Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs Warner Hindustan Ltd. on 10 February, 1989
Equivalent citations: 1990(29)ECC172, 1989(24)ECR361(TRI.-DELHI), 1989(42)ELT33(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. This is an appeal against the order of Collector of Central Excise (Appeals), Madras. Brief facts of the case are that the appellants manufacture a product described as Halls Icemint Tablets and claim the assessment of the same under Tariff sub-heading 3003.30 as Ayurvedic medicine chargeable to nil rate of duty. These tablets contain the following ingredients:
"1. Sucrose I.P.
2. Liquid Glucose
3. Menthol I.P. (mentioned on the label by the assessee as pudina)
4. Euclyptus oil IP rectified (mentioned as Nilgirei Tailam on label)
5. Glycerin
6. Spearmint Oil
7. Tartrazine ISI
8. Brilliant Blue
9. Water potable"
2. Earlier, the appellants had also filed a classification list of another product described as Halls Mentholyptus Tablets claiming assessment of the same under Tariff sub-heading 3003.19 chargeable @ 15%. The ingredients of the Halls Icemint Tablets and Mentholyptus Tablets appear to differ in respect of only colouring, material and flavouring, agents.
3. The respondents, before the lower authorities, pleaded that they were manufacturing a product Halls Icemint Tablets under a licence issued to them by the Director, Indian Medicines and Homoeopathy and claimed that taking into account the nature of the ingredients used, the same was correctly assessable as Ayurvedic medicine at nil rate of duty.
4. The Assistant Collector, however, held the goods to be assessable under 3003.19 chargeable @ 15%. The Collector (Appeals), however, on appeal by the respondents, allowed their plea for assessment of the goods as Ayurvedic medicine under Tariff sub-heading 3003.30. His findings in this regard are as under:
"The point for determination is whether "Halls ICE Mint" Tablets are Ayurvedic medicine or P.P. Medicine. In the order, the Assistant Collector has stated that Director Indian Medicine and Homeopathy has issued licence for manufacture of the "Halls Ice Mint Tablets" but there is no evidence that the same are being used or marketed .as Ayurvedic medicine. The appellants produced the packing for the said tablets, on which, it is clearly stated, that the contents of the tablet contains "Ayurvedic medicine". Further, they also produced a certificate from Dr. T. Sripathy Rao, Project Officer, Chemical Research Unit (Ayurveda), Central Council for Research in Ayurveda and Siddha (Government of India), Hyderabad, that the tablets are Ayurvedic medicine. Therefore, there is no doubt, that the Medicaments are used in Ayurvedic system, and accordingly, the clas-sification claimed under Tariff sub-heading 3003.30 in correct and approved. The appeal is allowed for the above reason."
5. The revenue has appeal against this order of the Collector and have claimed that the said goods were neither the P.P. medicines nor Ayurvedic medicines falling under heading 17.04. The grounds of appeal are set out as under:
"(1) The Collector of Central Excise (Appeals), Madras had erred in classifying HALLS ICE MINT TABLETS as an Ayurvedic Medicine falling under Chapter sub-heading 3003.30 of Central Excise Tariff Act, 1985 whereas the CORRECT classification would be under Tariff heading 17.04.
(2) the composition of the product is furnished as : (1) Sucrose I.P. (2) Liquid Glucose (3) Menthol I.P. (mentioned on the label by the assessee as pudina) (4) Euclyptus Oil IP rectified (mentioned as Nilagiri Tailam on the label) (5) Glycerin (6) Suearmint Oil (7) Tartrazine ISI (8) Brilliant Blue (9) Water Potable. The ingredients are of common usage with no specific medicinal properties or therapeutic value.
(3) The product does not possess any medicinal or curative properties and is commonly used as mouth fresher or of the throat.
(4) Although menthol and euclyptus are mentioned in the Ayurveda, the mere usage of these ingredients in a product does not render it as an Ayurvedic Medicine. (Shri Baidyanath Ayurveda Bhavan v. Collector of Central Excise, 1985 (22) ELT 175 (Tribunal).
(5) The licence issued by Director, Indian Medicine and Homoeopathy Department or the certificate issued by the Project Officer, Chemical Research Unit (a Central Counsel for Research in Ayurveda and Siddha) Govt. of India: Hyderabad are not sufficient to establish that the product is an Ayurvedic medicine.
(6) The manufacture of the product under a licence issued under the Drugs and Cosmetics Act, 1940 does not 'ipso facto' render the product classifiable as an Ayurvedic product under the Central Excise Tariff Act, 1985. Even otherwise there indication to show that the product is being manufactured terms of the formulae described in the authoritative by Ayurvedic system of medicine specified in the 1st stage of the Drugs and Cosmetics Act, 1940. Also this product mentioned as in any of the authoritative books or...."
(7) The product is freely sold by all general merchants without insistance on a physicians' prescription. The label affixed on the product does not indicate any dosage/period of usage, toxicity, side effects, etc., which are essential for a drug. The product is used as an item of confectionery.
(8) The respondent has not furnished any proof that the product is a medicine. Mere advertisement as an Ayurvedic Medicine could not make it as an Ayurvedic product.
(9) The produce is manufactured by M/s. Warner Hindustan Ltd., which is a multi-national Company with its base in U.S.A. and it is inconceivable that an Ayurvedic Medicine would be manufactured by them as they are not established manufacturers of these medicines.
(10) The onus of establishing that the product is an Ayurvedic Medicine is on the respondent which has not been discharged by them properly."
6. The learned J.D.R., for the department, pleaded that the issue before the lower authority was as to whether the goods were assessable to duty under Tariff subheading 3003.30 as Ayurvedic medicine exempt from payment of duty or under 3003.19 chargeable @ 15% and before the Collector (Appeals), the issue was decided in the context of these competing entries. He pleaded that before the Tribunal the Collector has pleaded for the assessment of the goods under 17.04 at 12%. These three Tariff headings, for convenience of reference, are reproduced below:
"3003 - MEDICAMENTS (INCLUDING VETERINARY MEDICAMENTS)
Patent or proprietary medicaments; other than those
medicaments which are exclusively Ayurvedic, Unani,
Siddha, Homoeopathic or Biochemic
x x x x
x x x x
x x x x
x x x x
3003.19 -- Other 15%
X X X X
3003.30 - Medicaments, including those used in
Ayurvedic, Unani, Siddha, Homoeopathic
or Biochemic systems Nil
"17.04 - SUGAR CONFECTIONERY (INCLUDING WHITE
CHOCOLATE) NOT CONTAINING COCOA
X X X X
X X X X
1704.90 - Other 12%
7. He pleaded that so far as Halls Mentholyptus Tablets are concerned, they were assessed at 3003.19 and the classificstion of the same has not been disputed. He pleaded that merely because the appellants have been issued a license for the manufacture of Ayurvedic medicine by the concerned authorities does not automatically make the product to be 'Ayurvedic' medicine. He pleaded there is nothing on record to show that the produce has been manufactured exactly on Ayurvedic Siddha Unani systems of medicines. He pleaded that the Collector (Appeals) had merely gone by the certificate of Dr. T. Sripathi Rao, Project Officer, Clinical Research Unit (Ayurvedia), Central Council for Research in Ayurveda and Siddha, Government of India, Hyderabad produced by the respondents and the fact that the products are described as Ayurvedic medicine. He pleaded that he had not examined the issue in depth and the decision was not based on the analysis of any issue involved. He pleaded that the menthol in the tablets which is being described as active ingredient as an Ayurvedic medicine was not made out according to the Ayurvedic principles and in fact this was of I.P. grade. He pleaded that the certificate of Dr. Rao states that the product was prepared as per Ayurvedic principles and nothing has been spelt out as to what he means by Ayurvedic principle and the certificate is in very general terms. He pleaded that the certificate of Dr. Rao, produced before the Collector (Appeals) gives the purposes for which Icemint Throat Tablets were being used and sets out the various conditions it is said to treat without giving any basis.
8. He pleaded that the goods were assessable under Tariff Item 704.90 and in this connection, he drew our attention to the Explanatory Note (Vol. I) at p.133 Note (v) of the harmonized system of nomenclature on which the Central Excise Tariff is based and pleaded that throat pastilles or cough drops are covered under sub-heading 1704.90. The said Note (v) is reproduced, for convenience of reference as under:
"17.04 - SUGAR CONFECTIONERY (INCLUDING WHITE CHOCO-LATE NOT CONTAINING COCOA * * * 1704.90 - Other
(v) Preparations put up as throat pastilles or cough drops, consisting essentially of sugars (whether or not with other foodstuffs such as starch or flour) and flavouring agents (including such substances as benzy) alcohol, menthol, euclyptol and tolu balsam). However, whenever a flavouring agent could also have medicinal properties and its proportion in each pastile or drop is such that the preparation is thereby given therapeutic or prophylactic uses, the pastilles or drops fall in Chapter 30%.
9. He also drew our attention to Explanatory Note under Chapter 30 of the said nomenclature at page 438 under which the pastilles of specific variety are excluded. His plea is that the appellants' goods fall in the category set out under Note (v) of Chapter 17 under sub-heading 1704.90 as Were is nothing to show that these are of a variety which fall under Chapter 30.
10. The learned Advocate for the respondents pleaded that the 'Ayurvedic' medicines are covered under a specific heading and that the decision of the Tribunal in the case of Sri Baidyanath Ayurveda Bhavan and Anr. v. Collector of Central Excise, Patna 1985 (22) ELT 844 covers the case in his favour and drew our attention to paras 105,110, 111, 116,117 and 119. His plea is that in the trade parlence, the goods are understood as 'Ayurvedic' medicine and as held by the Tribunal in that case, the goods should be considered so for the purpose of assessment. He pleaded that the certificate produced by Dr. Rao clearly shows that the goods are Ayurvedic medicines and this certificate has not been challenged hi the grounds of appeal. He pleaded that the goods have been manufactured under a licence issued under the Drugs Act and they have clearly stated before the lower authorities that the product had a curative effect. On a query from the Bench, to show as to whether the ingredients in the tablets were such or in such quantity as would be required for the tablets to act as medicine, he pleaded that he does not have any information as to what is the quantum that would be required to treat the condition of the throat. He was specifically asked as to what was the basis on which Dr. Rao had given the certificate and whether any clinical tests were done to establish the medicinal character of the tablets and also whether the appellants have claimed in their literature as to what conditions the tablets treat.
11. The learned Advocate could not throw any light in this regard. So far as the literature is concerned, he drew the attention of the Bench to the packing in which the tablets are sold. The packing describes the goods as Halls Icemint throat tablets with the following wordings:
"Cools and Soothes the Throat - Refreshes the Mouth."
On the wrapper of the, tablet, the following additional information is furnished:
"Podina 33 mg., Nilgiri Tailam 2.45 mg. approved colours Ayurvedic Medicine."
On the carton in which tablets are sold, the following, further, endorsement is made:
"Halls Icemint combines time tested ingredients to provide cooling, soothing, refreshing feeling to the throat and mouth."
12. He could not show from any one of their literatures or even from the claims made on the individual wrapper or the carton in which the Icemint Tablets are packed as to which condition of the throat the Icemint Tablets were intended to treat.
13. He pleaded that they had evidence from the Physicians and also certificates from the consumers and also from the retailers regarding the tablets being Ayurvedic and that they had appended the same in the proceedings before the Collector (Appeals) but the same find no mention in the order. On a query from the Bench, they stated that they have not filed the documents in the appeal before us nor did they make any plea for taking any additional evidence in this regard on record other than what has been filed in the paper book. The only evidence, therefore, before us is the certificate from Dr. Rao.
14. The learned J.D.R. for the Department referred to the Tribunal's decision in the case of Baidyanath 1985 (22) ELT 844 and drew our attention to Paras 86,116 and 117. He pleaded that as there is no evidence on record to show that the goods manufactured by the appellants are Ayurvedic medicines. Both the sides were given opportunity to file the, extracts from the authentic literature to show that the ingredients used were Ayurvedic in nature. The learned J.D.R. however, pleaded that even if the ingredients find mention in the Ayurvedic literature, it cannot be taken to mean that the goods are Ayurvedic medicines as held by the Tribunal in the case of Baidyanath referred to supra in Para 86.
15. Both the sides filed the extracts from the literature on Ayurvedic and the case was again heard to enable both the sides to make any submissions based on the literature filed by both the sides. The learned Advocate for the respondents pleaded that the Pudina is covered in the extracts produced by the Revenue regarding the Ayurvedic ingredients. The Revenue pleaded that the relevant extracts from the book Indian Materia Medica by Dr. K.M. Nadkarni describes Pudina under the heading as Mentha Arvensis Podina. In this literature, different types of podina have been described. The herbs of mint have been described as aromatic, carminative, stimulant, antispasmodic, stomachic and emmenagogue and are shown to be used in chutneys and also decoction or vapour of its tea is largely used with lemongrass as a febrifuge and it is also shown that the oil and menthol have the same properties. The oil is shown as an anti-neuralgic.
16. The respondents also have produced extracts from Krishna Gopal Gran-damal Ka Pratham Ratna showing the use of podina (menthol) (Peppen ient ke Phool) in various preparations for treating different conditions. Podina with campher, cardamom, clove and Nutmag have been shown to be used in the preparation of Kantha Sudhar Vati for disorder of the stomach and asthema. For the preparation of Shoolan-tak Balm, the following ingredients have been found to be used:
WINTER GREEN OIL (Methyl Salicylate) 50 Parts Pudina (Menthol)(Pepperment Ke Phool) 10 Parts Euclyptus Oil (Nilgiri Tailam) 2-1/2 Parts Kajuputi Tel 2-112 Parts White Bees Wax (Saphed Mom) 20 Parts Lancline (Oon Ki Charbi) 25 Parts
17. He referred to the judgment of the Hon'ble Supreme Court in the case of Leuco Plast 1988 (36) ELT 369. He pointed out that ratio of this decision has a bearing on this case so far as the application of the common parlance criteria is concerned inasmuch as the issue has been decided in that case in this context after taking note of the ingredients used.
18. The points that fall for consideration in these proceedings are whether un-product manufactured by the appellants are a medicine and if so whether it is assessable as a patent and proprietary medicine chargeable to duty @ 15% or as an 'Ayurvedic' medicine chargeable to nil rate of duty. In case the same is not a medicine whether the same can be considered as an item falling under Tariff heading 17.04.
19. We observe the respondent's claim is that the respondent's goods are an 'Ayurvedic' medicine and their claim is primarily based on the fact that the same contains menthol which has been described by them in the sales packet as Pudina and also euclyptus oil as active ingredients. There claim is that both these ingredients are 'Ayurvedic' medicinal ingredients and by virute of this, the tablets containing the same with other ingredients should be considered as 'Ayurvedic' medicine. They have described the tablets as 'Ayurvedic' medicine on the wrapper of the individual tablet and the claim made on the same is that it cools and soothes the throat and refreshes the mouth. The certificate of one Dr. T.S. Rao has been produced. He is an ENT Surgeon and the Head of the Department of a College in Hyderabad. He is certifying the appellant's product as 'Ayurvedic' medicine taking into consideration that it has active ingredients mentioned in the authoritative 'Ayurvedic' books. He has then gone into and described the medicinal properties of Pudina. He has described that Pudina, Nilgiri Tailam and Pahari Pudina Tailam have powerful anti-septic and anti-....He has certified that the Halls Icemint Tablets help in treating throat, cough, cold and bad breath and that it is an 'Ayurvedic' medicine.
20. It is seen from the last para of the certificate that his opinion is based on the information provided by one Dr. M.A. Virinchi. It has not been clarified by the respondents nor in the certificate as to who Dr. M.A. Virinchi is and what was the information supplied by him to Dr. Rao on which he has based his certificate. Obviously, the Certificate of Dr. Rao is not based on his first hand information. There is no mention in the certificate that the information is based on the analysis of the tablets done by Dr. Rao or any clinical trials that he may have carried out. In fact during the hearing, a specific question was asked by the Bench as to whether Dr. Rao had carried out any clinical trials before he gave his information on the medicinal nature of the tablets.
21. The respondents pleaded that they had no such information. The hearing was held on more than one occasion and the appellants failed to come up with the information as to whether the claim for medicinal use as made was on the basis on any clinical trial done. This information, we may mention, is necessary as the appellants' product is not formulated according to the formulations set out in any 'Ayurvedic' Formulary or in any standard works recognised by the Central Council for Research in Ayur-veda and Siddha or the Drugs Control Act. Apart from the fact that the certificate given by Dr. Rao is not based on first hand informaton and that the appellants could not furnish any information as to the competence of Dr. Rao to give a certificate. It is seen that Dr. Rao is a Professor of Surgery of ENT and he cannot be considered as a specialist in the field of medicine. The certificate which could be taken note of is the one issued by the competent authority which in this case could be only DGHS of the Government of India.
22. 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.
23. 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 coditions 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 the (sic) tion 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 pathatogenic conditionof the throat. No evidence has been produced before us to show that the quantity hi which 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.
24. The appellants 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 for is treating any condition of the throat.
25. 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 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.
26. Both the sides cited the decision of this Tribunal in the case of Shree BaidyanathAyurvadic, Bhavan v. C.C.E., Patna and Anr. 1985 (22) E.L.T. 844.
27. The learned JDR pointed that the Tribunal took note of the fact that merely because some ingredients, which may have medicinal properties are there in a formulation, this does not, by itself, make the product a medicine unless it is so understood in the trade or unless the same finds a mention in the authoritative Ayurvedic books. He pointed out that the appellants' product does not figure in any one of the authoritative books. He referred to Paras 72-104 and 116 of the said judgment. He pointed out that the definition of the product given in the Drugs and Cosmetics Act, 1940 was held to be not applicable for the purpose of classifying a product under Central Excise Tariff.
28. The learned Advocate referred to Paras 105-110, 111, 116,117 and 119 of the said judgment and pointed out that even if some allopathic ingredients were used in a product so long as in the trade the same is known as Ayurvedic medicine, it would qualify to be considered as Ayurvedic medicine. He pleaded that the certificate of Dr. Rao, referred to supra, goes to show that the product is understood as an Ayurvedic medicine in the trade.
29. We observe that we have held in the earlier paragraphs that the evidence of Dr. Rao is not acceptable and the product does not pass the muster of Ayurvedic medicine. The facts of the present case are, therefore, distinguishable from the facts cited in Shree Baidyanath Ayurvedic Bhavan case so far as pleas made by the respondents are concerned.
30. In view of the foregoing, we hold that the appellants' claim that Icemint (sic) by them are a medicine is not established before us.
31. We observe that in the proceedings before the original authority and the appellate authority, the issue was considered in the context of only two competing items 3003.19 and 3003.30 i.e. whether the goods were patent and proprietary medicines or 'Ayurvedic' medicines. In the view, we have held above, inasmuch as, the tablets cannot be considered as medicine, the question of assessment of goods under anyone of the two headings, therefore, does not arise. The next point for consideration is, therefore, which will be appropriate heading for the purpose of levy of Central Excise duty.
32. We observe that the Revenue have claimed that the goods are assessable under Tariff Heading 17.04. The plea that even if these are throat lozenges these stand covered by this entry and excluded from ambit of Tariff sub-heading 3003.
33. The Revenue have pressed the Chapter Notes under Harmonised System of Nomenclature in support of this plea.
34. We observe that the Central Excise Tariff of 1986-87 is not based on the Harmonised System as cited by the Revenue and the goods will have to be assessed with reference to the provisions of the law as contained under the relevant Central Excise Tariff.
35. We observe that Chapter 17, specifically, excludes from its purview the products of Chapter 30. We have already held above that the appellants' product is not a medicine falling under Chapter 30. Tariff Entry 17.04 covers sugar confectionary. The question is whether the product can be considered as confectionary as such. We observe that Icemint Tablets are claimed to be for refreshing the mouth and also for cooling and soothing the throat. These have aromatic or property of flavour imparted to these by menthol and euclyptus oil and the major content of the same is sugar apart from the colouring matter and other items as preservative. Like pepperment tablets which are sold as confectionery item, these tablets can be, therefore, considered to have the attributes of confectionary. However, even if the items are not strictly considered as confectionary for any reason, the matter will have to be re-examined with reference to interpretative rules as applicable to the Central Excise Tariff.
36. We observe that both sides have not adduced any detailed arguments as to why these tablets can be considered as confectionary item or otherwise although a plea is there from the Collector in the grounds of appeal that the goods are assessable under Tariff 1704.
37. We observe that once the tablets are held to be not a medicament falling under Chapter 30, the next item which falls for consideration is 1704.90. We observe from the interpretative rules for interpretation of the Central Excise Schedule, which are statutory in nature that under the interpretative Rule 4, the tablets will fall within the ambit of interpretative Rule 4. The said rule, for convenience of reference is reproduced below:
"Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin."
38. In view of the above, we allow the appeal of the Revenue in the above terms. Any recovery to be made will have to be in terms of the assessment of the goods in terms Tariff heading 1704.90 subject to the other provisions of the law.