Customs, Excise and Gold Tribunal - Delhi
Amrutanjan Limited vs Collector Of Central Excise on 13 September, 1990
Equivalent citations: 1992(38)ECC229
ORDER
S.L. Peeran, Member
1. In these two appeals common issues are involved, hence they have been taken together for disposal.
2. M/s. Amrutanjan Limited have sought far setting aside the order of the Collector (Appeals) Madras in order-in-appeal No. 37/88(M) dated 29-02-1988 by which the Collector (Appeals) for the reasons given by him in the other order-in-appeal No. 56/87(H) Dated 27-02-1987 confirmed the order-in-original dated 17-09-1987 passed by the Assistant Collector of Central Excise, Madras. M/s. Amrutanjan Limited, the appellants, are manufacturer of a patented pain balm known as "Amrutanjan Pain Balm Ayurvedic" falling under Tariff Item 14-E of the First-Schedule of Central Excise and Salt Act, 1944, till 01-03-1986 and under the C.E. Heading 3003.30 after the introduction of the C.E.T. Act, 1985. They filed a classification list dated 05-03-1986 seeking classification under sub-heading 3003.30 with nil rate of duty. The same was approved provisionally on 26-05-1986 under Rule 9B pending further enquiries by the Department in respect of this item being classifiable as an a ayurvedic medicine under Heading 3003.30.
3. The appellants had filed the following evidence before the department along with the classification list to claim the product Amrutanjan Pain Balm Ayurvedic as an ayurvedic one.
(i) A copy of the Licence No. 368 in Form 25-D issued by the State Drug Controller under Rule 154 of the Drugs and Cosmetics Act, 1940 for the manufacture of Amrutanjan Pain Balm Aryurvedic, licensing them to manufacture Amrutanjan Pain Balm Ayurvedic at premises in Madras;
(ii) A copy of the Certificate issued by the Principal and Chief Physician of the Ayurvedic College and Dispensary, Madras, giving out the ingredients used in the manufacture of the said Amrutanjan Pain Balm with their English and Sanskrit names and the references of the authoritative ayurvedic books where in mention has been made of the ingredients;
(iii) Labelling particulars giving the formula of the product, the indications, Batch No., Maximum price etc.;
(iv) A copy of the certificate of Registration of the Directorate General of Technical Development, New Delhi;
(v) Extracts of the Drugs & Cosmetics Act, 1940;
(vi) Extract of Indian Materia Medica giving out the description of the ingredients and the purchase invoices of the ingredients.
4. The Department on examination of these documents and on enquiries, noticed that the Company had obtained a licence from the State Drug Controller for the manufacture of Amrutanjan Pain Balm as an ayurvedic medicine declaring certain items as ayurvedic ingredients other than the ones declared e.g. Thymol Cryst, Menthol Recryst and Methyl Salicilate were actually being used instead of the declared Ayurvedic ingredients "Ajwarl Ka Phool", "Pudina Ka Phool" and "Winter Green Tel". The Department's stand is that, according to the definition of the ayurvedic medicine, any medicine claiming to be an ayurvedic one, should contain only the ingredients mentioned in the authoritative books of Ayurvedic listed in the First-Schedule of the Drugs and Cosmetics Act, 1940. The Department has taken a further stand that ingredients like Thymol, Menthol and Methyl Salicilate do not find place in the traditional books of Ayurveda as ayurvedic ingredients. The Department had further taken a stand that these ingredients are synthetic ones, chemically manufactured and cannot be considered as ayurvedic ingredients figuring in approved ayurvedic books. The Department, therefore, issued a show-cause-notice dated 22-08-1986 calling upon the appellants to explain as to why they should not reject their prayer for classification of the product as ayurvedic medicine and why the product should not be classified under Heading 3003.19 attracting a duty of 15% ad valorem and duty demanded for clearances of the goods effected from 05-03-1986 onwards be demanded for them under Sub-rule(5) to Rule 9B of the Central Excise Rules, 1944. The appellants filed their reply dated 17-09-1986 to the said show-case notice and have contended that based on the certificate issued by the Chief Physician of the Venkataramana Ayurvedic College and Dispensary, Madras, it could be seen that the disputed ingredients Thymol, Menthol and Methyl Salicilate were nothing but "Ajwan Ka Phool", "Pudina Ka Phool" and "Winter Green Tel" as was known in Sanskrit and Hindi. They denied the charges that they had not used the same ingredients as declared to the Drug Controller in their product "Amrutanjan Pain Balm" and they have asserted that the ingredients declared by them on the labels and also in the formulae were nothing but their names in English popularly known and commercially accepted. They, however, did not dispute the synthetic nature of some of the ingredients but have taken a stand that the presence of one or two synthetic ingredients along with other ayurvedic ingredients could not disqualify the products from being classified as ayurvedic. They had further contended that the use of Sulphur BP, Camphor BP and Mercury BP in ayurvedic preparations had the approval of the Board vide their letter F.No. 7/26/61-C. VI dated 23-06-1961. They had further contended that [in] the popular understanding and in trade parlance, the product was accepted as an Ayurvedic medicine. The appellants had, however, admitted that the product was not prepared in accordance with any formula given in the authentic Ayurvedic treatises. The Learned Assistant Collector of Central Excise rejected the contentions of the appellants and held that the product was not manufactured in accordance with the formulae described in the authoritative books of Ayurvedic systems of medicine listed in the First-Schedule of the Drugs and Cosmetics Act, 1940. He has held that the issue of licence by the State Drug Controller under the Drugs and Cosmetic Act, 1940 detailing their Pain Balm as an Ayurvedic product does not lend any evidentiary value for classifying the product as Ayurvedic one under the Central Excise Tariff. He found that the appellants had not used Ayurvedic ingredients and not (sic) natural extractions as is required for preparation of Ayurvedic medicine. They had used imported items like Thymol which was different from "Ajwan Ka Phool" and both were not the same. While "Ajwan Ka Phool" is natural derivative from herbs, the Thymol crystals used by the appellants is an ingredient organic chemical imported from France, classified under Chapter-29 of the Customs Tariff. The "Pudina Ka Phool" was not used, instead Menthol BP which has been classified under sub-heading 2902.20 evidencing that "Pu-dina Ka Phool" is not the ingredient which the appellants had purchased for the use as ingredient but a synthetic organic chemical menthol BP. The Assistant Collector also found that the winter green oil, a herb oil was not used but instead Methyl Salicilite IP (Alta) synthetic, a substitute for winter green oil, a natural product had been used. The Asatt. Collector of Central Excise by his order-in-original rejected the prayer for classification of the impugned product as an ayurvedic medicine.
5. The Collector (Appeals) in the impugned order upheld the reasoning of the Asstt. Collector of Central Excise in the order-in-original. He held that a licence issued from the Drug Controller (Ayurvedic) and the classification by Chief Controller of Imports and Exports as Ayurvedic medicine will not keep the product outside Tariff Item 14-E relying upon the definition given in Section 3(a) of the Drugs and Cosmetics Act, 1940. The Collector (Appeals) while upholding the order-in-original held that the product was rightly classifiable under Tariff Item 14-E as P or P return (sic). He further held that the name Amrutanjan does not figure in any of the ayurvedic books and held that the product is essentially a patent and proprietary preparation falling under P or P medicine.
6. The facts of the case in Appeal No. 1534/89-C are as under-
This appeal has arisen from the order-in-appeal No. 56/87 dated 27.2.87 passed by the Collector of Central Excise (Appeals) Madras confirming the order-in-original No. 47/86 dated 21.10.86 passed by the Asstt. Collector of Central Excise, Hyderabad. The appellants have taken licence L-4 No. 6/77 (P or P Medicines) Hyderabad for manufacturing the product "Amrutanjan Pain Balm Standard" They filed a classification list on 28.10.85 under the description of "Amrutanjan Strong Pain Balm" and claimed exemption from whole of duty on the ground that it is an ayurvedic preparation and non-excisable. On 5.5.1986, the appellants filed another classification list under the description "Amrutanjan Pain Balm Ayurvedic" seeking classification under sub-heading 3003.30 and claimed exemption from the whole of duty.
7. The ingredients of the medicine "Amrutanjan Pain Balm standard, Amrutanjan Strong Pain Balm and Amrutanjan Pain Balm Ayurvedic" are given as under-
Amrutanjan Pain Balm Standard
1. Camphor IP 10%
2. Ghymol IP 1%
3. Menthol IP 4.5%
4. Methyl Salicylate IP 7%
5. Turpentine Oil IP 7%
6. Eucalyptins oil IP 17%
7. Lemongram Oil IP 1.5%
8. Cinanaman Leaf Oil IP 5%
9. Mentha oil IP 1.5%
10. Rasa oil 1%
11. Rase 45% Amrutanjan Strong Pain Balm
1. Karpoor Powder 1%
2. Ajwan ka phool 0.25%
3. Pudina ka phool 20%
4. Winter green Tel 12%
5. Turpentine ka tel 0.25%
6. Nilagiri ka Tel 0.25%
7. Khatak Tel 0.25%
8. Dal Chini ka tel 0.25%
9. Ganjiri ka tel 0.25%
10. Base 65.50% Amurtanjan Pain Balm Ayurvedic
1. Karpoor Powder 10%
2. Ajwan ka Phool 1%
3. Pudina ka Phool 7%
4. Wintegreen Ka Tel 7%
5. Turpintine ka Tel 7%
6. Nilagiri ka Tel 14.5%
7. Edianaka Tel 5%
8. Dalchini Ka Tel 1%
9. Pudina ka Tel 1.5%
10. Ganjin ka Tel 0.25%
11. Base 45%
8. The Asstt. Collector of Central Excise in his order-in-original has observed that the ingredients in all the three products, the base and turpentine oil are mainly petroleum product. As a reasonable doubt arose regarding the Ayurvedic nature of the two products as claimed by the assessee, hence, the matter was referred for investigation to Madras Central Excise Officers as many of the raw materials were received from Madras.
9. During the course of investigation, the Superintendent of Central Excise Hd.qrs office, Madras contacted M/s. Chandan lal and Co. dealers of chemicals and drugs on 16.1.86. and ascertained that a consignment of 60 kgs of Methyl Salcyliate was sold by them to M/s. Kawrilal & Co. vide letter dated 19.10.85. It was further ascertained that the consignment was originally purchased by Chandanlal & Co. from M/s. Sanjay Sales Corp., Bombay vide Invoice No. 2155 dated 16.10.85. The description of the goods in the invoice was "Methyl Salcylate Synthetic Alta" The word 'Alta' stands for the manufacturer and the word synthetic means that it is an artificial preparation (as observed by Asstt. Collector in his order-in-original). The Superintendent contacted Shri Vijaya partner of M/s. Kawarilal & Co and ascertained that M/s. Amrutanjan Ltd in their Letter No. 9-718-85 dated 14.10.85 addressed to M/s Kanwarilal & Co instructed them that thymol should be described under the Ayurvedic nature "Ajwan ka phool" in the invoice ascertained as well as on the labels and the containers. It was also ascertained that the ingredient methyl sateylate IP(sic) which they purchased from M/s. Pandya Chemicals and M/s. Chandlal & Co. and M/s. Litha Chemicals Madras had despatched to M/s. Amrutanjan Ltd. under the name Wintergreen oil. The superintendent also contacted M/s. Dujadwala Madras who supplied D.D. Turpentine to M/s. Amrutanjan Ltd. and ascertained that M/s. Amrutanjan Ltd. in their letter ST 8-715-85 dated 14.10.85 instructed M/s. Dujerdwala Industries to supply D.D. Turpentine under the Ayurvedic name Turpentine ka tel.
10. The Superintendent visited the factory on 10.6.86 and obtained a statement from Shri K.S. Anantanarayan, Deputy Factory Manager during the course of investigation. They stated that the ingredients of Amrutanjan pain Balm Standard and that of Amrutanjan Strong Pain Balm and Amrutanjan Pain Balm Ayurvedic are one and the same except with a variation in the ratio of their composition and excepting 'Pudina ka Tel' as an additional Ingredient in Amrutanjan Strong Balm and Amrutanjan Pain Balm Ayurvedic. The raw material stores was checked and verified and the following materials were found.
1. D.D. Turpentine 1 Barrel of 200 litres
2. White Soft Paraffin 8 barrels
3. Paraffin 92 Bags
4. Methyl Salicilate synthetic 30 wooden crates of 30 kg each The officers also noticed that 30kgs of menthol small crystals and 250 kgs of De-mentholised oil were received from M/s. Gupta Vanshi Essential Oils (P) Ltd., Barrel under G.P. No. 9 and 5 dated 1.5.86. The description of the goods was noted as menthol small crystals (pudina ka phool) and dementholised oil (pudina ka tel) as per the gate passes and the menthol crystals fall under the sub-heading 2902.00 and that the same is a manufactured product. Based on these investigations and the admission made by the appellants, a show cause notice dated 16.6.86 was issued to the appellants to explain as to why the two products should not be classified under Tariff Item 14-E with the rate of duty of 13% ad-valorem upto 28.2.86 and under sub-heading 3003.19 with 15% from 1.3.86 onwards in as much as-
1. The base and the turpentine are petroleum products and another ingredient Methyl Salcylate a synthetic product, Menthol Crystals are manufactured products which are used in the composition of the above two medicines.
2. The medicines Amrutanjan Strong Pain Balm and Amruntanjan Pain Balm Ayurvedic got the patent or proprietary name Amruntanjan.
3. The labels, cartons and the lids of the containers have got their own monogram printed.
4. A particular colour scheme characteristic of the drugs is adopted on the labels and the cartons.
11. The appellants submitted their explanation dated 10-09-1986 and asserted that turpentine is not a petroleum product but distilled from the alco resins. They admitted that paraffin wax is a petroleum product. They had submitted that merely because one raw-material is classified under one tariff item, it did not mean that any product manufactured with such raw- material would be disentitled for exemption. They claimed that menthol is derived from mentha oil or pepper mint oil which is itself distilled from the leaves of a plant. They admitted that methyl salicylate is obtained by synthesis but it is known in Ayurvedic system as "Winter green tel". They contended that both these products are noted in the preparations of Ayurvedic medicines as seen by the 'Indian Materia Medica'. They also quoted from pharmacopeia of Hospital of Integrated Medicine 1956 in which preparations having menthol, camphor, lemon grass oil as ingredients are recognised as Ayurvedic medicine substantiating their action of issuing instructions to their suppliers to quote the name of the ingredients as found in the Ayurvedic treatise. They reiterated that they had done so to satisfy the conditions under Drug Control Licence and their act was not a clandestine one. The medicines were prepared under licence issued by the Director of Indian Medicine and Homeopathy, Govt. of Andhra Pradesh. The formulae has been accepted by them. Their medicines do not come under Drug Price(Control) Order, 1979. The appellants relied upon the affidavits from the ayurvedic chemists, letters from dealers and users to claim their product to be ayurvedic. Reliance was heavily placed by them on the ruling given by CEGAT in the case of Shri Baidyanath Ayurved Bhawan, reported in 1985 (22) E.L.T. 844. The Assistant Collector of Central Excise, Hyderabad, after a careful consideration of the entire materials on record and the submissions made by the appellants, rejected the claim of the appellants to classify the products as Ayurvedic medicine. The Assistant Collector of Central Excise, Hyderabad, in his order-in-original held that the assessee had used IP raw materials satisfying the pharmacopoeial standards. The assessee in order to circumvent tax obligation, had dropped the suffix IP and used Sanskrit and Hindi Nomenclature. The Assistant Collector of Central Excise also found that the base of major ingredients were petroleum products and synthetic ones. The medicines bear the labels and trade names of Amrutanjan having adopted a particular colour scheme which is characteristic of the drug on the labels and cartons in conformity with the description and definition of patent or proprietary medicaments. The name of the manufacturer has been identified by the trade-mark and colour scheme adopted by them which promotes the popularity of the medicines in the trade. The Asstt. Collector of Central Excise held that their products fit with the definition of "P and P medicines" as defined in Tariff Items 14-E of the erstwhile C.E.T. and sub-heading 3003.19 of the C.E.T. Act, 1985, and therefore, rejected the prayer of the appellants to classify the products as ayurvedic medicine.
12. The Collector(Appeals) has confirmed the findings of the Assistant Collr. Of Central Excise, Hyderabad, passed in the order-in-original.
13. Shri A.N. Haskar, Ld. Advocate, argued extensively for the appellants and the Revenue was initially by Shri A.S. Sunder Rajan, Ld. Departmental Representative and later the arguments were concluded by Shri L.C. Chakraborty, Ld. J.D.R.
14. Shri AN. Haksar, Ld. Advocate, has submitted that the department has not discharged its burden in showing that the products manufactured were not ayurvedic drugs. He submitted that the mere use of IP and BP grade ingredients do not make the product non-ayurvedic. The appellants have utilized synthetic ingredients but by itself the product will not become non-ayurvedic. The products have been made as per the Ayurvedic formulae and the mention of ingredients are found in "The Indian Materia Medica". He referred to "Winter green" at page 570-571 of "The Indian Materia Medica" which is described as a plant and it contains 99.0 per cent of Methyl Salicylate. Menthol BP is referred to as "Pudina ka Phool" at page 486. Camphor is referred at page 250 as "Karpoor". It is referred as "The Concrete Volatile Oil" i.e. Camphor(Stearoptene) obtained by distillation with water of the wood of the trees and plants viz. Cinnamonum Camphore of Formula and S.China or Diptero Carpus Camphora of Borneo and Sumatra and purified by sublimation. It occurs in translucent white crystals. Further in the same page 250 of "The Indian Materia Medica" regarding its constituents "All parts of the camphor tree yield, on distillation a semi-soiled [solid?] oil from which camphor can be separated by mechanical means. The oil from the wood and root is of the highest value as in addition to camphor it contains another valuable substance called "Safrola". Regarding its uses it is mentioned that it is used in ayurvedic, Siddha. The ingredient Ajowan also finds place in "The Indian Materia Medica" as "2065 PTYCHOTIS AJOWAN DC". Among its uses, it states that oil and flowers of Ajowan combined with soda forms a nice remedy for acidity, dyspepsia, flatulence etc. It further states that the chief importance of ajowan seeds is for production of the thymol which is a very valuable anthelmintic. Further at page 1030, it states "Crude Thymol popularly called Ajwan Ka Phul". He submitted that turpentine is an extract form Pine Tree and it is referred as "Turpentine Ka Tel" in "The Indian Materia Medica". "Nilgiri Ka Tel" is an extract from tree Eucalyptus Globulus and it is referred to in "The Indian Materia Medica"; so also Chaha, a Tel which is an extract from "Andropogen Citratus" referred at page 173 of the Indian Materia Medica, "Dalchini Ka Tel" is an old [oil?] extracted from "Cinnamum Iners". "Ganju Ka Tel" is an extract from "Andropogan Martini". While "Pudina Ka Phool" or "Pudine Ka Tel" is an oil extracted from "Mentha Arvensis" referred to at page 1587 of Indian Materia Medica. He pointed out from page 457 of the Pharmacopoeia of India that when oil of Winter green or winter green oil is prescribed or demanded, "Methyl Salicylate" shall be dispensed or supplied. He referred to the certificate dated 15-4-85 issued by Shri K.S. Vishwanatha Sarma, Principal and Chief Physican of the Venkataramana Ayurveda College and Dispensary who has certified that the ingredients used by the appellants are all found in the authoritative books of ayurveda. He also referred to the affidavit of one Shri Dr. SHS Hussainy who is working as Ayurvedic chemist in the appellants' factory and who has stated that "The manifacturing process in our plant is as under":
The ingredients of base are molten together and strained. The active ingredients are then incorporated in the base under suitable conditions with stirring to form the ointment. The ointment is filled into the bottle, capped, labelled and put into single carton and packed into dozen cartons. This product is manufactured under drug licence in Form 25-D which is the licence issued under Rule 154 of the Drugs and Cosmetics Rules, 1945 for manufacture and sale of Ayurvedic (including Siddha) or Unani medicine. The manufacturer is done under ayurvedic system under my supervision and I am qualified in the manufacture of Ayurvedic drugs.
The ingredients consist mostly syurvedic preparations and include some synthetic preparation also. But these synthetic preparations have their own name in the Ayurvedic system and have been used in the Ayurvedic system from time immemorial. Further, the Directorate of Indian Medicine and Homeopathic Department, Hyderabad has confirmed our formula as paer manufacture of the pain-killing balm and has in consequence issued the licence in Form 25-D. The pain-killing balms sold all over India under different patents contain in essense these constituents only and are being treated as having been prepared under the Ayurvedic system only.
Amrutanjan Pain Balm is known only as an ayurvedic medicine prepared under the ayurvedic system by the different manufactures of Pain-killing balms like Baidyanath Ayurvedic Ltd. Nagpur etc.
15. Shri A.N. Haksar then referred to the letters given by the patients and distributors and chemists to show that in trade parlance and in commercial parlance, the products have been understood as an ayurvedic medicine and therefore, he submitted that the appellants seeking exemption as an ayurvedic medicine should be upheld. In conclusion, he placed before the Bench, the extract of the Ayurvedic Formulary of India, Part-I, First Edition, published by Govt. of India, Ministry of Health and Family Planning, Department of Health and referred to the Introductory Chapter in which it is stated that--
The system of Ayurveda embraces within its fold drugs of plant, animal and mineral origin, both single drugs and compounded formulations. Although Ayurveda does not rule out any substance from being used as a potential source of medicine, presently about 1000 single drugs and 8000 compound formulations of recognised merit are in vogue. All the main classical works on Ayurveda, such as Caraka Samhita, Susruta, Samhita, Astanga Sangraha and Astanga Hrdaya deal with drugs, their composition and action in addition to the other aspects of the medical system. Some of the Ayurvedic books known as Nighantugranthas like Dhanvantarinighantu, Kaiyadevanighantu, Bhavaprakasanighantu, Rajanigantu, etc., deal mainly with single drugs, describing their habitat, characteristics and therapeutic action. Ayurvedic compound formulations are divided into two groups viz. (1) Kasthausadhi (predominantly plant drugs) and (2) Rasausadhi (predominantly metals and minerals).
There are many authentic books on both the groups of compound formulations. While Sarngadhara Simhita, Cakradata, Bhaisaya Ratnavali, Sahasrayogam, Bharat Bhaisajya Ratnakara, etc., deal with both the groups of formulations, others like Rasendra Sarasangraha, Rasaratna Samuccaya, Rasaprakasa Sudhakara, Ayurveda Prakasa, Rasatarangini, Rasayogasagara, etc., deal only with Rasausadhi group of formulations.
There are several categories of Kasthausadhi formulations such as Asavarista, Avaleha, Ghrta Curna, Taila, etc., and of Rasausadhis such as Bhasma, Pisti, Lauha, Mandura, Kupipakva Rasayana, etc., which are described in this volume.
Till recently Ayurvedic medicines used to be prepared by the practising physician himself for the use of his patients. He was well qualified for identifying the single drugs and trained in the various processes of preparing the compound formulations because of his training in the Guruparampara system. The physician was at liberty to modify the composition of any preparation according to prevailing local conditions and with a view to serve the needs of any individual patient. In course of time, though the name of the formulation remained the same, variation in composition became an established practice. This resulted in the same preparation having different composition as well as different therapeutic indications. This inevitably resulted in a sort of confusion in the minds of unwary physicians who find themselves at a loss to choose an appropriate remedy. In the case of individual drugs, on account of various ecological factors, the same plant has varying properties depending upon the region, the climatic conditions of its growth, etc. The text is being interpreted in regional languages and conclusions drawn, as based on the actual clinical experience of the physician in that region. Due to lapse of long period and the break of continuity over the ages, drugs which were at one time identified with one term have now been equated with others of the same name. All these factors have contributed, as in the case of formulations, to a state of uncertainty about the identity and use of the drugs.
The practice of the individual physician identifying drugs and preparing medicines himself for the use of his patients has been largely supplanted by the pharmaceutical industry. No longer, except in a few cases, does the physician, particularly in the urban areas, undertake to prepare his own requirements of drugs; he prefers to purchase them straight from the market. Even the patient has become more sophisticated and prefers purchasing a readymade drug from a manufacturer instead of obtaining it from his own physician. On account of increasing urbanization, the tendency is towards more and more dependence on readymade preparations. The increasing needs of the population and the chronic shortage of authentic raw materials have made it incumbent that some sort of uniformity in the manufacture of Ayurvedic medicines should be brough about. The need has also been felt for statutory control to ensure standards of Ayurvedic drugs. Evolution of standards for Ayurvedic drugs, in the modern sense considering the vast number of such drugs and their formulation, is a time-and-money-consuming task, and will take considerable time for its achievement.
16. Referring to this introductory note, The Ayurvedic Formulary of India, Shri Haksar submitted that it is the need of the time, which has brought in Ayurvedic pharmaceutical industries to manufacture the drugs in large scale to meet the demands of the population. Therefore, the use of synthetic ingredients will not in any way make the medicine less Ayurvedic or P & P medicine or will make the medicine altogether different as claimed by the Department. He referred to the Board's Circular F.No. 7/26/61-CX-VI dated 23-06-1961 which has stated that use of ingredients of pharmacopoeial Items like Camphor BP or Sulphur BP in ayurvedic preparations where the use of those ingredients is recognised in authentic treatises on ayurveda and is established by usage and tradition, does not render such preparations non-ayurvedic on that score alone. Shri Haksar further relied on the ruling given in the case of Shree Baidyanath Ayurved Bhawan Ltd. v. Collector of Central Excise and Anr. as held that "no doubt, some of the ingredients used therein are pharmacopeial Items but their use in ayurvedic preparations does not render such preparations non-ayurvedic provided the use of these ingredients is recognised in authentic treatises of ayurvedic and also established as such by uses and traditions.
17. He further relied on the reference of natural plant products, plant extracts and honey, beeswax, camphor being referred to in British Pharmacopoeia and argued that the Departments inference that the mention of ingredients in British Pharmacopoeia or in Indian Pharmacopoeia should be the basis to rule out the ingredient as non-ayurvedic is fallacious. Shri Haksar also relied upon the ruling of CEGAT in the case of M/s. Richandson Hindustan which is confirmed by Supreme Court wherein the Tribunal held that the understanding of trade parlance was important for the purpose of classification of the product and hence the Tribunal had remanded the case for de novo condiseration.
18. Shri A.S. Sunder Rajan, Ld. Departmental Representative had submitted that the appellant products are not ayurvedic products and the same had not been manufactured as per the ayurvedic formulations prescribed in the ayurvedic treatises. He submitted that the process of manufacture of ayurvedic medicines should also be according to the manner of preparation of drugs as laid down in the ayurvedic sastric books. In support of this contention, letter dated 26-08-1989, issued by the Indian Medicine and Homeo Department of Andhra Pradesh was placed, which stated that Amrutanjan Pain Balm and Amrutanjan Strong Pain Balm are not the sastric drugs and the formulae of the same are not available in the authentic books of the Schedule-I of Drugs and Cosmetics Act.
19. The main plank of the Revenue's stand has been that the products of the appellants do not conform to the ayurvedic texts and that the appellants have not followed the method of preparation of ayurvedic medicine as per the sastric treatises. They have used extentively IP, BP grade inputs and synthetic raw-materials of which the major constituent between 45 to 65% as a base, is the petroleum jelly and turpentine oil, both are petroleum products. The use of synthetic raw-materials like menthol, thymol BP, methyl salicylate, camphor BP, has made the medicine non-ayurvedic. The medicines bear the labels and trade mark of "Amrutanjan". They have adopted a particular colour scheme which is characteristic of the drug in the labels and cartons in conformity with the description and definition of "patent or proprietary medicine". The name of the manufacturer has been identified by the trade-mark and colour scheme adopted by them, which promotes the popularity of the medicine in the trade. Therefore, the products in question fit in the definition of P&P medicines defined in tariff Item 14-E of the erstwhile Central Excise Tariff and sub-heading 3003.19 of the C.E.T. Act, 1985.
20. Shri L.C. Chakraborty, Ld. JDR substantiated the stand of the department and contended that the assessee had admitted fairly the use of synthetic ingredients but the assessee had only argued that these are the substitutes for the natural extracts from plants and such uses in preparations of the medicine would not make non-ayurvedic as the same had been found referred in the Sastric Texts. He submitted that this argument of the assessee was non-acceptable and had been taken solely to cover up their serious offence committed by them to evade the payment of excise duty. They had been buying imported synthetic raw materials and had instructed the supplier to change the labels of Thymol and Turpentine to ayurvedic name as "Ajowan Ka Phool" and "Turpentine Ka Tel" methyl salicylate as "Winter Green Tel", menthol crystals as "Pudina Ka Phool". This is clearly admitted in the detailed statement by Sh. K.S. Ananthnarayan before the department officials during investigations. Sh. L.C. Chakraborty, Ld.JDR submitted that the ingredients used were all synthetic chemicals of BP and IP grade pharmacopoeia. He produced the extracts from them and from the condensed chemical dictionary Tenth Edition, Gessner G. Hawley to show that camphor, menthol, methyl salicylate, thymol were all chemicals with chemical formulae and having special preparation. He also referred to the definition of "Synthesis" appearing at page 989 to show that the ingredients used by the appellants had all being [been?] derived by Chemical synthesis and not from natural source of plants and minerals. He referred to The New Encyclopaedia Britannica, Vol. I, 15th Edition, page 832 on the chapter "Medicine History of Traditional Medicines and Surgery" in the orient India which is as follows. "Indian medicine is ancient. Its earliest concepts are set out in the sacred writings called the Vedas, especially in the matrical passages of the Atharaveda which may possibly date as far back as 2nd millennium BC. According to a later writer, the system of medicine called ayurveda was received by certain Dhanvantari from Brahma and Dhanvantari was defined as the God of medicine". He further referred to the following portion therein:-
The Indian Materia Medica was extensive and consisted mainly of vegetable drugs, all of which were from ingredient plants. Caraka knew 500 medicinal plants and Susruta knew 760. But animal remedies such as the milk of various animals, bones, gallstones and minerals (sulphur, arsenic, lead, copper, sulfate, gold) were also employed. The Physicians collected and prepared their own vegetable drugs. Among those that eventually appeared in Western pharmacopacia are cardamom and cinnamon.
21. Shri L.C. Chakraborty referred to each of the letters of the customers produced by the appellants and countered that they do not satisfy the trade parlance test. He referred to the affidavit of Dr. SHS Hussainy and submitted that it only stated that the drug was marketed as ayurvedic products and the chemist admitted the use of synthetic ingredients. The chemist has not said that the product is prepared in the manner as laid down in the Sastric texts and as per the "Ayurvedic Formulary of India" brought out by the Govt. of India relied on by the appellants. Dr. N. Guha Roy had given a certificate dated 13-08-1985 as follows: "I am a paraphelgic patient having severe back-ache. I have used Amrutanjan ayurvedic pain balm and had found it very useful". Likewise, all the letters read more to the utility of the product. These certificates and letters are all procured at the behest of the appellants and that they are all self-serving and self-interested testimony and no reliance can be placed on it to satisfy the test of trade parlance and commercial use. He relied on the ruling as given in - Sunny India Pvt. Ltd. v. Collector of Central Excise in support off his argument that no reliance can be placed on the certificates produced by the appellants regarding trade parlance. He submitted that what is claimed in certificate is more of sales promotional strategy. The evidence produced has no evidential value. In conclusion, Shri Chakraborty submitted that the products manufactured by the appellants are non-ayurvedic medicines, satisfying the "P & P Medicine" as per the definition given under the "P & P" Medicines in Tariff Item 14E of erstwhile Tariff and sub-heading 3003.19 of the C.E.T. Act, 1985 and that the products do not satisfy the definition of ayurvedic medicines as given in 3(a) of the Drugs and Cosmetics Act, 1940. He further submitted that the Baidyanath's case did not go into the questions raised in this appeal and the ratio of the Baidyanath's case is not applicable.
22. We have heard both the sides, carefully considered the entire materials placed before us. The main questions that arise for our consideration are (i) as to whether the registration of the impugned product by the appellants as "patent and proprietory medicine" will disentitle them for classification as "Ayurvedic medicine"; (ii) does the impugned product prepared by the appellants qualify to be classified as ayurvedic medicines classifiable under heading T.I. 14 of erstwhile tariff and C.E.T. 85 under T.I. 3003.30 and thus entitling for exemption from payment of duty or (iii) are the impugned products classifiable as P & P medicines falling under tariff Item 14E of erstwhile tariff upto 28-02-1986 and under tariff Item 3003.19 as non-ayurvedic product - medicaments (including veterinary medicaments) - others, attracting a duty liability of 15% ad valorem. The Tariff Item 14-E as it stood then and Tariff heading 3003.30 and 3003.19 of C.T.A. 1985 are reproduced below:-
______________________________________________________________________________________ T.I. No. Description of the goods Rate of Duty Basic Special Excise ______________________________________________________________________________________ 14-E Patent or proprietary medicines not containing alcohol, 12 1/2" Adv. 10% of the opium, Indian hemp or other narcotic drugs or other basic duty narcotics other than those medicines which are exclusively chargeable.
ayurvedic, unani, sidha or homeopathic.
Explanation-I 'Patent or proprietary medicines' means any drug or medicinal preparation. In whatever form, the use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a Pharmacopea. For merly or other publications notified in this behalf by the Central Govt. in the Official Gazette, or which is a brand name, that is a name or a registered trade mark under the Trade and Merchandise Marks Act, 1988 (43 of 1988) or any other mark such a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person, having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person.
Explanation-II Alcohol, Opium, Indian Hemp, Narcotic Drugs and Narcotics have the meanings respectively assigned to them in Section 2 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (15 of 1955).
_______________________________________________________________________________ Heading No. Sub-Heading Description of Goods Rate of Duty _______________________________________________________________________________ 30.03 Medicaments (including veterinary medicaments)
-Patent or proprietary medicaments, other than those medicaments which are exclusively Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic 3003.19 Other 15% 3003.30 - Medicaments, including those used in Ayurvedic, NIL Unani, Siddha, Homeopathic or Bio-chemic systems.
23. The main grounds of the Revenue to deny the appellants classification of their product as ayurvedic medicine has been that the main ingredients used are Menthol IP, Camphor IP, Turpentine IP, Methyl Salicylate which are of synthetic nature. The Revenue has also found that the impugned products have not satisfied the definition of Section 3(a) of Drugs and Cosmetics Act, 1940 for internal or external use for or in the diagnosis, treatment or prevention of disease or disorder in human beings or animals and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic systems of medicine, specified in the first schedule and the patent or proprietory medicines in relation to Ayurvedic. The contentions of the appellants that as per the Section 3(b) of the said Act, all formulations containing only such ingredients mentioned in formulae described in the authoritative books of ayurvedic system of medicine specified in the first schedule but does not include a medicine which is administered by parenteral route and also a formulation included in the authoritative books as specified in Clause (a) of Section 3 of Drugs and Cosmetics Act, 1940 has been rejected by the Revenue. The Revenue has relied upon the admission made by Shri K.S. Anantharayana, Dy. Factory Manager in his statement before the investigating officer that the synthetic ingredient were all got labelled by them with ayurvedic names on the invoices and on the labels of the containers. The Revenue has found that the inpugned products bear the labels and trade marks of Amrutanjan. They have also found the assessee adopting a particular colour scheme which is characteristic of the drug on the labels and cartons in conformity with the description and definition of patent or proprietory medicaments. The name of the manufacturer has been identified by the trade mark and colour scheme adopted by the assessee, which promotes the popularity of the medicine in the trade. The Revenue has found that the inpugned products have not been prepared as per the formulae described in the authoritative books of ayurvedic. The Revenue has also found that the ingredients used in all the three inpugned products are with suffix IP satisfying the pharmaceutical standards and that it is only with a view to circumvent tax obligation of the assessee had put the nomenclature of the ayurvedic names and dropped the suffix IP.
24. The appellants do not deny these facts. They are all admitted except that the ingredients although synthetic ones, are having auyrvedic names as well, and that there mention is found in the authoritative books. In support, they had placed the affidavits of various persons but however, the Revenue rejected these evidences and have held that mere mention of ayurvedic nomenclature is not sufficient but the medicines have to be prepared as per the formulae in the authoritative books.
25. Both the sides have relied on the ruling of this Bench in the case of Shree Baidyanath Ayurved Bhawan v. Collector of Central Excise as . The appellants have also relied on the ruling of this Tribunal given in the case of Richardson Hindustan as . The appellants have shown through the affidavit of one Shri K.S. Viswanatha Sarma that the ayurvedic ingredients find mention in various authoritative books. But they have not shown to us that the inpugned product has been made according to the formulae as laid down in the authoritative books of ayurveda.
26. It is well known that ayurvedic medicine solely employs medicinal herbs, barks of trees, honey, wax, various natural substances having medicinal value prevailing in nature including various organs, secretive juices and substances of animals and plants, precious stones and metals, and natural chemicals like camphor, sulphur, alum are also used. The science of ayurveda has recognised the uses of these natural substances available in nature for cure of human ailments. The science is quite unique to our country. The Pandits have employed methods which are quite unique and kept secret in their families for extraction of potions and medicines for cure of human ailments. The Sastric books on ayurveda have underlined the methodology of the uses of medicinal plants and also has given specific method of extraction of potions and medicines. The method of administration of medicine to the patient is also prescribed. The science has made vast improvements in the recent times with the keen interest taken by the Govt. Many Research Institutes, teaching institutions, have sprung up to impart the education on ayurveda. There are hundreds and thousands of qualified ayurvedic Pandits/physicians as well as those who have acquired knowledge from their ancestors practising in our country. There are several pharmaceutical industries who are preparing these ayurvedic medicines to meet the need of modern times. The Govt. being anxious to maintain the standards in ayurvedic medicines set up a Committee to formulate an authentic formulary in ayurvedic. The efforts bore fruit and the first formulary, namely, "The Ayurvedic Formulary of India, Part-I Edition" prescribed by Govt. of India, Ministry of Health and Family Planning, Department of Health, has been released in the year 1976. This formulary has been placed before us by the appellants. The first page of this formulary has "Legal notice" which reads as under:-
1. In India there are laws dealing with certain substances which are the subject of the monographs of compound formulations included in the Ayurvedic Formulary of India. These monographs should be read subject to the restrictions imposed by those wherever they are applicable.
2. It is expedient that enquiry be made in each case in order to ensure that the provisions of any law are being complied with;
3. In general, the provisions of the Drugs and Cosmetics Act, 1940, Chapter-IVA as are applicable to Ayurvedic Drugs and the Rules framed thereunder should be consulted.
4. Standards for the several single drugs of plant, animal and mineral origin included in the Pharmacopoeial List of Single Drugs included as an Appendix to the Ayurvedic Formulary have yet to be worked out. In the manufacture of medicines included in this Formulary, it should be ensured that the Vaidya-in-Charge of the Pharmacy has reasonably satisfied himself about the identity and purity of the drugs.
5. Use of substitute drugs (pratinidhi dravyas) wherever the original drugs are not available, is permissible in the Ayurvedic classics and practice. It must however be ensured that only the substitutes as are mentioned in the texts are included in the Formulary are used.
6. Formulations included in the Ayurvedic Formulary may also be manufactured as per formulae given in various Ayurvedic Classics. The Ayurvedic Formulary has however included the most commonly accepted Formulae for the medicinal preparations included therein. It does not however preclude the Ayurvedic Pharmaceutical industry and the practitioners from manufacturing medicines on the basis of other formulae. But should the medicines be prepared according to the reference mentioned in the Formulary, deviation in the details of the ingredients or their quantities is not permissible.
27. The second page contains "General Notices" which is reproduced below:-
Title: The title of this book, including supplements thereto, is the Ayurvedic Formulary of India. The word 'Formulary' wherever it occurs in the text, refers to the Ayurvedic Formulary of India.
Names of Drugs, Preparations and other Substances Synonyms: While it is advisable that the Sanskrit titles and names should be employed in prescription, the more important or frequently used alternative names are given as synonyms. These synonyms are also titles and substances or preparations so designated for use in medicine have the same significance as the main titles.
Official: All names of drugs, formulations and processes mentioned in the Formulary will be deemed to be Shastriya and would be synoymous with the word 'Official' and applies to any statement included in the General notices, Monographs and Appendices of the Formulary.
Methods of Preparation: The General method of preparation has been given immediately preceding the individual groups of formulations. When there is a statement in the body of a monograph of the formulation that a substance will have to be prepared by a certain method, it indicates that the general method is modified to that extent. In some cases, there are more than one method of preparation and new methods are constantly being evolved. What is intended is that irrespective of the method of preparation, the resulting substances must comply with Formulary requirements.
Doses: Doses mentioned in the Formulary are intended merely for general guidance and represent unless otherwise, stated the average range of quantities per dose which are generally regarded as suitable for adults when administered orally. It is not to be regarded as binding upon the prescribers. The dose may in many cases be repeated three to four times in 24 hours. The medical practitioner will exercise his own judgement and act on his own responsibility in respect of the amount of any therapeutic agent he may prescribe or administer or the frequency of its administration. When, however, an unusually large dose appear to have been prescribed, it shall be the duty of the pharmacist or dispenser to satisfy himself that the prescriber's intention has been correctly interpreted. If it is necessary to administer a drug by a route other than oral, the single dose for such administration is mentioned.
Doses are expressed in metric system of weights or measures. A conversion table is appended to the Formulary giving the classical Ayurvedic system of weights and measures and their metric equivalents.
It is to be noted that the relation between the dose in metric and ayurvedic systems set forth in the text is of only approximate equivalence. These equivalents are for the Convenience of the prescriber and are sufficiently accurate for pharmaceatical or other purposes, Weights and Measures: In the Formulary only the metric system of weights and measures is indicated. Fluid measures are given in multiples or fractions of millilitre. The term 'ml' is used as short designation for the millilitre. When the term drop is used, the measurement is to be made by means of a tube which delivers 1 gramme of distilled water at 15c in 20 drops.
Metric measures are required by the Formulary to be graduated at 25c and all measurements involved in the analytical operations of the Formulary are intended unless otherwise stated to be made at that temperature.
Crude Drugs: Plant, animal and mineral drugs are required to be free from insects and other foreign matter and from animal excreta and to show no abnormal odour, colour, sliminess, mould or other evidence of deterioration.
Storage: The container and its closure must not interact physically or chemically with the sub-stance which its holds so as to alter the strength, quality or purity of the substance. If interaction is unavoidable, the alteration must not be so great as to bring the substance below Formulary requirements. A well-closed container must protect the contents from extraneous matter or from loss of the substance under ordinary or customary conditions of handling, shipment, storage or sale. A tightly-closed container must protect the contents from contamination by extraneous matter or moisture from loss of the substance and from efflorescence, deliquescence, or evaporation under the ordinary or customary conditions of handling shipment, storage or sale and shall be capable of tight reclosure. Where a tightly closed container is specified, it may be replaced by hermetically closed container. A hermetically closed container for a single dose of that substance must be impervious to air or any other gas under the ordinary or customary conditions of handling, shipment, storage or sale.
28. We are also incorporating the Preface to this Formulary as under-
1. The Ayurvedic Pharmacopoeia Committee is glad to present the First Part of the Ayurvedic Formulary of India which was one of the functions assigned to it. Every attempt has been made to include in it as many important formulations as are currently manufactured on a large scale in terms of value and in use throughout the country. Various organisations, institutions including pharmacies and individual vaidyas, in the different regions were consulted before the Formulary was prepared. The Formulary therefore, represents the consensus of opinion of the Ayurvedic profession as a whole and as a consequence the Committee hopes it will be acceptable to the profession at large.. The Committee urges the Central Government to recommend the adoption of this Formulary by all the Ayurvedic institutions maintained by Govt. in the States, as well as Semi-Government and other institutions managed by public voluntary organisations. The Committee hopes that to start with, the Central Govt will adopt it in its own institutions like the Central Govt. Health Scheme Ayurvedic Dispensaries, the Gujarat Ayurveda University and the Post Graduate Institute of Indian Medicine, Banaras Hindu University.
2. In the absence of adequate scientific standards of single drugs and compound formulations, a work which has only been recently started, the committee has not been able to recommend standards for either of them. The Committee while appreciating the efforts made by the Government to initiate work on standardisation, is aware of the fact that steps taken so far have been inadequate and need to be further accelerated. Therefore, the Committee very strongly recommends that the Govt. of India will expedite the establishment of Laboratories for standardisation work and setting up of drug farms where genuine and authentic drugs may be grown for this purpose. As Govt. is aware, the vast majority of the population in the country depend on drugs of indigenous origin. It is, therefore, necessary that standardisation of drugs should be taken up as a priority programme.
3. In addition to the establishment of drugs farms for genuine and authentic drugs, the Committee recommends that a National Herbarium and a Drug museum should be established in the Fifth Plan.
4. The Committee express its thanks and appreciation to State Governments, Institutions and experts in Ayurveda and other sciences for their unstinted co-operation and help in compiling this Formulary. The Committee also expresses its appreciation and thanks for the Secretariat Staff who unsparingly gave of their best in this task.
29. A few paragraphs of the introductory of this Formula have already been extracted in Para 15 above. What follows from the reading of these passages from the ' The Ayurvedic Formulary of India' is that the experts in the field of Ayurvedic Science are very keen to maintain the originality of the science in use of ingredients and in the preparation of the medicine as per the formulary in the authoritative texts. They have emphasised that all pharmaceuticals should adhere to these basic tenets of the Ayurvedic science.
30. We have to observe that the courts and Tribunals have to adjudicate within the meaning and scope of the respective disciplines of science in which it is dealing. We cannot brood and give a difference dimension to the scope of the ayurvedic science other than what the field has recognised for its applications.
31. The appellants have attempted to show that use of synthetic ingredients will not in any way take away the characteristic of their ayurvedic medicine. They have attempted to show that the synthetic ingredients have equivalent ayurvedic nomenclature and its place is found in authoritative books. What they have failed to show is that their entire formulae and method of preparation of medicine is as per the authoritative text. It may be true that some synthetic ingredients may resemble in characteristic with natural substances but they cannot be a substitute or be a replacement to natural ones as recognised by Ayurvedic science. When ayurvedic science recognises only use of natural extracts from medicinal plants, it cannot be substituted by modern chemical ingredients. The appellants have imported from abroad synthetic grade IP chemicals and have asked the supplier to change the invoices and labels with ayurvedic nomenclature to suit their design. It is a clear case of intention to evade duty liability. The menthol salicylate is changed as "Pudina Ka Phool" dementholised oil as "Pudina Ka Tel", Thymol and Turpentine IP grade substituted with the name as "Ajwan Ka Phool" and "Turpentine Ka Tel"; Methyl Salicylate IP as winter green Tel.
32. The appellant's reliance of both the rultings of Shree Baidyanath's case and Richardson Hindustan (supra) will not be of much help and assistance as the issues in these cases are different from the one at hand. The questions before the Bench in both these cases were different. There was no admission of the ingredients being synthetic in both the cases. The Tribunal took the view that use of few Pharmacopoeial items by itself will not make the preparation non-ayurvedic, provided the use of these ingredients is recognised in authentic treatises on ayurveda. On close reading of both the citations, the ratio laid down will not be binding on this case, as the facts and issues are different.
33. The term "Formulae" is not defined in Drugs Act or in Drugs and Cosemetics (Amendment) Act. The Condensed Chemical Dictionary, Tenth Edn., revised by Gessner G. Hawley, defines the term "Formula, product" is given at Page-477 as follows:-
formula, product: A list of the ingredients and their amounts or percentages required in an industrial product. Such formulas (or recipes) are mixtures, not compounds; they are generally used in such industries as adhesives, food, paint, rubber and plastics.
The term manufactured exclusively in accordance with the formulae described in the authoritative books of ayurvedic system of medicine used in Section 3(a) of Drugs and Cosmetics Act should be taken to mean that the preparation of ayurvedic drug is by use of recognised ingredients in ayurvedic medicine and as per the formulae described in the authoritative books, the appellant has not placed any authoritative book of ayurvedic medicine which spells out the formulae adopted for manufacture of the impugned products, namely, Amrutanjan Pain Balm. The appellants have not shown that the ingredients are ayurvedic in nature and the same has been recognised in ayurvedic books and that the formulae of the impugned product including its methodology of preparation is from the 'Ayurvedic Formulary of India' or from any recognised ayurvedic treatise. Mere mention of use of ingredients in preparation of ayurvedic medicine is not sufficient. Entire formulae and methodology of preparation as recognised by the system of ayurvedic system in thier recognised books has to be placed for considering the impugned products as ayurvedic medicine.
34. We had put to the appellants the ruling of the Supreme Court in the case of Aphali Pharmaceuticals Ltd. v. State of Maharashtra as and its relevance in deciding the controversy in this case. Shri A.N. Haksar Ld. Advocate had said that the ruling is not of much assistance. But we find that the observations made in paras 20 to 24 are of interest, though not having direct bearing on this case. They are quoted below:-
Para-20(Para 21 of 25 ECC7):- The Explanation-I says that patent or proprietory medicines has the same meaning as in Clause(h) of Section 3 of the Drugs Act, 1940. The High Court has found that renumbered definition 3(h) was earlier 3(d) and read as follows:-
3(d): Patent or proprietroy medicine means a drug which is a remedy or prescription prepared for internal or external use of human beings or animals and which is not for the time being recognised by the Permanent Commission on Biological Standardisation of the World Health Organisation or in the latest edition of the British Pharmacopoeia or the British Pharmaceutical Codex or any other pharmacopoeia authorised in this behalf by the Central Government after consultation with the Board.
Thus, patent or proprietary medicines meant a drug which was defined in the Drugs Act and not in the Act. The High Court rightly held that Ayurvedic medicine was not a drug at all. The definition of drug expressly excluded them. So the definition of patent or proprietary medicine was exclusive of Ayurvedic medical preparations, those being excluded from the definition of drug. The definition of patent and proprietary medicines till then did not apply to ayurvedic preparations. This position continued indeed till the amendment of Drugs Act by the Drug and Cosmetics (Amendment) Act, 1964. Several amendments were effected by that Amendment Act of 1964. Section 33A and Chapter IV-A were inserted. Section 33A said that Chapter IV was not to apply to ayurvedic (including siddha) or unani drugs. Save as otherwise provided in this act, nothing contained in this chapter shall apply to ayurvedic (including siddha) or Unani drugs. Chapter IVA made provisions relating to ayurvedic (including siddha) and Unani drugs. This shows that prior to this amendment of 1964 Ayurvedic preparations were expressly not drugs under the Drugs Act.
Para-21 (Para 22 of 25 ECC7): The Drugs and Cosmetics Act in the amended First Schedule after the amendment act of 1964 included Ayurvedic (including siddha) and Unani system drugs prepared under Section 3(a) which contains the definition. Ayurvedic (including Siddha) or Unani drugs includes all medicines intended for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings and animals, mentioned and processed and manufactured exclusively in accordance with the formula prescribed in the authoritative book on Ayurvedic (Siddha) Unani system of medicines specified in the First Schedule. This definition was also inserted by Drugs and Cosmetics (Amendment) Act, 1964 (13 of 1964) Section 2(a)(i) with effect from 15.9.1964.
Para-22(Para 23 of 25 ECC7): The same exclusion remained in the related Central Acts. For example, the Drugs Control Act, 1950 (Act 26 of 1950) replaced the Drugs Control Ordinance, 1949 (6 of 1949) which was promulgated on 3.10.1949 in order to ensure that certain essential imported drugs and medicines were sold in the reasonable price in the Chief Commissioner's provinces. Similar ordinances were issued by all the provinces. The necessity for continuing price control of these essential drugs continued. That was an Act to provide for the control of sale, supply and distribution of drugs. Drug meant any drug as defined in Clause (b) of Section 3 of Drugs Act, 1940, in respect of which a declaration had been made under Section 3 which defined drug. It may be noted that Pharmacopoeias authorised for the purpose of Section 3(h) of the Drugs Act, 1940, were : The Indian Pharmacopoeia, the Pharmacopoeia of the United States, the National Formulary of the United States, the International Pharmacopoeia and the State Pharmacopoeia of the Union of Soviet Socialist Republics vide SO 701 Gazette of India 1961 Pt. II Section 3(ii) p. 725. There was thus no ayurvedic pharmacopoeia prescribed for the purpose of that Act. Pharmacopoeia is a book containing the list of drugs with directions for use. The fact that no Ayurvedic Pharmacopoeia had been notified at the relevant time was because Ayurvedic preparations were not drugs for the purpose of Drugs Act and for that matter of Medicinal and Toilet Preparations (Excise Duties) Act, at the relevant time. It could be for this reason that in the original Schedule the expression medicinal and toilet preparations 'not otherwise specified' was used and Ayurvedic preparations of different categories were put under Item 2. In the Schedule as amended by the 1962 Act, this expression continued in Item 3. The same definition of 'drug' also continued in the Drugs Act.
Para-23(Para 24 of 25 ECC 7): From the Explanation I of the Schedule of the Act as substituted by Act 5 of 1964 also it is clear that patent or proprietary medicine means any medicinal preparations which is not specified in a monograph in a Pharmacopoeia, Formulary or other publications notified in this behalf by the Central Govt in the Official Gazette.
Para-24(Para 25 of 25 ECC 7): To be a patent medicine one would be required to have a patent. A patented article means an article in respect of which a patent is in force. 'Patent' means a patent granted under the Indian Patents and Designs Act, 1911 and now the patent Act, 1970. A patent medicine will, therefore, mean medicine in respect of which a patent is in force. Proprietary means of a proprietor, that is, holding properitary rights. Patent means a grant of some privilege, property, or authority made by the Govt. or sovereign of a country to one or more individuals. A proprietor is one who has the legal right or exclusive title to anything. It is synonymous with owner. A person entitled to a trade-mark or a design under the Acts for the registration or patenting of trade-mark or design [is called a proprietor of the trade mark or design]. Under the Trade and Merchandise Marks Act, 1958, 'Trade-mark' means:-
(i) in relation to Chapter-X(other than Section 81), a registered trade-mark or a mark used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right as proprietor to use the mark; and
(ii) in relation to the other provisions of this Act, a mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right, either as proprietor or as registered user, to use the mark whether with or without any indication of the identity of that person and includes a certification trade mark registered as such under the provisions of Chapter VIII.
As defined in Section 2(a) registered proprietor in relation to a trade mark means a person for a time being entered in the register as proprietor of the trade mark. A registered trade mark means a trade mark which is actually on the register.
35. From the reading of the materials on record and examining the evidence, more particularly, the admissions made by the appellants with regard to the use of BP and IP synthetic ingredients, the contention of the Revenue on the question of the classification has to be upheld. It is an admitted fact that the appellants are manufacturing "P & P" medicines having been registered under a Trade name of Amrutanjan and the products have been identified by the name of the manufacturer and also identified by the trade mark and colour scheme adopted by them. Further, it has to be observed that, 'The Ayurvedic Formulary of India' has given detailed formulations of drugs with specific mention of all the ingredients in each drug formulation. The methods and manner of preparation of drug are also given with the quantum of ingredients by weight and measures are also shown. Taking these factors into consideration and in the absence of any material evidence from the appellants to show that the impugned products have been prepared as per the manner, and method laid down in "The Ayurvedic Formulary of India" or any other authoritative texts, the Revenue's contention regarding classification has to be upheld.
36. As regards the evidence produced by the appellants in support of their claim, the arguments addressed by Shri L.C. Chakrabotthy has great force and are quite acceptable. The licence issued by the Director of Indian Medicine and Homeopathy in Form 25-D relied upon by the appellants, is not helpful in determining the classification of the product as per the terms of tariff entry. The affidavit of the chemist does not say that the impugned drugs have been prepared as per the prescribed formulae found in the authoritative texts on ayurveda. It merely states as reproduced by us in Para-14 above that "the ingredients consist mostly of ayurvedic preparations and include some synthetic preparations also." Hence, the contention of the Revenue in this regard has to be accepted. The reliance placed on the certificate issued by Sh. K.S. Viswanathsarma, Principal and Chief Physician of the Venkataramana Ayurveda College and Dispensary indicates that the ingredients are mentioned in the respective authoritative books of Ayurveda but the certificate does not state that impugned products have been prepared as per the formulae mentioned in the authoritative books on ayurveda. It is interesting to note that the certificate does not give the formulae of preparation with these ingredients. Merc mention of ingredients is given in the ayurveda books. In what context it is used, is not mentioned. As such, this piece of evidence is not at all helpful to determine the controversy in issue.
37. As regards the various letters of customers, most of which arc written in hand in illegible hand-writing, it has to be observed that it is in the nature of self-interested testimony, as all the letters are similarly worded. Shri L.C. Chakraborty's argument on this plea is acceptable and so also the lower authorities' reasoning.
38. We do not find any infirmity in the order of the Lower authorities and, therefore, the appeals have no merits and the same require to be rejected and the same are rejected.
P.C. Jain, Member
39. While concurring with the conclusions arrived at by my learned brother Shri S.L. Peeran, I would like to add the following observations:
40. A strong reliance has been placed by the learned advocate for the appellants on Tribunal's decision in Richardson Hindustan Ltd. .
41. In order to appreciate the submission of the learned advocate for the appellants, para 11 of the aforesaid Report is extracted below:-
11. Shri Chakraborty has argued that the two products in question are not exclusively Ayurvedic. They are not prepared strictly according to the formula laid down in authentic books of Ayurvedic medicines specified in the First Schedule to the Drugs and Cosmetics Act, 1940. We have already observed that the definition laid down in Section 3(a) of the Drugs and Cosmetics Act cannot be followed for classification of goods for central excise duty. Similar argument was advanced on behalf of the Revenue in the case of Shri Baidyanath Ayurved Bhawan Limited in the respect of their products Himalaya Surma, Moti Surma, Netramrita Surma, Angimukh Churan, Atul Shaktidata, Gasol Pachak, Kasbati, Namak sulemani, Pachakbati and Sodhi Harre. It was argued for the Department in that case that these products had not been manufactured as per formula laid down in any of the specified books on Ayurveda mentioned in the First Schedule to the Drugs and Cosmetics Act, 1940 and that all these products contained some Allopathic ingredients and as such, they could not be called exclusively Ayurvedic medicines. In the said case, 'Menthol' and 'citric acid' were used in Gasol Pachak, Namak Sulemani and Agnimukh Churan, 'Borax' was used in Kashbati, Pachakbati and Sodhi Harre. Citric acid was used in Pachakbati and Sodhi Harre.Steel was used in Atul Shaktidata. Swet Parpati contained potassium nitrate, Alum and Ammonium chloride. In the said case, the Tribunal dismissed the first argument of the learned Departmental Representative on the ground that definition of Ayurvedic medicine given in Section 3(a) of the Drugs and Cosmetics Act could not be followed for deciding the classification for central excise duty. Regarding the second contention of the Departmental Representative it was held by the Tribunal that Menthol, Citric Acid, Camphor, Iron, Alum, Borax, Potassium nitrate, Ammonium Chloride were, no doubt, pharmacopoeial items. But their use in Ayurvedic preparations did not render such preparations non-ayurvedic, provided the use of these ingredients is recognised in authentic treatises on Ayurveda. Based on this principle the Tribunal held that all these products qualified for categorisation as Ayurvedic medicines and the exemption from duty was admissible in respect of those medicines. We do not find any justitiable reasons for not following this principle. The ingredients of Vicks Vaporub are Pudine ke Phobl, Karpur, Ajowan ke Phool, Sarala drava, Nilgiri tail, Jatiphal tail and Ointement base (Parafine). The ingredients of Vicks Inhaler are Pudina ke Phool, Karpur, Banafshah and Sarala drava. Learned Advocate has stated that all the ingredients of Vicks VapoRub and Vicks Inhaler are mentioned in authoritative books on Ayurvedic medicines. The Collector (Appeals) has not examined the case from this angle although extracts from such books and other materials are stated to have been submitted to him.
42. It would thus be seen that in coming to the above findings in Richardson Hindustan, strong reliance, in turn, has been placed by the Tribunal on Tribunal's decision in the case of Shree Baidynath mentioned earlier. Para 116 of the said Report holds that "Ayurvedic medicine" has not been defined in the Central Excises and Salt Act or the Central Excise Tariff. Therefore, resort to the common parlance test has to be applied. Applying the said test, the Tribunal held in Shree Baidyanath's case that certain surmas (medicines for treatment of eye troubles) were Ayurvedic medicines and hence excluded from T.I.14E of the CET.
43. A similar argument has been raised by the learned advocate in this case too on the basis of certificates from various dealers, consumers and experts.
44. These certificates, we observe, are based on the labels on the medicines put out for sale indicating the Indian names of constituents or ingredients used in the medicine. Information on labels is apparaently for public consumption, but actually, it is brought out on record that the appellants have not only used certain pharmacopoeial medicines of B.P. and LP. standards, which strictly speaking may not be impermissible if used in small quantities to destruct from the medicine being Ayurvedic, but they have used the synthetic substitutes which can by no stretch of imagination be called Ayurvedic ingredients. Ayurvedic system permits drugs of plant, animal and mineral origin. It is to be noted that in Shree Baidyanath's or Richardson's cases, there was no controversy whether synthetic ingredients could be considered as Ayurvedic ingredients i.e. ingredients/materials used for. Ayurvedic medicine. The various certificates, based on such wrong informations supplied by the appellants would no doubt be wrong. Learned advocate for the appellants has urged that the two lower authorities have not questioned the veracity of the certificates and therefore, it is not permissible for the Tribunal at the second appeal stage to re-appraise the evidence. We are unable to agree with this plea. The Tribunal, as a final fact finding body, is not only not debarred from re-appraising the evidence but also duty bound to make a finding of fact when it is in question in the appeal before it. I would, however add that the genuineness of the certificates is not questioned by anyone; what is impeached about the certificates is that they are based on wrong or suppressed information about the character of ingredients or method of preparation.
45. Two medicines under consideration are in the form of ointment or Lepa.
The Ayurvedic Formulary of India defines lepa and sets out its method of preparation as follows:-
Method of preparation--The drugs are made into in a fine powder. Before use on the baby, it is mixed with some liquid or other medium indicated in each preparation and made into a soft paste. Water, cow's urine, oil, and ghee are some of the media used for mixing.
It is admitted to the appellants that the two medicines in consideration have not been prepared as per the above method or any other method given in any text book. The 'Ayurvedic Formulary of India' is an important piece of evidence in determining commercial parlance of a medicine being ayurvedic, besides other authoritative texts on Ayurvedic system. It is claimed in the 'Preface' dated 30th April 1976 to the said book that "various orgnisations, institutions including pharmacies and individual vaidyas, in different regions were consulted before the Formularly was prepared. The Formulary, therefore, represents the consensus of opinion of the Ayurvedic profession as a whole." The medicines under consideration could not be called Ayurvedic medicines either on the strength of Ayurvedic Formulary of India or of any other authentic treatise on Ayurvedic on the ground that these medicines have not been prepared according to a method given in any treatise on Ayurveda.
46. Learned DR has further relied on Bombay High Court's judgment in (Leukoplast India Ltd. v. State of Goa). He submits that although it is a sales tax case, the observations of the Hon'ble High Court regarding definitions in the Drugs and Cosmetics Act and that these definitions reflect the commercial parlance of the medicines are of general significance and apply eqully to central excise cases.
47. Para 15 of the said Report holds "that considering the provisions of the Drugs and Cosmetics Act which minutely regulate the manufacture, sale and distribution of drugs and cosmetics, it appears to as that such provisions necessarily have an over-riding effect and therefore, prevail and thus, the definition of drug given in the said Act is most relevant for determining its meaning in the trade. We are thus of the view that Mr. Hidayatullah is entirely right when he contends true and real meaning which a drug is in the trade or in the commerce is the meaning given to it in the Drugs and Cosmetics Act. The provisions of Section 18 are unquestionably motivated by public interest to protect and defend the health and lives of people. We are thus of the view that the popular or the commercial meaning of a drug is synonymous to the one given in the Drugs and Cosmetics Act". (emphasis supplied). On this analogy, learned DR has stated that the definition of Ayurvedic drug in Clause 3(a) of the said Act should govern the meaning of Ayurvedic drug under Central Excise Tariff. Therein Ayurvedic, Siddha or Unani medicine includes a medicine intended for internal or external use or in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, and manufactured exclusively in accordance with the formula described in the authoritative books of Ayurvedic, Siddha or Unani Tibb Systems of medicines specified in the First Schedule. He, therefore, rightly submitted that as held above since admittedly Amrutanjan Pain balms have not been manufactured in accordance with the formula described in authoritative books of Ayurveda, the same cannot be treated as Ayurvedic medicines.
48. I find sifficient force in this plea of the learned DR. It is apparent that the judgements of the Tribunal in Richardson Hindustan Limited and in Shri Baidyanath could not take into account the judgement of Bombay High Court in the Leukoplast case mentioned (supra) which has been delivered later. Bombay High Court's observations in the Leukoplast case, therefore, assume a binding character, so far as definitions in the Drugs and Cosmetics Act are concerned that they reflect the true meaning in the trade and commerce, in the absence of any other judgement to the contrary by any other High Court.
49. Nevertheless, the mere fact that the appellants had been holding a Drug Licence under the Drugs and Cosmetics Act for manufacture of Ayurvedic drugs does not entitle them to claim that it is Ayurvedic drug,in view of their admission that the Amrutanjan pain balms have not been manufactured according to any formula prescribed in the authoritative Ayurvedic treatise.
In view of the foregoing discussions, the medicines in question are not held to be Ayurvedic medicines. Accordingly, the appeals are rejected.