CCE, Hyderabad -2003 (158) E.L.T. 257 (S.C.) and mentioned that the Appellants therein manufacture ayurvedic drugs including medicated cough drops and vaporub throat drops on job work basis for Procter & Gamble India Ltd.; that the Supreme Court, after considering decisions of the Court and the Larger Bench of the Tribunal has held that "it is clear that a patent Ayurvedic medicament could be one where all the ingredients find mention in the authoritative text books on Ayurveda, though the formula for preparation of the medicament is not in accordance with the formula given in those text books...... Even if it is a patented medicine in U.S.A., it does not cease to be an exclusively Ayurvedic medicine if it has the characteristics of such medicine." He thus contended that the fact that the products are sold aboard as allopathic medicament is not relevant to determine the classification inasmuch the impugned product manufactured and sold in India contains only ingredients which are mentioned in Ayurvedic Text books. He mentioned that the Supreme Court observed that the following clear propositions and findings emerge:-
"(a) That the words 'Ayurvedic Medicine' not having been defined in the Central Excises and Salt Act, 1944 or the Central Excise Tariff Act, 1985, the common parlance test would have to be resorted to find out whether a medicine is treated as an Ayurvedic medicine by the public.
(b) That it is necessary that the ingredients of Ayurvedic Medicine should be mentioned in authoritative books on Ayurvedic Medicines."
3.2 The learned Advocate also mentioned that the Supreme Court has further held that "the essential character of the medicine and the primary function of the medicine is derived from, the active ingredients contained therein and it has certainly a bearing on the determination of classification under the Central Excise Act. As held in Amrutanjan case, the mere fact that the ingredients are purified or added with some preservatives does not really alter their character."
4. The learned Counsel submitted that the judgment in the case of Naturalle Health Products would squarely apply to decide the classification of the Vicks Medicated Cough Drops (all flavours) Vicks Herbal Throat Drops, Vicks Blue Drops and Vicks Hunnies Drops; that the said judgment would also apply in respect of Vicks Inhaler; that the Collector (Appeals) has classified Vicks Inhaler under sub-heading 3003.10 on the ground that the product contains the oil of Sassafras and oil of Siberain Pine needle which are not mentioned in the authoritative text books; that the active ingredients used in Vicks Inhaler are Pudinah Ke Phool, Karpoor and Wintergreen Tel which are mentioned in authoritative text books on Ayurveda; that the non-active ingredients used in the nature of fillers or carriers are Siberian Pine Needle oil and Sassafras oil; that there is no requirement that non-active ingredients should also be mentioned in text books. He referred to Board's Circular No. 196/30/96-CX, dated 3-4-1996 in support of his contention. He also mentioned that Wintergreen Tel is also used in Amrutanjan Pain Balm which has been held to be Ayurvedic medicament by the Supreme Court in Amrutanjan Ltd. v. CCE -1995 (77) E.L.T. 500 (S.C.).
5. Coming to product "Chatpat Churanets", the learned Advocate submitted that the Collector, under Order-in-Original No. 57/93, dated 27-7-1993 has classified it under sub-heading 1704.90 of the Tariff; that all the ingredients contained in Chatpat Churanets are mentioned in authoritative text books and the product is known as an ayurvedic medicament in common parlance; that similar products manufactured by others have been classified as ayurvedic medicament in the following cases :-
(i) Panama Chemicals v. UOI - 1992 (62) E.L.T. 241 (Bom.);
(ii) Dabur India Ltd. v. CCE - 1994 (71) E.L.T. 1069;
(iii) CCE v. Dabur India Ltd. - 2002 (144) E.L.T. 365 and 2002 (146) E.L.T. A311 (S.C.)
6. Countering the arguments, Mrs. Charul Baranwal, learned SDR, mentioned that the Tribunal, while remanding the matter in the case of Richardson Hindustan Ltd., supra, has directed the Asstt. Collector to "examine whether in the common parlance Vicks Inhaler is known as an Ayurvedic Medicine and whether all the ingredients of this product are mentioned in the authoritative book(s) on Ayurvedic medicine; that this decision has been affirmed by the Supreme Court by Order dated 10-1-1989 in Civil Appeal No. 2127 of 1989 [1989 (42) E.L.T. A100 (S.C.)] filed by the Collector, Central Excise and as such has attained the finality; that the Collector (Appeals) has given a clear and specific finding in Order-in-Appeal No. 44193 dated 12-3-1993 (impugned Order-in-Appeal No. E/865/93-C); that no certificates from Vaidyas and doctors who are very much part of the common parlance test has been produced and the Appellants have not passed the common parlance test; that the Collector (Appeals) has also given a specific finding that "Vicks Inhaler" clearly fails the "Ingredients test" as all the ingredients are not mentioned in the authoritative text books on Ayurveda and "no distinction case made in terms of active ingredients and non-active ingredients". The learned SDR submitted that the Tribunal had not remanded the matter in respect of active ingredients only; that all ingredients contained in Vicks Inhaler are required to be mentioned in the authoritative text books on ayurveda; that thus in terms of Remand Order, Vicks Inhaler is not an Ayurvedic Medicament as all the ingredients contained therein are not mentioned in the authoritative text books. She relied on the following decisions in support of her contention that the Adjudicating Authority, while deciding any matter on remand from the higher appellate forum has to follow the directions contained in Remand Order :-
(i) Scientific Instruments Co. Ltd. v. C.C. - 1980 (6) E.L.T. 89 (Cal.);
(ii) Geep Industrial Syndicate Ltd. v. Asstt. Collector - 1990 (48) E.L.T. 3 (All.);
(iii) Smit International Singapore P. Ltd. v. C.C. (Port), Kolkata - 2003 (154) E.L.T. 139 (T)
7. In reply the learned Advocate mentioned that once it has been decided that a particular product is medicament, only issue remains to be decided is whether the medicine is Ayurvedic medicine or Allopathic Medicine and as such common parlance test does not play any significant role inasmuch as it is settled that the product in question is a medicament; that 'Sarla Tel' used in the manufacture of Vicks Inhaler is a preservative only and it finds mention in Bhavprakash Nightantu and Dhanvants Nighantu.
8. We have considered the submissions of both the sides. The main dispute in all these appeals is whether the products manufactured by them are Ayurvedic Medicine. It has been held by the Larger Bench of the Tribunal in the case of Himtaj Ayurvedic Kendra (supra) that differentiation has been made between Ayurvedic Medicine manufactured in accordance with formula prescribed in the authoritative text books specified in the first Schedule to the Drugs and Cosmetics Act and Ayurvedic Medicament manufactured otherwise and that the product is Ayurvedic Medicine even though it is not manufactured in accordance with the formula prescribed in text books. The Supreme Court has affirmed the said decision as reported in 2003 (154) E.L.T. 323 (S.C.). The Supreme Court also in the case of CCE, Calcutta v. Sharma Chemical Works, 2003 (154) E.L.T. 328 (S.C.) has held that if all the ingredients used in the product are those which are set out in ayurvedic test books it will be ayurvedic medicament even though the formula may not be as per text books. Recently the Supreme Court in the case of Naturalle Health Products v. CCE (supra) has held that "Patent Ayurvedic medicament could be one where all the ingredients found mention in the authoritative text book of ayurveda though the formula for preparation of the medicaments is not in accordance with the formula given in those text books. Applying the ratio of all these decisions as well as the tests laid down in these decisions Vicks Vaporub, Vicks Medicated Cough Drops, Vicks Herbal Throat Drop, Vicks Blue/Hunnies Drops and classifiable under sub-heading 3003.30 of the Tariff as Ayurvedic Medicament as all the ingredients are mentioned in text books on Ayurveda. We also observe that the products in consideration in Naturalle Health Products case were Vicks medicated cough drops and Vicks Vaporub throat drops. Accordingly the appeals in respect of these products are allowed.
9. In respect of Vicks Inhaler, it has been contended by the learned SDR that all the ingredients contained therein are not mentioned in the authoritative text books on Ayurveda and as such it is not ayurvedic medicament. On the other hand the learned Advocate has submitted that the ingredients which are not mentioned in authoritative text books are not active ingredients and that will not take the character of ayurvedic medicament away from Vicks Inhaler. Reliance has been placed on the Board's Circular No. 196/30/96-CX, dated 3-4-1996 wherein it has been clarified by the Board that ingredient added, other than those prescribed in the authoritative text books, should not have any therapeutic value and the medicine remains ayurvedic medicine even if they contain preservative, inner excipiento, binding agents, etc. In view of this the use of non-active ingredients will not make Vicks Inhaler an allopathic medicine classifiable under Subheading 3003.10 of the Tariff. In view of this finding there is also no force in the submissions of the learned SDR that matter was remanded by the Tribunal to the Adjudicating; Authority to examine whether all the ingredients contained in Vicks Inhaler are mentioned in the Ayurvedic text books. The expression 'all ingradients' would apply to 'active ingredients' and not to 'non-active ingredients'. Accordingly we hold that Vicks Inhaler is also an ayurvedic medicament and allow the appeal on this count also.
10. Appeal No. E/2740/93 relates to the classification of the product namely 'Chatpat Churanets'. A perusal of impugned Order No. 57/93 passed by Commissioner Central Excise, reveals that the Adjudicating Authority has not given any specific finding on classification of the product in question as the Adjudicating Authority had simply referred to the Order dated 8-11-1991 passed by the Asstt. Collector classifying the impugned product under Heading 1704.90 of the Tariff. We, therefore, remand this matter to the jurisdictional Adjudicating Authority with the direction to decide the classification of 'Chatpat Churanets' in accordance with law and after the decision by the Commissioner Appeals against Order-in-Original dated 8-1-1991passed by the Asstt. Collector.
11. Appeal No. E/495/88-C relates to refund of duty paid by the Appellants. This appeal is also remanded to the jurisdictional Adjudicating Authority to be decided afresh as per the Order passed by us in the present appeal regarding classification of Vicks Vaporub and Vicks Inhaler.
All the appeals are disposed of in the above terms.