Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Juggat Pharma Ltd. on 21 May, 1999
Equivalent citations: 2000ECR158(TRI.-CHENNAI), 1999(114)ELT707(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. This is a revenue appeal against the Order-in-Appeal No. 47/95 upholding the claim of classification of the assessee on two items namely Mulmin drops and capsules under Chapter Heading 3003.10 and negativing the classification under Chapter sub-heading 2936.00 as claimed by the revenue in their review application before the Commissioner. Both the authorities had approved the classification list by giving detailed reasoned orders under Chapter sub-heading 3003.10. In the or-der-in-appeal, the Commissioner based his findings only on the ground that both the items are manufactured under licence and supervision under Drugs and Cosmetics Act and also he referred to Govt. of India letter No. X-11035/11/95-D, dated 26-5-1995 which opined that Mulmin capsules and Mulmin drops (vitamin tonic) are considered as drugs Under Section 3(b) and also as Patent and Proprietary medicines Under Section 3(h)(II) of the Drugs & Cosmetics Act. He also referred to the letter No. DCD/CR-43/Mfg.94-95, dated 10-5-1994 issued by Drugs Controller, Govt. of Karnataka, which had confirmed both these items are Patent and Proprietary medicine under licence in form 28 bearing No. SP-58/78 containing vitamins and minerals as active ingredients. No reference to the grounds and findings given by the Assistant Commissioner in his detailed Order-in-Original. The findings given by the Assistant Commissioner in his Order-in-Original para 6 are extracted hereinbelow :-
"I have gone through the records of the case, assessees submissions and also heard the assessee's Consultant in person. The point to be decided in the instant case is the classification of Mulmin drops and capsules whether under 2936.00 or 3003.10 of CETA., 1985. Chapter sub-heading 2936.00 reads as "Provitamins are vitamins, natural or reproduced by synthesis (including natural and concentrates) derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent". Chapter sub-heading 3003.10 reads as : "Patent or Proprietary medicaments, other than those medicaments which are exclusively Ayurvedic, Unani, siddha, homoeopathic or bio-chemic". To enable the correct classification of Mulmin drops and capsules, it is necessary to know the contents of the said products, which are : Vitamin A I.P. (as acetate), (cholecalciferol, Thiamine Hydrochlo-ride, Riboflavine, pyridoxine hydrochloride, nicontinamide, cyanocobalamin, calcium patothenate, ascorbic acid, zinc sulphate monohydrate, ferrous gluconate. It could be seen that in Chapter 29, the intermixtures of vitamins are just mixtures of vitamins and they are not subjected to any of the process such as conversion of powder into tablets or capsules, labelling, repacking from bulk packs to retail packs etc., whereas apart from mixing the vitamins and minerals dissolving in suitable vehicle, addition of stabilizer and dilutents is being carried out during the course of manufacture of Mulmin drops and capsules. These process are carried out in accordance with Chapter Note No. 5 of Chapter 30. Chapter Heading 2936.00 covers only provitamins and vitamins, but the Mulmin drops and capsules contains minerals such as ferrous gluconate and zinc sulphate alongwith the vitamins. The assessees contention in this regard that by addition of Ferrous gluconate and zinc sulphate which are inorganic chemicals of Chapter 28 change the character of products Heading 29.36 and renders them suitable for specific use as medicine is acceptable. Therefore, they aptly merit classification under Chapter 30 rather than 29. Mulmin drops and capsules comprises two or more constituents which have been mixed or compounded together with other pharmaceutical necessities for therapeutic and prophylactic uses and hence satisfy the definition of Medicament referred to in Chapter Note No. 2 (i) of Chapter 30. Certain products though sometimes called vitamins, have no vitamin activity or have a vitamin activity which is of secondary importance in relation to their uses. Further, medicaments are excluded from Chapter 29.36 as per Explanatory Notes of Harmonized Commodity Description and Coding System (page 407 & 408 refers). The extract of report given by Chemical Engineer, Madras, vide his letter No. 30/5/94/1168-L-CX. 271 to 291 dated 24-6-1994 is given below :
"It is seen from the ingredients mentioned on the original container that Mulmin capsules contain Zinc Sulphate and Ferrous Gluconate and vitamins Mulmin drops contain Phosphate sodium, Zinc Sulphate and Ferrous Gluconate and vitamins. In the pharmacopeia of India, zinc sulphate has been mentioned under the category of Emetic, Astringent, ferrous gluconate as Haematinic, sodium phosphate under the category of cathartic. Thus the above products contain also ingredients which are not considered as vitamin in pharmacopoeia and whose functions are different that of vitamin. Chapter Heading 29.36 of CETA covers provitamins and vitamins natural or reproduced by synthesis (including natural concentrates) derivatives thereof used primarily as vitamins and intermixtures of the foregoing, whether or not in any solvent. Thus, the products under reference being preparations containing vitamins and other ingredients may not satisfy the above criteria".
In view of the above discussions, I hold that Mulmin drops and capsules are medicaments and are rightly classifiable under 3003.10 of CETA, 1985. Accordingly, I pass the following order :-
Order I hereby order classification of Mulmin drops and capsules under Chaper sub-heading 3003.10 and classification list No. 7/94 effective from 1-3-1994 be approved accordingly. Further proceedings initiated in show cause notices C.No V/30/3/305/90-B3/B4, dated 15-3-1994 and 14-4-1994 is hereby dropped."
2. On a perusal of the above order, it is seen that the Assistant Commissioner has examined the entire evidence on record including the Chapter Notes in question. In Chapter Note No. 5 of the Chapter 30 and Chapter Note 2(i) of Chapter 30. He has also referred to the Chapter Heading 29 which deals only with the intermixtures of vitamin which are not subjected to any of the processes such as conversion of powder into tablets or capsules, labelling, repacking from bulk packs to retail packs etc. He has also referred to the Chemical Engineer's report in respect of the analysis done on these items, which clearly indicated the ingredients as zinc sulphate and ferrous gluconate and vitamins Mulmin drops contain phosphate sodium, zinc sulphate and ferrous gluconate and vitamins. He also refers to the Pharmacopeia of India which states that zinc sulphate has been mentioned under the category of emetic, astringent, ferrous gluconate as Haematinic, sodium phosphate under the category of cathartic. On the basis of these evidences, he concluded that the ingredients are different from those of the vitamins as contemplated in Chapter Heading 29.36 of the Central Excise Tariff Act. Excise Tariff Act, which covers provitamins are vitamins, natural or reproduced by synthesis (including natural and concentrates) derivatives thereof used primarily as vitamins and intermixtures of the foregoing, whether or not in any solvent.
3. As can be seen from the grounds made by the Commissioner, there is no reference to these findings.
4. We have heard learned DR Sri S. Kannan for the revenue and Sri M. Subramaniyan, Manager for the assessee respondent.
5. The learned DR relied on the grounds made out by the Commissioner for upholding the classification under Chapter 30. He also points out to the reference made by the Commissioner to Order-in-Appeal No. 107/94 in respect of M/s. Micronova Pharmaceuticals P. Ltd., wherein the Commissioner (Appeals) has held that similar products are to be classified only as vitamins under Chapter Heading 2936.00.
6. The representative for the company pointed out that M/s. Micronova Pharmaceuticals P. Ltd. had filed an appeal in respect of Order-in-Appeal No. 107/94 before the Tribunal in Appeal No. E/5342/94-C and the Tribunal comprising of Three Members finally decided the case in the party's favour by upholding the classification of the items under Chapter sub-heading 3003.10 in terms of the Final Order No. 368/96-C, dated 31-5-1996. He produced a copy of the said order. He points out that all the points raised by the Commissioner in the appeals have already been gone into by the Tribunal and the Tribunal categorically held that the products in question as Vitamin Bl, B2, B6, Niacinamide I.P. and calcium pantothenate fall only under Chapter Heading 3003.20 for the detailed reasons given thereunder. He pointed out that Tribunal also looked into HSN Notes which are relied on by the Commissioner (Appeals). He prays for upholding the said order.
7. On a careful consideration of the submissions on both sides and on a perusal of the records, we are of the considered opinion that both the authorities have gone into great detail on the aspect pertaining to the ingredients in these two products and the ingredients having placed under Pharmacopoeia of India with specific therapeutic effect. The Assistant Commissioner also noted that under Chapter 29 only these types of vitamins are required to be classified and in terms of Chapter Note 5 of Chapter 30, the items are required to be classified only under Chapter 30. The Commissioner in the grounds of appeal not referred these grounds, nor ingredients placed in Pharmacopoeia of India, besides there is no reference to the Govt. of India letter No. X-11035/11/95-D, dated 26-5-1995, which expressly opined that both the items are required to be considered as drugs Under Section 3(b) and also as Patent and Proprietary medicines Under Section 3(h)(II) of the Drugs & Cosmetics Act. The Commissioner also not referred to the opinion expressed by the Drugs Controller, Govt. of Karnataka vide letter No. DCD/CR/43/Mfg. 94-95, dated 10-5-1994, which have also confirmed that both these items are patent and proprietary medicines under licence in form 28 bearing No. SP-58/78. Thus the Commissioner in the grounds has relied on the Order-in-Appeal No. 107/94 in respect of Micronava Pharmaceuticals P. Ltd. v. C.C.E. We notice that this Order-in-Appeal in respect of this party was in appeal before the Tribunal and the Tribunal vide Final Order No. 368/96, dated 31-5-1996 by a Bench comprising of Three Members have over-ruled the de partment's claim for classification under Chapter Heading 2936.00 and has upheld the classification under Chapter Heading 3003.20. The findings given by the Tribunal in paras 3 & 4 are reproduced hereunder :-
"3. We have considered the rival submissions and perused the record. The point for decision is whether the product in question namely Vitamin B Complex tablets NFI attracts classification under tariff sub-heading 2936.00 as held by the impugned order or under sub-heading 3003.20 as claimed by the appellants. The former sub-heading covers provitamins and vitamins natural or reproduced by synthesis (including natural concentrates) derivatives thereof used primarily as vitamins and intermixtures thereof, whether or not in any solvent while the latter covers medicaments (other than patent or proprietary) other than those which are exclusively used in Ayurvedic, Unani Siddha, Homoeopathic or Biochemic systems. The most point thus is whether the Vitamin B Complex tablets merit classification as Vitamins under sub-heading 2936.00 or as medicaments other than patent or proprietary ones. At first blus it may appear that the specific entry "vitamins' will apply and not the gental one medicaments. But the position is not so. It was the contention of the appellants before the authorities below that the former entry "vitamins' covers only bulk drug and not a vitamin preparation (tablets) as theirs. This was not accepted by the Collector (Appeals) who held that there is no provision that only a bulk drug should attract the classification under 2936.20. For proper appreciation of the issue, the Chapter Notes under these two Chapters 29 & 30 have to be considered. The former Chapter covers organic chemicals and Chapter Note l(a) lays down that except where the context otherwise requires the headings of that Chapter inter alia apply only to separate chemically defined organic compounds whether or not containing impurities. Applying this test, it will appear that the entry 2936.00 will cover only a separate chemically defined vitamin or intermixtures of vitamins but not a medicament or preparation in the form of tablets containing other ingredients. The appellants have contended that their product vitamin B complex tablets contain the following ingredients :-
1. Thiamine
2. Riboflavin
3. Niacintunide
4. Calcium Pantothenate
5. Lactose
6. I.P.A.
7. Magnesium Stearate The printed label showing the composition of the product indicates the ingredients in the product in question as vitamin Bl, vitamin B2, vitamin B6, Niacinamide I.P and Calcium Pantothenate. Such a product does not fall under sub-heading 2936.00 in view of the Chapter Note referred to above, as the product is a formulation of several vitamins with other ingredients added and not separate chemically defined organic components. Though this requirement is subject to the condition "Except where the context otherwise requires" as per the said Chapter Note, the wording of the subject tariff sub-heading 29.36 does not take within its sweep the product, Vitamin B Complex tablets containing several other ingredients. This entry which has been preferred by the authorities below is therefore, not appropriate.
4. The alternative classification claimed by the appellants, namely, 3003.20 has been held by the Collector (Appeals) to be not applicable on the ground that medicament has been defined in Chapter Note 2(i) of Chapter 30 as products for therapeutic or prophylactic uses, that it had been admitted by the appellants that Vitamin B complex is therapeutically inert and that the vitamins neither prevent any diseases nor cure them which is the sanction of therapeutic products. He has in this connection, observed that just because of vitamins finding a place in a pharmacopeal formulary one cannot go beyond the scope of the definition in the tariff and classify the goods as a medicament. While it is undeniable that one cannot go beyond the scope of the tariff it is to be noted that the Collector has misinterpreted the tariff entry itself. The Chapter Note 2 lays down that for the purpose of Heading 30.03 medicament means products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic uses or unmixed products suitable for such use put up in measured does or in packings for retail sale or for use in hospitals. The Collector has referred to dictionary meaning of the term "therapeutic" and has missed the other type of use "prophylactic" figuring in the said Chapter Note. He has also drawn a wrong conclusion that the appellants had admitted that Vitamin B complex is therapeutically inert. What the appellants had stated was that their product Vitamin B Complex Tablets are a formulation made out of principal vitamins and other ingredients which are pharmaceutical necessities and therapeutically inert. The therapeutically inert attribute is in respect of the other ingredients and not the vitamins themselves. This mistake apart, the use of vitamin formulation in the manner satisfying the definition in the relevant Chapter note would independently clinth the matter. The Collector has referred to the Chapter Notes in the Harmonised System of Nomenclature (HSN) stating that vitamins are active agents usually of complex chemical composition which are essential for the proper functioning of the human or animal organisms and that their absence gives rise to metabolic disturbances. There is a mention that the Chapter includes vitamins and their derivaties used primarily as vitamins with compositions such as solvents, antioxidant carbothydrates and coating with appropriate substances. The words underlined do not find a mention in the tariff entry or Chapter note in the Excise Tariff and cannot be brought into play. Though the Collector had omitted to consider the entry "prophylactic' which follows the word "therapeutic' and has only referred to the latter entry and the scope thereof, he has noted that for clinching the issue the answer depends upon whether the Vitamin B Complex in question cures diseases or prevents ailments. The last mentioned expression "prevents ailments' relates to prophylactic use. Though it has been observed earlier by us that the HSN Notes cannot be applies in the manner done by the Collector, the use or function of the vitamins as referred to therein which runs along the general understanding as per description in standard dictionary or literature would settle the issue. Vitamins are essential as stated in the HSN, for the proper functioning of human or animal organisms and their absence gives rise to metabolic disturbances. Their administration is to treat these disturbances and to prevent them and hence vitamin B Complex Tablets satisfy the criteria of therapeutic or prophylactic use. Thus the product in question merits classification under tariff sub-heading 3003.20 as claimed by die appellants. The impugned order is accordingly set aside and the appeal allowed."
8. On a careful consideration of the above findings, we notice that the Tribunal has dealt with the same issue pertaining to similar ingredients which has vitamins as well as active ingredients having therapeutic effect and to be considered as medicament. The findings in the case of Micronova Pharmaceuticals P. Ltd. as extracted above are clearly applicable to the facts of the present case. Respectfully applying the ratio of the said decision, we do not find any merit in the appeals and hence the same are rejected by confirming the orders passed by the original authority and the appellate authority.