Customs, Excise and Gold Tribunal - Ahmedabad
Mehta Unani Pharmacy And Co. vs Cce on 11 September, 2007
Equivalent citations: 2007(123)ECC125, 2007(149)ECR125(TRI.-AHMEDABAD)
ORDER M. Veeraiyan, Member (T)
1.1 The Appeal No. E/2545/2003 is by the party against the order in adjudication by the commissioner vide order No. 14/Commr/2003, dt.12.6.03.
1.2. The appeal No. E/1417/2005 is an appeal by the Department against the order of Commissioner (Appeals) No. 50/2005/1(RAJ)/Commr(A)/Raj, dt.24.1.05.
2. Heard both sides.
3.1 The relevant facts, in brief, in the case of appeal No. E/2545/2003 are as follows:
a) The appellant is engaged in the manufacture of products described "Test-up, Coolex, Cold-drops".
b) The appellant claimed that these products are ayurvedic medicines containing ayurvedic ingredients, classifiable under Heading 3003.30 and are fully exempted under Notification No. 31/89-CE, dt. 1.3.89.
c) On the basis of investigation the department issued show cause notice. Proposing that these products are confectionary falling under sub-heading 1704.90 and demanding duty of Rs. 12,02,862 relating to the period from November 1985 to October 1990.
d) The commissioner confirmed the classification under chapter heading 1704.90. He, however, dropped the proceedings for demand of duty holding that the same is time barred.
3.2 The issue in the appeal No. E/1417/2005 is also the same. For the same products "Test-up, Coolex, Cold-drops", the original authority confirmed a demand of Rs. 2,95,939.39 relating to the period April'92 to Feb.'94. On appeal by the party, the Commissioner (Appeals) set aside the order of the original authority holing them as ayurvedic medicaments falling under 3003.30 and exempted.
4. Thus, in both the appeals, the main issue involved is the classification of the three products viz. Test-up, Coolex and Cold-drops and therefore, they are being dealt with by a common order.
5.1. The learned advocate for the appellant submits that burden of proof lies on the department to prove the classification; the product manufactured by them contained the ingredients as specified in the ayurvedic book; the active ingredients are not low as held by the commissioner; the preparations are contained in vehicle in the form of sugar, honey or some such easily palatable substances; the percentage of content of the vehicle is high; this cannot make the product different from ayurvedic medicaments. The findings of the Director, Indian Medical & Homeopathic Systems, Gujarat State is to the effect that Test-up is an ayurvedic medicament.
5.2. The Commissioner (Appeals)'s order dt.24.1.05, holding that the product manufactured by them as ayurvedic medicament is correct and to be upheld.
5.3. He relies on the following judgments:
a) CCE Calcutta v. Sharma Chemical Works.
b) Puma Ayurvedic Herbal (P) Ltd v. CCE Nagpur.
c) Naturalle Health Products (P) Ltd. v. CCE Hyderabad.
d) Procter and Gamble India Ltd. v. CCE Noida.
e) CCE Aurangabad v. Balsara Herbal Products Ltd.
6. The learned SDR reiterates the findings of the Commissioner in his order in adjudication to hold that the products are confectionary falling under Heading 1704.90.
7.1. We have carefully considered the submissions from both sides. On the issue of classification the commissioner has held against the appellant whereas the commissioner (appeals) has held it in favour of the party.
7.2. The Commissioner in his order dt. 12.6.03 has come to the conclusion that the product has to be treated as a confectionary mainly on the basis of high percentage of the sugar in the product. He also held that the exact composition of Test-up is not prescribed in the ayurvedic textbook or any authorative literature; that the exact composition of Coolex and Cold-drops cannot be found in any authorative ayurvedic textbook; ayurvedic composition of Test-up are not per se low and negligible but low only as compared with non-ayurvedic components i.e. sugar or glucose; menthol can not be considered purely as ayurvedic ingredient; that evidences not convincing thar the products are marketed as ayurvedic drugs or are prescribed by ayurvedic practioners.
7.3 However, the Commissioner (Appeals) vide order dt. 19.1.05, compared the ingredients of Test-up with that of swad; the ingredients of Cold-drop with that of Vicks cough drops and the ingredients of Coolex with that of Vicks Herbal Throat Drops and came to the conclusion that the percentage of ayurvedic content in the product should not be accorded excessive importance; percentage of the sugar being high, is not a significant factor in classifying this product. He has also relied on Judgments of the Hon'ble Supreme Court in support of his decision.
7.4 In the case of Puma Ayurvedic Herbal (P) Ltd. v. CCE Nagpur cited supra, it has been held as follows:
It will be seen from the above definition of cosmetic that the cosmetic products are meant to improve appearance of a person, that is, they enhance beauty. Whereas a medicinal product or a medicament is meant to treat some medical condition. It may happen that while treating a particular medical problem, after the problem is cured, the appearance of the person concerned may improve. What is to be seen is the primary use of the product. To illustrate, a particular Ayurvedic product may be used for treating baldness. Baldness is a medical problem. By use of the product if a person is able to grow hair on his head, his ailment of baldness is cured and the person's appearance may improve. The product used for the purpose cannot be described as cosmetic simply because it has ultimately led to improvement in appearance of the person. The primary role of the product was to grow hair on his head and cure his baldness.
21. The extent or the quantity of medicament used in a particular product will also not be a relevant factor. Normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. The medical ingredients are mixed with what is in the trade parlance called fillers, or vehicles in order to make the medicament useful. To illustrate an example of Vicks Vaporub is given in which 98% is said to be paraffine wax, while the medicinal part i.e. Menthol is only 2%. Vicks Vaporub has been held to be medicament by this Court in CCE v. Richardson Hindustan Ltd. . Therefore, the fact that use of medicinal element in a product was minimal does not detract from it being classified as a medicament.
22. In order to be a medicinal preparation or a medicament, it is not necessary that the item must be sold under a doctor's prescription. Similarly, availability of the products across the counter in shops is not relevant as it makes no difference either way.
7.5. In the case of Nathulle health products (P) Ltd. v. CCE Hyrabad cited supra, it has been held by the Hon'ble Supreme Court that essential character of the medicine and primary function of the medicine is derived from the active ingredients contained therein and it has certainly bearing on the determination of the classification.
8. In the light of the above, the classification claimed by the appellant as ayurvedic medicaments as upheld by the Commissioner (appeals) is held to be correct. Consequently, the order of the commissioner classifying the product under 170490 is to be set aside.
9. The appeal by the party No. E/2545/2003 is allowed. Appeal No. E/1417/2005 by the Department on the same issue for the later period is rejected.
(Pronounced in Court on 11-9-07)