Customs, Excise and Gold Tribunal - Mumbai
Shree Baidyanath Ayurved Bhavan Ltd. vs Commissioner Of Central Excise on 8 September, 1999
Equivalent citations: 2000(67)ECC344
ORDER Gowri Shankar, Member (T)
1. We have heard both sides on the stay application.
2. The issue is the classification, from March, 1999 onwards of the product "Dant Manjan Lal" manufactured by the applicant. The product is manufactured in two of its factory, one at Bahadur with which we are concerned, and the other at Nagpur.
3. The product of the appellant was the subject matter in the judgment of the Supreme Court on the assessee's appeal . In that judgment the Supreme Court did not accept the contention of the assessee that the product was a drug, medicine or pharmaceutical, exempted from duty by notification 62/78. Subsequent to that judgment, the tariff was amended to March, 1996 by introducing a new sub-heading 3003.30. This was for "Medicaments, including those used in Ayurvedic, Unani, Sidha, Homoeopathic and biochemic system manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940) or Homoeopathic Pharmacopoeia of India or the United States of America, or the United kingdom or the German Homoepathic Pharmacopoeia and sold under that name."
4. It is the contention of the advocate for the appellant that by introducing this sub-section, what is required to be considered is whether the product satisfies the conditions laid down in this sub-heading and if it does, it is to be classified as a medicament. Therefore, he says, the Supreme Court's judgment is no longer good law. He further says that accepting this condition, the assistant Commissioner at Nagpur had approved the classification claimed under Heading 3003.31 for the product in June, 1997. This is in appeal before the Commissioner (Appeals). Even prior to this amendment, the jurisdictional Assistant Commissioner at Nagpur had accepted the classification under the erstwhile Heading 3003.30 consequent to the amendment to the Drugs and Cosmetics Act, resulting in incorporation in the relevant Schedule to it of the book Ayurvedic Sar Sangraha in accordance with which this product is manufactured in the relevant schedule in that Act. He further contends that this matter has not been dealt with in a proper detail by the Commissioner (Appeals) and he has not considered the argument raised by the applicant.
5. The departmental representative contends that the Supreme Court comes to a specific finding on the product in the question that it is not a medicament; even after amendment of the Tariff the product has first to be a medicament before it can be classified under the heading claimed. Since it used, as found by the Supreme Court, was not considered by it to a medicament, it would continue to be ineligible as being considered as a medicament. He says that the Commissioner has in fact dealt with the arguments raised by the applicant.
6. The introduction of sub-heading 3003.31 has been embedded in the tariff as Ayurvedic and similar medicine. It is not unreasonable prima facie to conclude that the intention behind the amendment to the tariff introducing sub-heading 3003.31 is inter alia to treat as Ayurveda, medicines such goods which are recognised in the relevant Ayurveda text as such and so figure in the Drugs and Cosmetic Act, 1940. Section 3(a) of that Act defines Ayurvedic Drugs in substantially the same terms as are employed in this sub-heading. It could therefore be argued that the intention was to incorporate in the tariff the definition of Ayurvedic drugs as given in that Act, and so long as the product satisfies this requirement, it is not necessary to look further to say whether the product is an Ayurvedic Drugs or not. On the other hand, the definition of the term "medicament" as contained in Note 2(1) to Chapter 30 of that tariff, which requires that it must be a product with therapeutic or prophylactic properties would continue to apply and it can be said that the product, which does not possess any such property cannot be considered to be a medicament, notwithstanding that it may satisfy the text in the tariff heading itself.
7. We also note that the department is itself in two minds about the classification, one Assistant Commissioner extending the classification of the product and the other denying. Advocate for the applicant has pointed out that on the writ petition filed by the applicant before the Nagpure Bench of the Bombay High Court against the Assistant Commissioner's order denying the classification, the Court had ordered clearance on 25% of the duty covered by bank guarantee pending decision on the appeal before the Commissioner (Appeals). The Court had also stayed the operation of the Assistant Commissioner's order demanding duty and imposing penalty on the past clearances. It is that order of the Commissioner (Appeals) which is before us. In these circumstances, we direct that on the applicant furnishing a Bank guarantee within a month from today to the Commissioner for 25% of the duty demanded, deposit of the duty and penalty is waived and their operation stayed.
8. The prayer made by the Advocate for the applicant, that in view of the conflicting stand of the Department and there are heavy liability imposed by the recurring effect of the order impugned before us, the matter may be heard out of turn, is accepted. The appeal is listed for hearing, subject to the compliance with the terms of this stay order, on 26-10-1999.