Customs, Excise and Gold Tribunal - Mumbai
Vicco Laboratories vs Commissioner Of Central Excise on 20 July, 2007
Equivalent citations: 2007(122)ECC459, 2007(148)ECR459(TRI.-MUMBAI)
ORDER
Jyoti Balasundaram, Vice President
1. Both appeals involve common issues and hence heard together and disposed of by this common order.
Appeal No. E/542/06
2. The appellants herein are engaged in the manufacture of various products including Vicco Vajradanti Paste, Vicco Vajradanti Powder, Vicco Vajradanti Sugar Free, Vicco Turmeric Cream, Vicco Turmeric Cream (Foam base), Vicco Turmeric S (Foam base), Vicco Turmeric Skin Cream (Oil base) and Vicco Turmeric - WSO Skin Cream (Non-greasy base). In the year 1978, the central excise authorities took a stand that Vicco Vajradanti and Vicco Turmeric Skin Cream were classifiable not as ayurvedic medicines as claimed by the assessees, but as cosmetics. The assessees challenged such stand by filing Special Civil Suit No. 143/78 before the Civil Judge, Senior Division, Thane and the suit was decreed on 6.5.1982 in favour of the assessees by holding that both products were ayurvedic medicinal preparations and not toothpaste or toothpowder or cosmetics falling under erstwhile Central Excise Tariff Entry 14F and 14FF. This decision was challenged by the Revenue by filing appeal No. 613/82 before the Hon'ble Bombay High Court which by its judgment dated 27.4.1988 upheld the finding that the products cannot be classified as cosmetics. However, the Court held that there were no pleadings that the products in question were exclusively ayurvedic medicines. Both the Revenue as well as the assessees filed Special Leave Petitions before the apex court; SLP No. 1918/1989 filed by the Revenue was dismissed by the Hon'ble Supreme Court vide order dated 7.9.1990 and as regards SLP No. 14082/88 filed by the assessees, the Revenue authorities consented that the products were rightly classified by the High Court as ayurvedic medicines and the apex court passed a consent order on 19.4.1993 on this basis.
3. With effect from 1.3.1986, there was a change in the Central Excise Tariff, and the new Central Excise Tariff Act, 1985 came into force. The classification list filed by the assessees for classification of the products as ayurvedic medicines under Chapter 30 of the new Tariff was approved by the Assistant Collector, Nagpur, by order dated 6.10.1986, which order was reviewed and appeal filed before the Commissioner (Appeals), but the appeal was subsequently dismissed as withdrawn vide order dated 26.12.1989. The department also issued show cause notice on 3.7.1987 seeking to classify the products as cosmetics and not as medicines and later on withdrew/dropped the notices on 21.6.1989. The issue of classification was again raised by show cause notices dated 2.5.1997, 18.9.1997 and 27.10.1997, relying on the judgment of the Hon'ble Supreme Court in the case of Baidyanath wherein "Dant Manjan Lal" was held not to be medicine.
4. In Civil Appeal No. 2123/93 arising out of SLP No. 14082/88, the Revenue authorities filed an application bearing I.A. No. 1/99 for a clarification that the apex court's order dated 19.4.1993 in the SLP filed by the assessees shall not affect classification of the subject goods in terms of the CETA, 1985. The application was, however, unconditionally withdrawn by the Union of India which also gave a categorical undertaking to the apex court that the authorities shall proceed in accordance with law and the High Court's order dismissing the application as withdrawn was passed on 17.7.2000.
5. The show cause notices dated May, September and October 1997 were adjudicated by the Deputy Commissioner by order dated 14.5.2001 classifying the products as cosmetics falling under Chapter 33 of the schedule to the CETA, 1985; the order was set aside by the Commissioner (Appeals), Mumbai, by his order dated 10.1.2002; Revenue appeal No. E/1303/02 was dismissed by the Tribunal vide order dated 3.2.2003, holding that the products in question were classifiable under Chapter 30 as claimed by the assessees; appeals filed by the department before the apex court (Civil Appeal No. 7896-97/2003) were dismissed vide order dated 7.12.2004.
6. During the pendency of the above proceedings, the Goa Commissionerate issued 11 show cause notices to the appellants, during the period ranging from June 1997 to May 2005, proposing classification of the eight products of the assessee as described in the opening paragraph of this order as cosmetics under Chapter 33 of the schedule to the CETA, 1985; the appellants replied to the show cause notices which were taken up for hearing after the Supreme Court's dismissal of appeals filed by the department against Tribunal's order dated 3.2.2003 and the notices were adjudicated by order dated 30.1.2006 of the Commissioner of Central Excise, Goa, who classified the products as under:
Product Chapter Heading prior to the amendment of the CETA, 1985 (upto 28.2.2005) Chapter Heading after the amendment of the CETA, 1985 (from 1.3.2005) Vicco Vajradanti Paste 3306.10 3306 10 20 Vicco Vajradanti Powder 3306.10 3306 10 10 Vicco Vajradanti SF Paste 3306.10 3306 10 20 Vicco Turmeric Skin Cream 3304.00 3304 99 50 Vicco Turmeric S Skin Cream (Foam base) 3304.00 3304 99 50 Vicco Turmeric Cream (with foam base) 3304.00 3304 99 50 Vicco Turmeric Skin Cream (in oil base) 3304.00 3304 99 50 Vicco Turmeric WSO Cream (with foam base) 3304.00 3304 99 50 A duty demand of Rs. 3,41,81,782/- and education cess of Rs. 12,292/- was confirmed against the assessees together with interest, while penal action proposed against them in the notices was dropped. This has given rise to appeal No. E/542/06.
Appeal No. E/1096/06
7. The classification of three products, viz. Vicco Turmeric Cream, Vicco Vajradanti Ayurvedic Paste and Vicco Vajradanti Ayurvedic Powder, is the issue in dispute in this appeal against order dated 10.1.2006 passed by the Commissioner of Central Excise (Appeals) who has upheld the stand of the department that the products are cosmetics falling for classification under Chapter 33 and not ayurvedic medicines falling under Chapter 30 read with the benefit of exemption in terms of Notification 8/94-CE dated 1.3.1994.
8. We have heard both sides.
9. The assessees contend that the impugned orders are per se illegal and invalid and fly in the face of the judgment of the Hon'ble Bombay High Court as well as the Hon'ble Supreme Court, clearly holding that the products in question are ayurvedic medicines as well as against the judgment of the Tribunal in its order dated 3.2.2003. It is their submission that even in the context of the present tariff, the products were duly examined by the Central Board of Excise and Customs which issued a circular dated 12.5.1989, that taking into consideration Note 2 to Chapters 30 and 33 coupled with the opinion of the Advisor (Ayurvedic and Siddha) in the Directorate General of Health Services, including the decision of the Bombay High Court, the Board feels stronger reasons to treat the subject goods as "ayurvedic medicines". They submit that the products have not undergone any change, that the therapeutic contents are the same, that only with respect to Vicco Turmeric the product is available in different bases like oil base, foam base, cream base and except for the change in base, the product is the same and that this factual position has not been disputed by the department. They submit that the show cause notices issued by the Goa Commissionerate are based only on advertisements of the assessees themselves, packing materials etc., all of which issues have been dealt with by the Civil Judge, Thane, Bombay High Court as well as the Tribunal and, therefore, it is not open to the Commissioner, Goa, to re-agitate and re-open the same issue. They rely upon various affidavits of consumers, ayurvedic experts, wholesalers, dealers, retailers, chemists as well as relevant extracts from ayurvedic text books and certificates issued by the authorities under the Drugs and Cosmetics Act as well as by the Joint Commissioner, which material has not been controverted by the Revenue, and submit that the snow cause notice does not disclose any material to substantiate the case of the department that the products in dispute are not ayurvedic medicines. As regards the stand of the department that Note 2 to Chapters 30 and 33 has not been considered for the purpose of classification, the assessees submit that Note 1(d) to Chapter 30 only states that preparations of Chapter 33 shall not be covered by Chapter 30 even if they contain therapeutic or prophylactic properties and, therefore, in order to be beyond the purview of Chapter 30, the products must first be cosmetics and if such cosmetics have subsidiary therapeutic or prophylactic use, then merely by such subsidiary use, the cosmetics cannot be classified as medicines. In this connection they rely upon the judgment of the apex court in Puma Ayurvedic Herbal (P) Ltd v. CCE, Nagpur . They submit that the products in question have throughout been held to be medicines and, therefore, Note 1(d) to Chapter 30 is not applicable to their products. As regards advertisements, packing material etc., the plea of the appellants is that the same relate only to products which are exported to foreign countries where the ayurvedic system of medicines is not recognised and in those countries the products cannot be sold as ayurvedic medicines and if they are so sold, they are liable to confiscation by the customs authorities in those countries. They submit that it is in this context that they approached the Drug Controller who has issued no objection to them to label and advertise the products as herbal products in consonance with the requirements of foreign countries. They draw the attention of the bench to Rule 161(A) of the Drugs and Cosmetics Rules, 1945 inserted by amendment dated 17.10.2000, providing that labels and packages or containers of Ayurvedic, Siddha and Unani drugs for export may be adapted to meet the specific requirements of the law of the country to which the said drug is to be exported.
10. On the other hand, the Revenue strongly relies upon the understanding of the products in commercial parlance. According to the Revenue, the issue in the present proceedings is one of determination of classification of the products for the first time by the central excise authorities at Goa and not one of re-opening approved classification and, therefore, the observations made by the apex court in its order dated 7.12.2004 would not apply to the present proceedings. According to the Revenue, the Bombay High Court's judgment dated 27.4.1988 specifically left open all issues relating to classification of the products under its consideration, consequent upon introduction of the CETA, 1985 w.e.f. 1.3.1986 and the apex court's order dated 19.4.1993 affirmed these observations and, therefore, the assessees are not correct in contending that the products are ayurvedic medicaments and known as such in commercial parlance and classification thereof, were foreclosed for reconsideration under the new tariff. Shri Mondal submits that the Tribunal's order dated 3.2.2003 only confirms the order dated 10.1.2002 of the Commissioner (Appeals) relying upon the opinion dated 13.11.1997 given by the Ministry of Law and Justice to the effect that the Revenue had no recourse except to follow the judgment dated 27.4.1988 of the Bombay High Court, which was accepted by the Revenue before the apex court. As per the order dated 7.12.2004 of the apex court which, while noting that mere decision of a court of law without anything more, cannot be justification enough for changing classification without change in the nature of a product or a change in the use of the product or a fresh interpretation of the tariff heading by such decision, gave liberty to the Revenue to undertake such tests in respect of the products for the purpose of classification under the appropriate tariff headings. The Commissioner has analysed the application of trade parlance tests as well as the relevance of Chapter Notes 2 and 5 of Chapter 33 and Chapter Note 1(d) to Chapter 30 of the schedule to the CETA, 1985 in paragraphs 19.9 to 19.13 of the order and admitted the therapeutic as well as cosmetic application of turmeric, which is the sole active ingredient in the turmeric based products in dispute, viz. Vicco Turmeric Skin Cream and Vicco Turmeric Skin Cream (foam base and oil base), Vicco Cream (with foam base) and Vicco Turmeric WSO Skin Cream (non-greasy base). Shri Mondal further submits that the products in dispute are known in industry as FMCG products and even the NCERT Textbook, Introductory Macroeconomics, for class XII students mentions Vicco Vajradanti as toothpaste. He draws our attention to the finding of the Commissioner on the plea that the medicaments were relabelled for the purpose of conforming to the legal requirements of the countries to which the products were exported, and submits that the reasons for the change in name would not be due to legal requirements of the countries to which the appellants export them. He, therefore, urges upholding of the impugned order of classification of five turmeric based products for care of skin and three vajradanti based products for oral and dental hygiene, viz. Vicco Vajradanti Paste, Vicco Vajradanti Powder and Vicco Vajradanti Paste (sugar free) as cosmetics under the headings arrived at by the Commissioner.
11. On a careful consideration of the rival submissions, we find that the issue of classification of the products in dispute stands settled by Tribunal's order dated 3.2.2003, in which the proceedings against the assessees were initiated on the basis of the apex court's judgment in the case of Shri Baidyanath Ayurveda Bhavan Ltd. 1996 (83) ELT 492 (SC). The only ground raised by the Revenue in its appeal before the Tribunal (which was disposed of vide order No. C-I/342-343/WZB/2003 dated 3.2.2003) was that the products were not manufactured exclusively in accordance with the prescribed formulae for the reason that certain ingredients other than those prescribed in authoritative text books on Ayurveda were added thereto, and the Tribunal has considered this ground in detail and rejected the contention of the Revenue and concluded that the products in dispute are medicaments falling for classification under CET sub-heading 3003.31, and not cosmetics falling under Chapter 33 as claimed by the Revenue. The products were also duly examined by the CBEC which issued a circular dated 12.5.1989 that, taking into consideration Note 2 to Chapters 3 and 33 coupled with the opinion of the Advisor (Ayurvedic and Siddha) in the Directorate General of Health Services, including the decision of the Hon'ble Bombay High Court in the context of the erstwhile Central Excise Tariff, the Board was fortified in its decision to treat the goods as ayurvedic medicines. There is no dispute that there has been no change in the products and that the therapeutic contents thereof remain the same and the only difference is that Vicco Turmeric is available in different bases like oil, foam and cream. The show cause notices issued by the Goa Commissionerate are based only on advertisements of the assessees themselves, and the packing materials therefor, and all these issues have been dealt with by the Civil Judge, Thane, the Hon'ble Bombay High Court in its order dated 27.4.1988 and the Tribunal in its order dated 3.2.2003. The assessees have also placed on record affidavits of consumers, ayurvedic experts, wholesalers, dealers, retailers and chemists to emphasize the point that the commercial/trade understanding of the products is that they are medicaments. The relevant extract from the affidavit of one Dr. V.S. Upasani who has his hospital and dispensary at Dombivli and also runs a dispensary on charitable basis, is reproduced below:
3. I know Vicco Laboratories. A medical representative from Vicco Laboratories approached me. He brought with him Vicco Vajradanti (Paste and Powder), which are products of Vicco Laboratories. He told me that they were exclusively Ayurvedic preparations and also advised me to use and prescribe them in my general practice. He also furnished me with the literature of Vicco Vajradanti (Paste & Powder). I went through the said literature and found that they are medicines for dental diseases. I asked the representatives whether the said products were manufactured under competent medical authority and he replied that they were manufactured under an Ayurvedic Licence. I have advised hundreds of patients to use Vicco Vajradanti (Paste and Powder) for their dental trouble and dental care, including prevention. I tried Vicco Vajdradanti for inflammation of gums, decay of teeth and other dental diseases. The ingredients of Vicco Vajradanti are Bakul, Babul, Jambhul, Lavang, Manjishtha, Bor, Acord, Akkalkadha, Ajwan, Jesthamadhu, Khair, Patang, Vajdradanti, Kavab, Dalchini, Harda, Bahada, Amla and Anantumul. According to Ayurveda, these ingredients are for healing of wounds, analgestic, homatatis, antiseptic, anti-inflammatory and hardening agents. I regard Vicco Vajdradanti (Paste and Powder) as Ayurvedic medicines.
4. According to me Vicco Vajdradanti (Paste and Powder) are, exclusively Ayurvedic preparations. Their ingredients are Ayurvedic and they are manufactured under an Ayurvedic licence. They give relief to patients complaining of ailment of the teeth and gums. They are both curative medicines. I regard Vicco Vajradanti (Paste and Powder) as exclusively Ayurvedic Medicines and not as tooth-paste and tooth-powder.
12. Relevant extract from the affidavit of Vaidya Antarkar is also reproduced hereinbelow:
2. I know Vicco Laboratories as manufacturers of Vicco Vajdradanti Paste and Powder and Vicco Turmeric Cream. They are Ayurvedic products used for different diseases. The carton of Vicco Vajdradanti in paste form shows 18 ingredients from which this product Vicco Vajdradanti is manufactured. The extracts of these 18 Ayurvedic ingredients are used to make Vicco Vajdradanti in paste form and in the case of Vicco Vajdradanti in powder form these 18 herbs and barks are ground to make it a powder. The said 18 ingredients have Ayurvedic therapeutic properties. The said properties are anti-inflammatory and haemostatic. They have gum hardening and pain on relieving properties. They have also antiseptic and antiplaque properties. They ingredients chalk and gum of tragacant have therapeutic value according to Ayurved, and I regard a product made from aforesaid ingredients and Sorbitol as exclusively Ayurvedic medicine.
3. Turmeric and Sandalwood oil have therapeutic properties in Ayurveda. In Ayurveda, Turmeric is recommended for a number of skin diseases like Urticaria, inflammation and boils. According to Ayurveda Sandalwood oil has soothing property and it also relieves itching. I would regard a product made out of an extract of Turmeric and Sandalwood oil with base of Vanishing Cream as an exclusively Ayurvedic medicines. Vanishing Cream is prepared out of mixture of Alkalied and acids. The Alkalies and Acids have been referred to in Ayurveda as Kshar and Amla and the mixture of these two make Vanishing Cream. Such a base is a recognised in Ayurveda. Vicco Turmeric Cream is made from an extract of turmeric and sandalwood oil which is made compatible in the said base. I say that Vicco Turmeric is an exclusively ayurvedic medicine.
4. Ayurveda is a Science which deals with the prevention and cure of the diseases. With this definition of Ayurveda the Ayurvedic products or Ayurvedic preparations are medicines. There would be two types of Ayurvedic medicines namely preventive and curative. An Ayurvedic medicine may have both preventive and curative value. Vicco Vajradanti and Vicco Turmeric have both preventive and curative medicinal value. Both of them are for external use only. Ordinarily in medicines meant for external use no dose or frequency is prescribed. I say that medicines are not necessarily taken only during ailments. Preventive medicines are required to be taken even if there is no ailment. For internal medicines there is prescription of dose and frequency but not for medicines of external use. Vicco Vajradanti and Vicco Turmeric is made for daily use. No prescription of medical practitioner is required for the use of Vicco Vajradanti.
5. Ayurved recognises use of chalk and vanishing cream as base in Ayurvedic medicines. A product known as " Shat Daut Grit" has base of vanishing cream. The meaning of the word Shat Dhaut Grit is Ghee Washed for hundred times with water. There are many Ayurvedic products with chalk, as a base. There is an ointment produced by Zandu Pharmacy which has base of vanishing cream and it is for skin diseases such as Eczema.
6. I say that Vicco Vajradanti and Vicco Turmeric are used for prevention and cure of diseases. I say so on the basis of my knowledge and the formulas that. I have studied. I say that these two preparations have medical value because I am aware of the properties i.e. ayurvedic therapeutic properties of their ingredients. By Ayurvedic Therapatic properties I mean therapeutic properties described in Ayurveda and which properties may not be explained by other modern medical sciences including allopathy. I do not regard Vicco Vajradanti as a tooth paste and Vicco Turmeric as Vanishing Cream. Further, I say that the said two products cannot be called cosmetics or toilet articles. I say that Vicco Vajradanti is an exclusively Ayurvedic medicine. I say that Vicco Turmeric is an exclusively Ayurvedic medicine. Since all the active therapeutic agents in the said two products are Ayurvedic medicinal ingredients only, I call them exclusively Ayurvedic preparations.
13. Shri Dhirajlal Damji Shah, proprietor of Matunga General Stores, Chemists & Druggists, has averred in his affidavit that he has been selling ayurvedic medicines such as Chhavan Prash, Vicco Vajradanti paste and powder as exclusively ayurvedic products for the past 10 years, that Vicco Vajdradanti paste and powder are used for diseases of teeth and gums as medicines, that these two products are sold on doctor's prescription and also without prescription and that he regards both the products of Vicco as exclusively ayurvedic medicines and not as tooth paste and tooth powder. Affidavits of customers have also been filed to the effect that they were advised by the dentist to use Vicco Vajradanti powder and paste and that they understood the two items as exclusively ayurvedic medicines and not as toothpaste or toothpowder.
14. Dr. Shyam H. Rane of Andheri (East), Mumbai, has averred that a medical representative from Vicco Laboratories came to him and showed him four products, namely Vicco Turmeric skin cream in oil base, Vicco Turmeric-WSO skin cream, Vicco Turmeric-S cream (with foam base) and Vicco Turmeric cream (with foam base) together with literature of the products. He has also averred in his affidavit as follows:
5. I used Vicco Turmeric Cream in oil base for patients having itching, burning, laceration of skin, abrasion of skin, wounds and other disorders of the skin like dermatitis, inflammatory edema (krimihara) antiseptic and leprosy wounds. I also tried Vicco Turmeric Cream in oil base in cases of infants for inflammation of skin around the anus due to diarrhea and I have found that after use of Vicco Turmeric Cream in oil base, the inflammation subsided and the child stopped crying. In my opinion, this is because of the ingredients - Sandalwood Oil in Vicco Turmeric Cream in oil base. Turmeric and Sandalwood Oil have got therapeutic values of cooling, healing and anti-itching. It prevents drying of the skin leaving a protective film on the skin. It nourishes the skin, improves tonal value. I regard Vicco Turmeric Cream in oil base as exclusively Ayurvedic medicine. According to me, the Vicco Turmeric Cream in oil base is an exclusively Ayurvedic medicine because its ingredients are Ayurvedic and it is manufactured under an Ayurvedic Licence. It gives relief to patients complaining of ailments of the skin. It is a medicine, which is curative as well as preventive. I regard Vicco Turmeric Cream in oil base as an exclusively Ayurvedic medicine and not a cosmetic or toilet article.
6. I used Vicco Turmeric-WSO Skin Cream for patients to prevent and cure skin infections, boils, pimples and acne. Turmeric has got therapeutic value of healing and anti-itching. I regard Vicco Turmeric-WSO Skin Cream as exclusively Ayurvedic Cream. According to me, the Vicco Turmeric-WSO Skin Cream is an Ayurvedic preparation because its therapeutic ingredients are Ayurvedic and it is manufactured under an Ayurvedic Licence. Vicco Turmeric-WSO Skin Cream helps to cure wounds and burns. It nourishes the skin, improves tonal value. It gives relief to patients complaining of ailments of the skin, boils, pimples and acnes. I regard Vicco Turmeric-WSO Skin Cream as an exclusively Ayurvedic medicine and not a cosmetic or toilet article.
7. I used the Vicco Turmeric-S Cream (with foam base) on patients for skin infections, healing of wounds, to clear pores and blackheads, for accelerating the process of natural renewal of skin, to stop bleeding, heals cuts and injuries, to sooth boils, pimples, acne and burns, to prevent and cure inflammation and blemishes, to nourish the skin and for cooling effect. I also tried Vicco Turmeric-S Cream (with foam base) in cases of infants for inflammation of skin around the anus due to diarrhea and I have found that after use of Vicco Turmeric-S Cream (with foam base), the inflammation subsided and the child stopped crying. In my opinion, this is because of the ingredients - Sandalwood Oil in Vicco Turmeric-S Cream (with foam base). Turmeric and Sandalwood Oil have got antiseptic and cooling properties. I regard Vicco Turmeric-S Cream (with foam base) as an exclusively Ayurvedic Cream. According to me, the Vicco Turmeric-S Cream (with foam base) is an Ayurvedic medicine because its therapeutic ingredients are Ayurvedic and it is manufactured under an Ayurvedic Licence. I consider the Vicco Turmeric-S Cream (with foam base) as an Ayurvedic Medicine because of its antiseptic and cooling properties of both Turmeric and Sandalwood Oil respectively. It is used widely for dermatological conditions like cuts, nicks, allergic rashes, burns and piles. I regard Vicco Turmeric-S Cream (with foam base) as an exclusively Ayurvedic medicine and not a cosmetic or toilet article.
8. I used the Vicco Turmeric Cream (with foam base) on patients for skin infections, healing of wounds, to clear pores and blackheads, for quick healing of skin, to stop bleeding, heals cuts and injuries, to sooth boils, pimples, acne and burns. This medicine is excellent for washing of wounds. Turmeric has got antiseptic properties. I regard Vicco Turmeric Cream (with foam base) as an exclusively Ayurvedic Cream. According to me, the Vicco Turmeric Cream (with foam base) is an Ayurvedic preparation because its ingredients are Ayurvedic and it is manufactured under an Ayurvedic Licence. I consider the Vicco Turmeric Cream (with foam base) as an Ayurvedic Medicine because of antiseptic properties of Turmeric. It is used widely for dermatological conditions like cuts, nicks, allergic rashes, burns and piles. I regard Vicco Turmeric Cream (with foam base) us an exclusively Ayurvedic medicine and not a cosmetic or toilet article.
Dr. V.S. Upasani has also filed an affidavit in August 2002 also to the same effect. Affidavits of consumers stating that they have been using Vicco skin cream in oil base for itching and burning of skin due to dryness, scabies and other similar skin disorders and Vicco Turmeric-S cream (with foam base) for healing of cuts, nicks and other small wounds or injuries and for inflammation of skin and Vicco WSO skin cream to prevent and cure skin infections, boils, pimples and allergic rashes, have also been filed.
15. As regards the stand of the department that the re-labelling of the medicaments for export was not due to legal requirements of the countries to which the products were exported, but because the products were in themselves cosmetics, and not medicaments, we find force in the submission of the assessees that the ayurvedic system of medicines is not recognised in those countries and therefore the products cannot be sold there as ayurvedic medicines and therefore the assessees approached the Drug Controller who issued no objection certificate for labelling and advertising the products as herbal products in conformity with the requirements of those countries. We also note that adaptation of labels and packages or containers or of ayurvedic drugs for exports to meet the specific requirements of the law of the country to which the drugs are to be exported, is provided for in Rule 161A of the Drugs & Cosmetics Rules, 1945.
16. As against the plethora of evidence brought on record by the assessees to substantiate their stand that the products in dispute are ayurvedic medicines falling for classification under Chapter Heading 30.03, the department has not adduced any material to support its stand that the disputed products are cosmetics under Chapter 33 of the schedule to the CETA, 1985 and therefore has not discharged the burden cast upon it to determine the correct classification.
17. The department has relied upon advertisements and packing material relating only to products which are exported to foreign countries where the ayurvedic system of medicine is not recognised. It is also relevant to note that the show cause notice issued by the Nagpur Commissionerate to the assessee was challenged before the Nagpur Bench of the Bombay High Court in Writ Petition No. 2913/05. In paragraph 15 of the judgment, the Court has clearly held that advertisements, packing material etc. cannot be taken into consideration for determining the real nature and character of the product. The Revenue has also relied upon the fact that the products in dispute are known in the industry as FMCG products and that the NCERT Textbook for class XII students, titled Introductory Macroeconomics, mentions Vicco Vajradanti as a toothpaste, to support its stand that the products are known and projected for use as skin care and dental and oral care products. However, this material is not sufficient for the purpose of establishing that the goods in question are cosmetics, as contended by the Revenue, and not medicaments, as claimed by the assessees and the common parlance test that the goods in question are medicaments has been satisfied by the assessees.
18. In the light of the above discussion, we hold that the disputed products are ayurvedic medicaments under Chapter Heading 30.03 of the schedule to the CETA, 1985, attracting nil rate of duty. As a result thereof, the impugned orders of classification under Chapter 33 and consequent duty demand are set aside and the appeals allowed. The cross objection is disposed of accordingly.
(Pronounced in Court on 20/7/07)