Customs, Excise and Gold Tribunal - Delhi
Bhoruka Industries (P) Ltd. vs Collector Of Central Excise on 30 September, 1991
Equivalent citations: 1992(59)ELT652(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal is directed against the order-in-original No. 3/86 dt. 25-4-1986 passed by the Collector of Central Excise, Madras.
2. By this order the learned Collector has held that the Product 'Ayur Shakti' and 'Santalin-D' is to be classified under T1 14E of the First Schedule of Central Excise Tariff as it is not exclusively ayurvedic medicine and ayurvedic drug.
3. The facts of the case are that Central Excise officers of Preventive Unit Madras on certain enquiries and on the basis of information furnished by the manufacturing chemists of the Company and statement of Shri C.R. Nataraj, Marketing Adviser of the Company and Sh. Rama Krishna Agarwal, partner of the Company, it was concluded that these two products manufactured by the appellant, attract duty under TI 14E of the First Schedule of Central Excise Tariff as the said products were not made from the exclusively ingredients of Ayurveda and are also not exclusively Ayurvedic. Hence, a show cause notice dt. 18-7-1985 was issued to show cause as to why penalty under Rule 173Q of Central Excise Rules, 1944 should not be imposed and also as to why a duty of Rs. 1,05,443.39 due on the said products should not be demanded for the period 1-4-1983 to 31-1-1984 under Rule 9(2) of Central Excise Rules, 1944 read with proviso to Section 11A of the Act. The show cause notice gave the ingredients of the said two products namely, Ayur Shakti (Pain Balm) and Santalin-D (Skin ointment) as below:
I. For Ayur Shakti:-
1. Medicated oil (prepared by Dry Ginger, Paper Sanbirishi)
2. Petroleum Jelly
3. Pudina ka Phul
4. Ajwan ka Phul
5. Karpur I.P.
6. Karpuka Thel
7. Karpur G.F.
8. Gandhapuram Thaila
9. Niligiri Thaila
10. Terpinka Thel
11. Twak Thaila
12. Gajeputka Thel
13. Paraffin Wax
14. Bee Wax
15. Lemon Grass oil
16. Lavanga Thaila
17. Colour Yellow.
II. Santalin-D (Skin ointment):-
1. Emulsifying Wax-B
2. Emulsifying Wax-D
3. Preservative (Nepagin)
4. Emulsifying Wax-I
5. Rakta Chandam (Tanka Ashara)
6. Krishna Musk Cedar Wood Oil} Murk Amber } D Perfume Methy Salicitate }
7. Lavolin Anhydride
8. Gum Acacia
9. Aqua Sheeba
10. Emulsifying Wax
11. Madhurirakhthan (Glycerine)
12. Plashkshara
13. Sorbital
14. Extract Preservative (Parachlore Metacrestal).
4. It was alleged that in view of the synthetic ingredients also being used, it appeared that the said products did not fall under the category of Ayurvedic but under the category of P. or P. medicine falling under T.I. 14E of Central Excise as the said products were not made from the exclusively ingredients of Ayurvedic and/or not exclusive Ayurvedic.
5. It was further alleged that the assessee had contravened the provisions of Section 6 read with Rule 174 of Central Excises and Salt Act, 1944, Rule 173B, 173C, Rule 53 read with 173G(4), 52A, Rule 9(1) read with Rule 173F and 22b of Central Excise Rules, 1944 inasmuch as that they had cleared the two products without obtaining licence or filing declarations, filing classification list, price list and not maintaining records and without paying duty on goods which act amounted to suppression of facts and hence the Department was entitled to invoke extended period of five years under proviso to Section 11A of the Act.
6. The applicant filed their reply on 3-9-1985 produced a copy of Test memo No. 2/83 dt. 26-9-1983 by which the samples drawn in respect of Ayur Shakti had been produced to Chemical Examiner to find out the ingredients of the product and to confirm whether the ingredients are of Ayurvedic nature. By letter dt. 9-9-1985, the department informed them that Chemical Examiner's Test Report cannot be supplied to them as the department was not relying on the same. However, the department sent a copy of the letter dt. 2-2-1984 of Madras Petro Chemical Ltd. confirming supply of Petroleum-jelly (IP grade) to them. Again, they wrote to department on 3-10-1985 insisting on the copy of Chemical Examiner's Test Report. The deptt. by their letter dt. 15-10-1985 informed them that Chemical Examiner had expressed his inability to conform the various ingredients present in the products in question by Chemical test. They were asked to file their reply within the stipulated time. Hence, the appellant submitted their detailed reply on 15-11-1985. In this reply they consented that department was aware of the notification of these products as their factory had been visited by department officials and samples had been drawn on 26-9-1983, under Test Memo No. 2/83. There was also correspondence in this regard. They contended that department had not discharged its burden of proof regarding classification of product. They contended that they had obtained Drug licence No. 305 dt. 20-10-1982 for their products as Ayurvedic medicines. The Head of Deptt. of Ayurvedic, Arin Gas Anna Hospital of ingredients medicine had also approved their formula. They relied on 'The Ayurvedic Formulary of India' Part-I-First Edition published by Govt. of India, Ministry of Health and Family Planning, Deptt. of Health. They contended that all the active ingredients figured in Ayurvedic treatises and it was commonly understood as Ayurvedic medicines. They filed certificates from several Ayurvedic practitioners, who have issued certificates in these lines.
"I have examined the two medicines AYUR SHAKTI and SANTALIN-D' and from the ingredients and formula of their preparation, I am of the opinion that the two are purely Ayurvedic medicines.
Dr. K.P. Sree Kumari Amma".
Similarly worded certificates have been issued by Proprietor of 'The Malabar Sidha Vaidya Ashram', Dr. M.G. Radhamani of Panchakarma Research Centre; Dr. C.S. Sastry, Dr. Cl. Hari Kumar, Dr. A. Prem Kumar, Dr. S.D. Kashavan. They have relied on the Indian Materia Medica Vol. I. II by Dr. K.M. Nadkarni; 'The Ayurveda Series Dravya Guna - Vijnana Volume II Vegetable Drugs by Prof. P.V. Sharma; 'Bhava Prakasa by Sri Bhava Misra; The Ayurvedic Formulary of India.
7. The learned Additional Collector rejected their contention and has held that in order to qualify as an Ayurvedic Drug, the preparation should satisfy the definition given in Section 3(a) of Drugs and Cosmetics Act, 1940 which had inter alia mentioned that the Ayurvedic Drug be processed and manufactured exclusively in accordance with the formulae, described in the authoritative books of Ayurvedic systems of medicines specified in the First Schedule. He held that the ingredients processed and contained in the preparation should be as per the formulae of Ayurvedic systems (i.e.) as per the authoritative books specified in the First Schedule of Drugs and Cosmetics Act, 1940.
8. He held that on verification of the list of Publications mentioned under the First Schedule of Section 3(a) of the Drugs and Cosmetics Act, 1940, he found only one book of the list furnished by the party, namely Bhava Prakasa at Sl. No. 11 of the list as authoritative book on Ayurveda. He held that in reference to this book also the ingredients like Karpur, Terpinka Thel, Ajwan ke Phul, Twak Thaila, Lavanga find a place in the list of ingredients in respect of 'Ayur Shakti' and in respect of 'Santalin-D' only one ingredient was noted in that book which is Gum Acacia. He held that this position clearly shows that all the other ingredients in respect of Ayur Shakti are not aligned to Ayurvedic systems and hence not exclusively Ayurvedic Drug. He held that the product Ayur Shakti is a Patent or Proprietary medicine and as it is not exclusively Ayurvedic preparation, it attracted Central Excise Duty under TI 14E. He further found that ingredients paraffin wax, Karpur IP, Terpinka Thel, Pudinaka Tel, Ajawanka Tel, Niligiri Tel and Gajeputka Tel BPC 1975 IP 2nd; Campur IP Crystals, were all manufactured out of synthetic substances and did not find a place in Ayurvedic medicines as they were of IP standards. The base ingredients Petroleum Jelly, emulsifying wax were also synthetic ingredients and these ingredients did not find a place in the authoritative test book on Ayurveda i.e. Bhava Prakasa.
9. In respect of 'Santalin-D' synthetic ingredients like sorbitol, emulsifying wax, Lanolin anhydride; Preservative (Nepagin) and extract preservative had been used and hence the product could not be ayurvedic drug.
10. As regards the certificates relied by the Party he held that none of them referred to any of the authoritative books on ayurveda mentioned in Schedule I to Section 3(a) of Drugs and Cosmetics Act, 1940 and hence he did not place much reliance on these certificates.
11. The learned Collector held that there was no suppression in the case and hence extended period of proviso to Section 11A could not be extended and penalty was also not imposable.
12. We have heard Shri B.B. Gujral, learned advocate for the appellant and Shri L.N. Murthy, learned JDR for the department.
13. Shri Gujral, learned Advocate submitted that the products in question had been manufactured exclusively from ingredients as prescribed in the authentic books on Ayurveda. He contended that merely because some ingredients conformed to pharmacopoeial standards but their use in Ayurvedic preparation does not render the products in question non-ayurvedic. He contended that there was no allegation in so far as 'Ayur Shakti' is concerned regarding the same having not been manufactured as per the formula. Although, wax and Petroleum jelly being synthetic in nature was used in this product but that by itself did not make the product non-ayurvedic. In 'Santalin-D' there was use of 'sorbital' a chemical but that was used only to remove the bad odour of the drugs used and it was not an active ingredient. However, he could not clarify the extent of percentage and/or proportion of the ingredients used as the same had not been indicated in the order or in appeal memo. He contended that this Tribunal in Shree Baidyanath Ayurved Bhavan Ltd. v. CCE as reported in 1985 (22) E.L.T. 844 had clearly not accepted the proposition of revenue that the ayurvedic products should be prepared strictly according to the formula laid down in authentic books specified in the First Schedule to the Drugs & Cosmetics Act, 1940 and also as per the definition laid down in Section 3(a) of this Act. Even the Central Board of Excise and Customs had by their circular F. No. 7/26/61-CX.VI dt. 23-6-1961 had clarified that their use of IP grade and B.P. grade camphor or sulphur in ayurvedic preparations would not make the products non-ayurvedic. It is his contention that this view of Tribunal was again reiterated in M/s. Richardson Hindustan Ltd. v. CCE as reported in 1988 (35) E.L.T. 424. But, however, the Tribunal in Amrutanjan Ltd. v. CCE as reported in 1991 (32) ECR 538 had laid down that the products should confirm to the definition as per Section 3(a) of the said Act as per formulae described in the authoritative books of Ayurvedic system of medicine. This view expressed in Amrutanjan's case following Bombay High Court decision tendered in Leukoplast (India) Ltd. v. State of Goa reported in 1988 (36) E.L.T. 369 was contrary to earlier view given by Tribunal and hence this Bench should now clarify that the view expressed in Shri Baidyanath's case and Richardson Hindustan's case should be followed. He contended that in Amrutanjan's case the party had deliberately labelled ayurvedic names to Synthetic ingredients, while in this case no such thing had happened. The ingredients were similar to the ones used in Shri Baidyanath's and Richardson's case and as it was made clear in those cases that mere use of Synthetic ingredients would not make the products non-ayurvedic, therefore, the learned Collector had gone wrong in relying on the definition of Section 3(a) of Drugs and Cosmetics Act. He contended that this Tribunal even in Warner Hindustan v. CCE reported in 1989 (42) E.L.T. 33 had also strictly followed previous rulings of this Tribunal referred supra. He contended that the learned Additional Collector had gone wrong in rejecting the certificates of ayurvedic practitioners. In trade the products had been accepted as ayurvedic ones and hence the appellants' contention should be accepted. He further pointed out that department had not supplied the Test results and thereby the burden of classification had not been discharged by the Revenue.
14. Shri L.N. Murthy, learned JDR arguing for Revenue contended that the principles laid down in Amrutanjan's case squarely apply to the facts of this case. The ingredients were same. There were clear uses of synthetic ingredients in both the products. The Ayurvedic Formulary of India relied by the appellant, also did not authorise the use of such ingredients. The formulary had clearly stated in its 'Preface', 'Introductory Chapter' and in the 'legal notice chapter' that the ayurvedic products should be prepared strictly as per formula given in the authoritative text books or as per the formulas indicated therein. The appellants had clearly not prepared it as per the authoritative text book relied by them. The learned Additional Collector on examining the authoritative book namely 'Bhava Prakasa' relied by the party, had clearly held that the synthetic ingredients had not been prescribed therein and that the product had not been made exclusively from the formula given in that Book. Therefore, the product not being exclusively ayurvedic could not qualify for the classification as such the learned Collector had clearly held to be 'P. or P. medicine' classifiable under TI 14E of Central Excise Tariff. He pointed out that the certificates were all similarly worded and it did not disclose that the ingredients used were all exclusively ayurvedic in nature. The certificates are not reliable piece of evidence. Both products contained synthetic ingredients and their preparations had deliberately been withheld by Party. He pointed out that in another case of Sree Baidyanath Ayurved Bhavan v. CCE as reported in 1985 (22) E.L.T. 175, the Tribunal had held 'Dant manjan' as non-ayurvedic product. The Tribunal had not rejected the reliance on the definition of Section 3(a) of Drugs and Cosmetic Act. He contended that the Tribunal was bound by ruling of Bombay High Court as laid down in Leukoplast case. The Tribunal rightly had followed this ruling in M/s Amrutanjan's case and hence the learned advocate's contention that the Tribunal had deviated from the earlier rulings was not at all correct. He pointed out that both the earlier rulings referred to the Bench had clearly held that use of few pharmacopoeial items by itself will not make the preparation non-ayurvedic, provided the use of these ingredients were recognised in authentic treatises as ayurveda. The Tribunal in earlier rulings did not have the benefit to look into 'The Ayurvedic Formulary of India' which had clearly spelled out the preparations to be as per the formula and authoritative texts. This was examined in Amrutanjan's case and hence the Tribunal had correctly classified and laid the proposition therein. The Tribunal even in Warner Hindustan's case had held that the preparation should satisfy the test of having been prepared exclusively ayurvedic.
15. We have carefully examined the contentions raised by both the sides and also perused the records and the rulings relied by both the sides.
16. The question that arises for our consideration is as to whether the products in question are exclusively ayurvedic or not and whether it justifies for classification under TI 14E of First Schedule of Central Excise Tariff as 'P. or P. Medicine'.
17. The issue in question is no longer res integra. It has by now been clearly clarified and spelt out in the rulings referred to supra. But the Counsel had raised a point that in Amrutanjan's case, the Tribunal had deviated from the earlier rulings and the matter required to be spelt out clearly and it required reconsideration. It was his main case that the grant of licence under Drugs and Cosmetics Act is sufficient to hold the products to be ayurvedic and again he put the proposition that the drugs need not be manufactured exclusively as per formula or authoritative text as per Section 3(a) of the said Act, as the said proposition had been rejected in Sree Baidynath Ayurved Bhavan's case reported in 1985 (22) E.L.T. 844, It was his further case that mere use of synthetic ingredients did not make the product non-ayurvedic and such use had been accepted both by Board's circular and also in earlier referred rulings of Tribunal to Amrutanjan's case. Therefore, the Tribunal ought to have clearly followed the law laid down in earlier rulings.
18. As the learned advocate has raised this issue it needed to be examined and hence the facts of this case and proposition raised have been set out in great length.
19. The Tribunal in Shree Baidyanath's cases both in 1985 (22) E.L.T. 844 and 1985 (22) E.L.T. 175, Richardson Hindustan's case and in Warner Hindustan's case did not have the benefit of 'Ayurvedic Formulary of India'. Further, it could be clearly stated that in all the earlier rulings, the Tribunal did not accept the proposition that use of synthetic ingredients in Ayurvedic formulation would still make the preparation ayurvedic.
20. In Shree Baidyanath Ayurved's case reported in 1985 (22) E.L.T. 844 at page 116 to 119 has clearly stated the view as under:
"Regarding the Surmas manufactured by Shree Baidyanath, it is clear from the literature produced by Shree Baidyanath that they are used for treatment of eye troubles. In commercial parlance they are also medicines and also used by the public as medicines. This fact has not been disputed by the Sr. Departmental Representative. It has been laid down by the Hon'ble Supreme Court in the case of Taj Mahal Hotel (Supra), where the definition of a word has not been given, it must be construed in its popular sense, if it is a word of every day use. The definition of word 'Ayurvedic medicines' given in Section 3(a) of the Drugs and Cosmetics Act, 1940 cannot be made use of for the purpose of classifying a product under Central Excise Tariff. Drugs and Cosmetics Act, 1940 is a distinct and separate Act enacted by the Parliament and no provision of it has been incorporated or referred to in the Central Excises and Salt Act, 1944 or Central Excise Tariff which is also a separate enactment.
Regarding her second contention, no doubt, it is true that Menthol, citric acid, camphor, iron, Alum, Borax, Potassium nitrate, Ammonium chloride are pharmacopoeial items but their use in Ayurvedic preparations does not render such preparations non-ayurvedic provided the use of these ingredients is recognised in authentic treatises on Ayurveda.
Mrs. Zutshi, SDR fairly conceded to this proposition in view of the circulars of the Central Board of Customs and Excise issued in this behalf from time to time. Board's circular letter No. 8 (Medicines) 62 conveyed vide letter F. No. 7/26/61-CX.VI dated 23-6-1961 allowed the use of iron, Sulphur, Mercury Camphor in Ayurvedic preparations, though they are of B.P. grade. The departmental representative has not disputed this fact that these pharmacopoeial items have been used in a very small quantity and that they find mention in the authoritative treatises on Ayurveda and are also established as such by uses and traditions.
Under these circumstances, we confirm the findings of the Appellate Collector, Central Excise, Calcutta that the products namely, Himalaya Surma, Moti Surma, Netramrita Surma, Agnimukh Churan, Atul Shaktidata, Gaisol Pachak, Kasbati, Namak Sulemani, Pachak and Sodhi Harre, Swet Parpati as mentioned in show cause notice C. No. V(14F)(3) Val-27/76/5473 dated 10-3-1980 are classifiable under Tariff Item 14-E/-(CET) but excluded being exclusively Ayurvedic medicines."
21. In Richardson Hindustan Ltd. at para 11 at page 424 it is stated as follows:
"Shri Chakraborty has argued that the two products in question are not exclusively Ayurvedic. They are not prepared strictly according to the formula laid down in authentic books of Ayurvedic medicines specified in the First Schedule to the Drugs and Cosmetics Act, 1940. We have already observed that the definition laid down in Section 3(a) of the Drugs and Cosmetics Act cannot be followed for classification of goods for central excise duty. Similar argument was advanced on behalf of the Revenue in the case of Shree Baidyanath Ayurved Bhavan Limited in respect of their products Himalaya Surma, Moti Surma, Netramrita Surma, Agnimukh Churan, Atul Shaktidata, Gasol Pachak, Kasbati, Namak Sulemani, Pachakbati and Sodhi Harre. It was argued for the Department in that case that those products had not been manufactured as per formula laid down in any of the specified books on Ayurveda mentioned in the First Schedule to the Drugs and Cosmetics Act, 1940 and that all those products contained some Allopathic ingredients and as such, they could not be called exclusively Ayurvedic medicines. In the said case, 'Menthol' and 'citric acid' were used in Gasol Pachak, Namak Sulemani and Agnimukh Churan, 'Borax' was used in Kashbati, Pachakbati and Sodhi Harre, Citric Acid was used in Pachakbati and Sodhi Harre. Steel was used in Atul Shaktidata. Swet Parpati contained potassium nitrate, Alum and Ammonium chloride. In the said case, the Tribunal dismissed the first argument of the learned Departmental Representative on the ground that definition of Ayurvedic medicine given in Section 3(a) of the Drugs and Cosmetics Act could not be followed for deciding the classification for central excise duty. Regarding the second contention of the Departmental Representative it was held by the Tribunal that Menthol, Citric Acid, Camphor, Iron, Alum, Borax Potassium nitrate, Ammonium Chloride were, no doubt pharmacopoeial items, but their use in Ayurvedic preparations did not render such preparations non-ayurvedic provided the use of these ingredients is recognised in authentic treatises on Ayurveda. Based on this principle the Tribunal held that all those products qualified for categorisation as Ayurvedic medicines and the exemption from duty was admissible in respect of those medicines. We do not find any justifiable reasons for not following this principle. The ingredients of Vicks Vaporub are Pudine ke phool, Karpur, Ajwan ke phool, sarala drava, Nilgiri tel, Jatiphal tel and ointment base (Paraffin). The ingredients of Vicks Inhaler are Pudina ke phool, Karpur, Banafshah and Sarala Drava. Learned Advocate has stated that all the ingredients of Vicks Vaporub and Vicks Inhaler are mentioned in authoritative books on Ayurvedic medicines. The Collector (Appeals) has not examined the case from this angle although extracts from such books and other materials are stated to have been submitted to him."
22. In Shree Baidyanath Ayurved Bhavan Ltd. reported in 1985 (22) E.L.T. 175 (Tribunal) in paras 15 to 19, it is stated as follows:
"The crucial point for decision is whether this product 'Surma' is exclusive Ayurvedic medicine or not. After discussing the entire case law on the subject, taking into account the ingredients contained in the 'Surmas' and the Board's circular letter No. 8(Med.) 162, dated 26th June, 1961 it was held that Surmas are exclusively Ayurvedic drug though pharmacopoeial items have been used in a very small quantity in the manufacture of Surmas.
Following our earlier decision in Appeal Nos. 248/82-C and 106/82-C (Order No. 438 and 439/85-C) we hold that the 'Surmas' in dispute manufactured by the appellants are classifiable under Item 14E (CET) and are excluded being exclusively Ayurvedic drug. We set aside the order of the Collector of Central Excise, Nagpur regarding this product 'Surma'.
Regarding 'Kajal' there is no material on record to show and prove that this product is exclusively Ayurvedic drug. 'Kajal' as is understood in common parlance is used for beautification purposes as it gives lustre to the eyes. 'Kajals' are not 'Surmas' and that is why they have been named separately. In the absence of any material available on record, we are not in a position to agree with the learned consultant for the appellants in holding that 'Kajals' are patent or proprietary medicines falling under Item 14E (CET) but excluded being exclusively Ayurvedic medicine. Neither in common parlance nor as per the definitions given in the Drugs and Cosmetics Act, 1940, 'Kajal' can be termed as a drug or medicine.
Admittedly, this product 'Kajal' has not been manufactured as per the formula laid down in any of the specified books of Ayurveda as mentioned in the First Schedule of the Drugs and Cosmetics Act, 1940 and as such it cannot be treated as Ayurvedic medicine as defined in Section 3(a) of the Drugs and Cosmetics Act, 1940. The definition of the word 'drug' as given in Section 3(h) of the Drugs and Cosmetics Act also does not bring this product within the purview of Ayurvedic drug or medicine. Nobody has come forward to say that it is being used as a medicine for the remedy of eye trouble.
A medicine/drug as known in common parlance is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. Here there is nothing on record to show and prove that 'Kajal' manufactured by the appellants in common parlance is known as a substance or preparation used in the treatment of diseases and has a curative power so as to make it effective for treatment of ailments.
Under these circumstances, we find no force in the contention of the learned consultant for the appellants that the 'Kajal' manufactured by the appellants is a patent or proprietary medicine falling under Tariff Item 14E (CET) and excluded being exclusively Ayurvedic drug."
23. In Warner Hindustan's case in paras 22 to 25 at pages 40 and 41 of the report, it is stated as follows:
"We observe that for any formulation to be considered as medicine, the same should be either recognised so in a standard Ayurvedic work or should be so proved by clinical trials or should be recognised so by an authority like DGHS. We observe that both sides have produced literature showing that in the standard recognised books of Ayurveda various formulations containing Pudina and Euclyptus oil for various purposes have been mentioned. The appellants' case for considering the goods as medicine is only based on one fact that the active ingredients, namely, Pudina which in fact is menthol and Euclyptus oil, are 'Ayurvedic' in nature and these have medicinal properties. The question for consideration is can the mere presence of some quantity of medicinally active ingredients irrespective of the quantity make a particular formulation a medicine.
We observe as it is pudina and euclyptus oil have some medicinal properties for certain purposes but the same have to be presented in such quantities as can produce a desired medicinal effect for treating specified conditions as seen from the formulations set out in the extracts of standard books produced before us. As it is, there is no claim made by the respondents that these tablets are for treating any specific condition of the throat or alleviating the suffering caused by certain infections of the throat or are prophylactic in nature. Their claim is only that the tablets are for creating cooling, soothing effect in the throat and it also refreshes the mouth. The medicines are not prescribed for these effects claimed to be produced by them. Even water when taken produces cooling and soothing effect on the throat most of the time and even mere rinsing of the mouth creates the refreshing effect. The claim made by the respondents does not show that the tablets have been formulated as a medicine for treating any specified condition or alleviation of any suffering caused by some pathogenic condition of the throat. No evidence has been produced before us to show that the quantity in which the the ingredients are present is such that these have certain medicinal effects as shown in the Ayurveda literature regarding Pudina, etc. All that can be said is that the tablets produce an aromatic effect and cooling effect in the mouth and the throat.
The appellant have claimed on the wrapper that the tablets contain Pudina which itself is not a correct declaration. What is used is menthol which can be an oil obtained from the Pudina leaves or of synthetic origin. This oil used is of I.P. grade. No literature has been produced before us regarding the euclyptus oil which has been described as Nilgiri Tailam. In any case no claim has been made before us nor any evidence produced that the euclyptus oil by itself or in combination with menthol in the quantities used in the tablets is for treating any condition of the throat.
We may observe that in case any product is marketed as medicine and is accepted as such then apart from the medicinal effect, it is supposed to have its dosage also prescribed. We find that no dosage has been prescribed for the medicine on the packings of the tablets nor any product literature has been prescribed for the medicine on the packings of the tablets nor any product literature has been produced before us in this regard. The appellants were specifically asked in case they were selling the product as medicine, whether they had any product literature in this regard. They could not produce any such literature. The appellants have not produced any evidence from any practising physician as to whether they have recommended Icemint Tablets as a medicine for any condition of the throat. They have not produced any evidence from the trade to show that these tablets have been marketed and accepted as medicine."
24. Even the Board's circular dated 23-6-1981 referred in para 16 in Amrutanjan's case has clearly stated that "use of ingredients of pharmacopoeial items like Camphor B.P. or Sulphur B.P. in Ayurvedic preparations, were the use of those ingredients is recognised in authentic treatises on ayurveda and is established by usage and tradition, does not render such preparations non-ayurvedic on that score alone (emphasis supplied).
25. Therefore, it is very clearly stated in earlier rulings that the use of synthetic I.P.; BP grade should be recognised by authentic treatises on ayurveda and it should be established by usage and tradition.
26. In Amrutanjan's case (supra) this is precisely what has been stated also in paras 26 to 32 and 35, 44, 45A of the said report. The burden of showing that the synthetic ingredients used in the preparation is recognised in authoritative ayurvedic treatise books and the product is exclusively ayurvedic to claim exemption from duty is on the manufacturer. The initial burden has been discharged by the department by pointing out the synthetic ingredients of IP and BP grade and also by pointing out that it has not been recognised in authoritative text on ayurveda and the preparation is exclusively ayurvedic. It is for manufacturer who claims the exemption from duty to show that the said claim of department is wrong and that the product manufactured is exclusively ayurvedic in the sense that it has been manufactured as per (i) authoritative text; and/or (ii) as per the Ayurvedic Formulary of India; and/or (iii) that the use of synthetic ingredients has been recognised and established by usage and tradition. Such a burden has not been discharged in this case and the appellants have not shown that the products are exclusively ayurvedic. In the product 'Ayur Shakti' there is the use of synthetic ingredients like Paraffin wax of IP grade, Karpur DP IP grade, Terpentine Thel IP grade, Indinaka Thel IP grade, Nilgiri thails IP grade, Twak Thails IP grade, Remograin Oil IP grade, Petroleum Jelly IP grade, Lavanga Thaila IP grade, Gajapukta Thel BPC grade. The annexure to show cause notice has shown these ingredients of IP grade. The appellants had contended that only two ingredients like Paraffin wax and Petroleum Jelly were of IP grade and rest were all ayurvedic not IP grade but they did not place any evidence in this regard. They have contended that the department has not supplied the test results were not being relied. On the examination of Bills, vouchers, invoices and other materials examined; the department could say that the ingredients were synthetic in nature. There was some evidence available in this case. The burden had clearly shifted to the manufacturer to show that it were indeed ayurvedic ingredients not synthetic and that that formulation was exclusively ayurvedic. The manufacturer has not placed any cogent evidence. There is no ambiguity in the show cause notice and charges levelled by the department that it is for the manufacturer to have clearly demonstrated to the satisfaction of the department of the ingredients being exclusively ayurvedic which has not been discharged in this case.
27. The learned Additional Collector had examined the authoritative text 'Bhava Prakasa' relied by the manufacturer. He found that the ingredients like Karpoor, IP Terpinka Thel, Ajwayan ka Phool, Twak Thaila, Paraffin wax, Pudina ka Tel, Nilgiri Tel and Gejapulka Tel BPC 1975 in IP 2nd Edition, Camphor (Karpur IP) crystals were synthetic in nature. He found that Ayur Shakti contains certain ingredients which are not mentioned in the authoritative Text book on Ayurveda i.e. 'Bhava Prakasha' relied by the manufacturer. He also found in 'Santalin-D' synthetic chemicals like sorbitol, emulsifying wax, lanolin Anhydride, Preservative (Nepagin) were used. Shri Gujral, learned Advocate contended that these ingredients were only preservatives and not active ingredients. But he has failed to show and convince us that such ingredients are recognised in Ayurvedic licence and that such use will still make the product exclusively ayurvedic.
28. It is his contention that the preparation need not be as per formulae prescribed in authoritative text and as per Section 3(a) of Drugs and Cosmetics Act and this argument had been negated in Shree Baidyanath's case by Tribunal but reversed in Amrutanjan's case. It has to be pointed out that the Tribunal in Amrutanjan's case has followed the Bombay High Court ruling in Leukoplast case (supra). It is in keeping with the practice of the Tribunal to accept and honour all High Court judgments in absence of any contrary view. It is also in keeping with the law laid down by five member Bench in Atma Steels Ltd. v. CCE - 1984 (17) E.L.T. 331. Therefore, the Tribunal in Amrutanjan's case has not deviated or rejected the view expressed in earlier rulings but has expressed clearly on the issue of use of synthetic ingredients in exclusive terms on different facts and circumstances as noted in that ruling.
29. The Bombay High Court has laid down in Leukoplast's case at para 15 that the definition given in clause 3(a) of Drugs and Cosmetics Act is relevant for determining its meaning in Trade. The said para 15 is noted below:
"The Drugs and Cosmetics Act is a comprehensive piece of legislation which deals with drugs and provides not only for the standards of quality, misbranded and adulterated drugs but also for the safeguards for the manufacture, sale and distribution of such drugs, as well as of cosmetics. Chapter IV deals with the manufacture, sale and distribution of drugs and Section 18(c), inter alia, provides that no person shall himself or by any other person on his behalf manufacture for sale or sell or stock or exhibit for sale or distribute any drug or cosmetic except under a licence issued for such purpose under the said Chapter. Clauses (a) and (b) prohibit the manufacture for sale, the sale, the stocking the exhibition for sale and distribution of any drug or cosmetic which is not of standard quality, which is misbranded or adulterated or which has been imported or manufactured in contravention of any of the provisions of the Act or the rules made thereunder. Section 27 provides for penalties to the contraventions of the provisions of the Act and specifically lays down that whomsoever, himself or by any other person on his behalf, manufactures for sale, sells stocks or exhibits for sale or distributes, inter alia, without a valid licence as required under clause (c) of Section 18 shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to 10 years and shall also be liable to fine. In other words, the Drugs and Cosmetics Act makes it abundantly clear that only those drugs which are manufactured under a valid licence issued under the o said Act and in compliance with its provisions can be lawfully sold, exhibited for sale or distributed. This also indicates that trade in respect of drugs is lawfully possible only when there is a compliance with the provisions of the said Act, both by the manufacturers and dealers. In Ashok Leyland's case (above), the Division Bench of this Court held that the relationship between the manufacturer and the dealer is not that of a principal and agent but that of a seller and a buyer. Applying the ratio of this decision to the case at hand, it seems to us obvious that the relationship that is established between the manufacturer and the dealer as regards the sale of the products manufactured by the petitioners is of a seller and a buyer and thus, the observation of the Supreme Court in Hindustan Sugar Mills' case (above) became most relevant. Their Lordships of the Supreme Court dealing with the provisions of the Central Act regulating the sale and the price of cement vis-a-vis the clauses of the agreement entered into by the parties, indeed observed that the provisions of the Central Act regulating the sale and the price of cement had an overriding effect and thus, if the said Control Order was stipulating that the freight was to be paid by the purchaser, such stipulation had to prevail notwithstanding clauses to the contrary in the agreement. In the case at hand, considering the provisions of the Drugs and Cosmetics Act which minutely regulate the manufacture, sale and distribution of drugs and cosmetics, it appears to us that such provisions necessarily have an overriding effect and therefore, prevail and thus, the definition of 'drug' given in the said Act is most relevant for determining its meaning in the trade. We are thus of the view that Mr. Hidayatullah is entirely right when he contends that the true and real meaning which a drug has in the trade or in commerce is the meaning given to it in the Drugs and Cosmetics Act. The provisions of Section 18 are unquestionably motivated by public interest to protect and defend the health and lives of people. We are, therefore, of the view that the popular or the commercial meaning of a drug is synonymous to the one given in the Drugs and Cosmetics Act."
30. The view of the Madhya Pradesh High Court in the case of Ramesh Chemical Industries v. Union of India and Others as reported in 1980 (6) E.L.T. 598 at para 5 is also noted below:
"A look at the various Tariff Items in Schedule I will go to show that these items have been grouped together under different headings. Item Nos. 1 to 3 come under the heading "Food" Item No. 1E which is one of these items is widely worded. Glucose in whatever form including liquid glucose, dextrose monohydrage and anhydrous dextrose and preparations of glucose and dextrose are taxable under this entry at 10% ad valorem. Item No. 14E comes under the head "Chemicals". The separate enumeration of glucose under the heading "Food" is a very significant indication that the Schedule does not treat glucose as a patent or proprietary medicine falling under Tariff Item No. 14E. Patent or Proprietary medicine within Tariff Item No. 14E must be a drug or medicinal preparation. There is no definition of "drug" contained in the Act. "Drug" is, however, defined in S. 3(b) of the Drugs and Cosmetics Act, 1940 as follows:
(b) drug includes -
(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals; and
(ii) such substances, (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette.
A look at the above definition will show 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 expression "any drug or medicinal preparation" as used in Explanation I defining "patent or proprietary medicines" indicates that the words "medicinal preparation" are used in the same sense as "drug". This inference is further supported by S. 3(h) of the Drugs and Cosmetics Act which defines "patent or proprietary medicines" to mean a drug. The assistance of the Drugs and Cosmetics Act can be taken for understanding the scope of Tariff Item No. 14-E of Sch. I of the Central Excises and Salt Act for there cannot be any manufacture of patent or proprietary medicines unless they are in accordance with the Drugs and Cosmetics Act [see Calcutta Clinical Research Assoc. Ltd. v. The Union of India, 1971 Tax LR 1073 at p. 1076 (Cal.)]. Glucose having been separately classified as an article under the heading "food" in Tariff Item No. 1-E, we think that the reasonable inference to draw is that it was not intended to be included in Item No. 14-E which comes under the head "Chemicals". In our opinion, the Asstt. Collector was not right in taxing glucose repacked by the petitioner under Item No. 14-E."
31. Therefore, it follows that the trade understanding should be as laid down in clause 3(a) of the said Act. If the certificates and trade practice is otherwise than as laid down in 3(a) of the said Act or as per the Ayurvedic Formulary of India then such certificates of trade usage and commercial parlance will have no evidentiary value to consider the products as exclusive ayurvedic. This is the proposition laid down in Amrutanjan's case, which is not in any way different from the view expressed in earlier rulings.
32. Shri Gujral further contended that the certificates produced by the manufacturer would clearly indicate that the product in question is pure ayurvedic. Unfortunately none of the physician had examined the synthetic nature of the ingredients nor they had stated that ayurvedic science recognised its uses by usage and tradition. Nor it had stated that the preparation had been exclusively ayurvedic. Therefore, the certificates lost its evidentiary value and its rejection by the learned Additional Collector is totally justified.
33. Therefore, there is no merit in the appeal and it is liable to be rejected. Ordered accordingly.