Custom, Excise & Service Tax Tribunal
C.C.E. Indore vs M/S Plethico Pharmaceuticals Ltd on 16 March, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/766/2010 -Ex[DB]
[Arising out of Order-In-Appeal No. OIA No. IND-I/265/2009 dated: 19.11.2009 passed by Commissioner (Appeals) Indore]
For approval and signature:
Hon'ble Mr. Rakesh Kumar, Member (Technical)
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
C.C.E. Indore ...Appellant
Vs.
M/s Plethico Pharmaceuticals Ltd. Respondent
Appearance:
Mr. R.K. Grover, DR for the Appellants None for the Respondent CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing.07.01.2015 Date of Decision. 16.03.2015 FINAL ORDER NO. 50637 /2015-Ex(Br) Per Rakesh Kumar (for the Bench):
The facts leading to filing of this appeal by the Revenue are, in brief, as under:-
1.1 The respondent manufacture the products named Actifresh, Plethico Mint, Plethico Byte, Travisil Lozenges and Plethico Khalo G Aam/ imli etc., and were classifying the same as ayurvedic medicines under sub heading 30049011 and were discharging the duty liability on this basis.
1.2 The period of dispute in this case is from April 2004 to March 2007 and April 2007 to October 2008. Each tablet of the product Actifresh contains 0.378% of the active ingredient Pudina ark and Nilgiri oil and the remaining contents is sucrose and liquid Glucose. In case of plethico byte, each tablet contains 0.10% of the active ingredient mulethi and the remaining contents are sucrose and liquid glucose and the very small quantity of citric acid orange flavor and sunset yellow colour. In case of product travisil, each unit of 3 grm contains 0.23 mg of ayurvedic extracts and the remaining contents are mainly sugar (sucrose & glucose) with very small quantity of chocolate brown colour, menthol lemon flavor and ginger oil. In case of plethico mint, each unit contains 0.15 MG of Pudina ark and the remaining content is of sugar and glucose. The Department was of the view that in view of the Tribunals judgment in case of Warner Hindustan Ltd. vs Collector reported in 1989 (42) ELT 33 (Tri) wherein it was held that Halls icemint tablets are not ayurvedic medicine simply because they contain the small quantity of Pudina and ginger oil and produce an aromatic and cooling effect in the mouth and throat, and that these product would be classifiable and sugar confectionery under heading 1704.90 of the tariff, the products, in question, would also be classifiable as sugar confectionery under heading 1704.90 of the tariff. It is on this basis that the Show Cause Notice were issued for classification of these products as sugar confectionery under sub-heading 17049090 of the tariff and demand of differential duty along with interest and also for imposition of penalty under Rule 25 of the Central Excise Rule 2002. The two Show Cause Notice dated 06.02.2008 and 24.04.2008 issued for classification of Products, in question, as sugar confectionery under heading 17049090 and demand of differential duty were adjudicated by the Assistant Commissioner vide order in original dated 06.12.2008 by which the proceedings initiated by their above SCNs were dropped. The Assistant Commissioner, accordingly, held that the products, in question, are ayurvedic medicines classifiable under sub-heading 30049011 of the tariff.
1.2 The above order of the Assistant Commissioner was reviewed by the Commissioner and accordingly he was directed to file appeal before Commissioner (Appeals) under section 35E(2) read with section 35E(4) of the Central Excise Act 1944. These reviewed appeals were decided by the Commissioner (Appeals) vide order in appeal dated 19.11.2009 by which the Revenues appeal were dismissed. Against this order of the Commissioner (Appeals), this appeal has been filed. In respect of the Revenues appeal, the respondent has file a memorandum of cross objection registered as E/CO/105/2010-Ex.
2. Heard both the sides.
3. None appeared for the respondent, though, a notice of hearing had been issued well in time. In view of this, so far as the respondent are concerned, the matter is being decided Ex-parte.
4. Heard Sh. R K Grover, the Ld. DR, assailed the impugned order by reiterating the grounds of the appeal in the Revenues appeal and besides relying upon the judgment of the Tribunal in the case of Warner Hindustan vs Collector of Central Excise (supra) he also cited the judgment of the tribunal in the case of Sampre Nutritions Ltd. vs CCE Hyderabad reported in 2004 (169) ELT 42 (Tri. Bang) wherein the Tribunal held that Vicks vitamin-C / mango tablets are not P&P medicines classifiable under chapter 30 of the Central Excise tariff but are sugar confectionery classifiable under heading 1704 of the tariff, and also the tribunals judgment in the case of Kushal Confectionery and Pharma Ltd. vs CCE Chandigarh reported in 2000 (116) ELT 271 (Tri.) wherein the tribunal held that Honey Herb, Churyum drops and Tazza are preparations of sugar classifiable under sub-heading 1704.90 of the tariff and are not P&P medicines classifiable under sub-heading 3003.30 of the tariff. He emphasized that just on account of presence of a very small quantity of active ingredient like puidna ark, nilgiri oil, mulethi or ayurvedic extracts, the products, in question, do not become ayurvedic medicines. that there is no dose prescribed for the products, in question, and that these products are neither prescribed by any Vaidya/ Doctor nor a products indicate any doses for any limited time and hence the same do not merit classification as ayurvedic medicine. He also pleaded that though the apex court in its judgment in the case of Warner Hindustan Ltd. vs Collector of Central Excise reported in 1999 (113) ELT-24(SC) has set aside the tribunals order reported in 1989 (42) ELT 33, the apex court has not overruled the Tribunals decision on the merits of the case but on the ground that the Tribunal had classified the products as confectionery on the plea taken for the first time and that the apex court has given an option to the excise authorities that they can issue fresh notice as to why the product should not be classified as sugar confectionery. He also emphasized that the products, in question, are not known as ayurvedic in the common parlance are known as use of sugar confectionery. He, therefore, pleaded that the impugned order is not correct.
5. We have considered the submissions of the Ld. DR and have perused the records. The dispute in this case is about classification of the tablets called actifresh, pletico mint, plethico byte and travisil. The composition of these products is discussed in the SCN. The actifresh consists mainly of Sucrose and liquid glucose and the active ingredients in it is pudina ark and nilgiri oil, Nilgiri Oil is nothing but eucalyptus oil. One tablet of actifresh contains 1495 mg of sucrose, 990.3 mg of liquid glucose, 4.8 mg of pudina ark (containing menthol) and 3.9 mg of nilgiri oil. The active ingredient in it is thus 0.378%. Each tablet of plethico byte contains 1490 mg of sucrose, 990 mg of liquid glucose, 20.585 mg of citric acid, 0.0092 mg of orange flavour, 0.058 mg of sunset yellow and 2.5 mg of mulethi an ayurvedic herb which is useful for curing sore throat/ cough. Each tablet of travisile contains 1950 mg of sucrose, 1305 mg of liquid glucose, 0.015 mg of chocolate brown colour, 3 mg of menthol, 0.0012 mg of lemon flavor, 0.0006 mg of flavored ginger oil and 0.23 mg of ayurvedic extracts consisting of various herbs like kali mirch, mulethi, haldi, saunth, sat-pudina, katha, baharda, chirmitri patra, amla etc. This Travisil Lozenges are marketed as cure for sore throat. Each tablet of plethico mint besides the sugar/ glucose based contains 0.15 mg of pudina ark. According to the Department, all these products are sugar confectionery falling under heading 1704 of the central excise tariff while according to assessee (respondent) these products are ayruvedic medicines classifiable under sub-heading 300400 of the tariff.
6. The SCN has been basically issued on the basis of the judgment of Larger Bench of the Tribunal in the case of Warner Hindustan Ltd. vs CCE (supra), wherein it was held that ice mint tablets with the base of sugar and containing menthol are not ayurvedic medicines falling under chapter 30, but are sugar confectionery falling under heading 1704 of the central excise tariff. According to the respondent this judgment had been set aside by the apex court vide judgment dated 03.08.1999 reported in 1999 (113) ELT 24 SC. However, on going through the apex court judgment, we find that the Tribunals judgment in the case of Warner Hindustan Ltd. vs CCE (supra) classifying ice mint tablets as sugar confectionery under heading 1704 had not been set aside on merit but had been set aside on the ground that on the Departments appeal against the Tribunals order, the Tribunal for the first time classified the ice mint tablets as sugar confectionery under heading 1704 while neither side had adduced arguments for classification of the ice tablets as sugar confectionery under heading 1704.
7. Heading 1704 of the central excise tariff is based on the HSN heading 17.04. Therefore, the scope of heading 17.04 of the central excise tariff would be same as the scope of the HSN heading 17.04. Heading 17.04 of the central excise tariff and heading 17.04 of the HSN cover sugar confectionery (including white chocolate, not containing cocoa). In terms of explanatory notes to HSN heading 1704, this heading includes:
preparations put up as throat pastilles or cough drops consisting essentially of sugar (whether or not with other food stuffs such as gelatin, starch or flour) and flavoring agents including substances having medicinal properties such as Benzyl alcohol, Menthol, eucalyptol oil and tolu balsom. However, throat pastilles or cough drops which contain substances having medicinal properties, other flavoring agents, fall in chapter 30, provided that the proportions of those substances in each pastilles or drop is such that they are thereby giving therapeutic or prophylactic uses.
In our view the classifications of the products, in question, must be decided on basis of the above mentioned HSN explanatory notes.
8. Each table of Actifresh consists of 1495 mg of sucrose and 990.30 mg of liquid glucose and active ingredient is 4.8 mg of pudina ark and 3.90mg of nilgiri oil which is nothing but eucalyptus oil. In view of the HSN explanatory notes mentioned above, actifresh would be classifiable as sugar confectionery under heading 1704, as the ingredients are mainly flavoring agents not having any therapeutic value. For the same reason, plethico mint tablet which, in addition to the sugar/glucose base contains 0.15 mg of pudina ark would be classifiable as sugar confectionery unde heading 1704 as the pudina ark is only a mouth freshener or flavoring agent.
9. As regards, plethico byte, each tablet of which grm, in addition to sucrose and liquid glucose base contains 2.5 mg of mulethi, the same would be classifiable as ayurvedic medicine under heading 3004 as mulethi acts a therapeutic agent for sore throat.
10. As regards, travisil, each tablet contains extracts of adussa, pipal, black pepper (kali Mirch), dry ginger (saunth), mulethi, amla, haldi, katha, saunf, tulsi, harad, baheda, kulingam, chirmitri patra and pudina satva. In our view since, this product, though with a base of sugar/ glucose has ingredients based on various herbs which have therapeutic value for giving relief in case of sore throat; the same would be classifiable under heading 3004 of chapter heading 30 of the central excise tariff.
11. One of the objections of the Department is that in respect of the products, in question, the percentage of medicament is very small and also no doses are prescribed and, therefore, these products do not merit classification under chapter 30. However, in this regard, we find that the apex court in the case of CCE Calcutta vs Sharma Medical works reported in 2003 154 ELT 328 SC has held that merely because the percentage of active ingredients in a product is less it does not mean that the product is not medicament, as generally, the percentage or doses of the medicament will be such as can be absorbed by the human body and the medicament would necessarily be covered by fillers/vehicles in order to make the product useable. In this judgment, the apex court held that the main criteria for determining classification is normally the use it is put to by the customers who use it and for classification of a product as a medicament it is not necessary that the same should be sold against the Doctors prescription. Applying the above criteria, we are of the view that the product plethico byte containing mulethi and travisile lozenges, which are marketed by the appellant as medicines for sore throat/ cough would be correctly classifiable as ayurvedic medicine under heading 3004 of the Central Excise Tariff. Accordingly, we uphold the impugned order with regard to classifiacation of these products. However, as discussed above, the other two products actifresh and plethico mint which are basically mouth fresheners are correctly classifiable as sugar confectionery under heading 1704 of the tariff and in this regard the impugned order is not correct, and the same has to be modified to this extent.
13. In view of the above discussion while we uphold the impugned order, with regard to the classification of Travisile lozenges and Plethico Byte, we set aside the impugned order with regard to classification of Actifresh and Plethico Mint and we order that these products would be classifiable as sugar confectionery under heading 1704 and the Appellant would be liable to pay duty on this basis alongwith interest. The duty shall be quantified by the Assistant Commissioner. The Revenues appeal is, thus, partly allowed.
[Pronounced in the open Court on 16/03/2015] (S.K. Mohanty) (Rakesh Kumar) Member(Judicial) Member (Technical) Neha Page | 8