Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Calcutta Chemicals Ltd. on 14 March, 2000
Equivalent citations: 2000(70)ECC833, 2000ECR345(TRI.-CHENNAI), 2000(120)ELT97(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. This is a Revenue appeal against Order-in-Appeal No. 96/96 (M) dated 29-3-1996 allowing the assessee's claim for the benefit of the exemption Notification No. 75/94-CX dated 29-3-1994 which grants full exemption to Ayurvedic Medicaments manufactured exclusively in accordance with the formula prescribed in the authoritative text books and sold under the name as specified in such books.
2. The Revenue authorities had initiated proceedings on the allegation that authoritative text books had prescribed the name "Maha Bhringaraj Oil" for the Ayurvedic preparation. While the assessee had very prominently in block letters had named the product as "MAHA BHRINGOL". Below this big lettered trade name they had also indicated 'MAHA BHRINGARAJ OIL' along with the following words below the same: "Unique Double Action Ayurvedic Formula". The Revenue's contention is that the product is not sold in the name in which the authoritative text books had given the name to the product as "Maha Bhringaraj Oil" but the assessee had projected the product in their own name as "MAHA BHRINGOL" and therefore the notification had not been satisfied and hence they were required to deposit short levy of Rs. 1,63,607.30 which was confirmed in the Order-in-Original. The Board of Central Excise vide their letter F. No. B/30/1/94-TRU dated 29-3-1994 had in order to remove ambiguity in the manner to obe applied the notification had issued a clarification. The sold Board instruction have been incorporated in the Trade circular issued by various Collectorates and one of which is reproduced herein below :-
A copy of Notification No. 75/94-CE., dated 29-3-1994 has been circulated under this Collectorate Trade Notice No. 33/GL/31/94, dated 20-4-1994.
The effect of this notification to provide for full exemption from excise duty to medicaments (including veterinary medicaments) used in ayurvedic, unani, siddha, homoeopathic or bio-chemic systems of medicine in the following circumstances:
(a) Medicines belonging to ayurvedic, unani and siddha systems of medicine which are prepared in accordance with the formulae given in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1944.
(b) Homoeopathic medicines prepared as per the pharmacopoeia of India, U.S.A., U.K., or Germany.
It would be seen that so far as S. No. 3(i) of the Table annexed to the notification is concerned, the benefit is applicable so long as the medicament is prepared according to the formulae described in the relevant authoritative books or pharmacopoeia as the case may be and the medicine is sold by the name described in such books or pharmacopoeia. It is immaterial whether the manufacturer puts his mark or logo or monogram, symbol etc. in marketing such medicine. To that extent, the definition of "patent or proprietary" medicament as applicable to allopathic medicines has not been followed in respect of Ayurvedic, unani etc. medicines specified in such text books. To further illustrate, the following example will make it clear as to which type of medicaments will be exempted. The specific case of one medicament say "Chavanprash" may be taken. The process of manufacture of this medicament is specified in the standard text books.
The following four situations will make it more clear:
(a) Chavanprash is prepared as per ayurvedic text books and sold also as "Chavanprash" without any indication as to who the manufacturer is;
(b) Chavanprash is prepared as per ayurvedic text books and sold as chavanprash but the manufacturer's name or mark, logo, symbol etc. is also prominently displayed;
(c) Chavanprash is prepared as per ayurvedic text books. It is, however, sold under a brand name and but not sold as "Chavanprash". For example, it is sold say, as "Kesri Jivan";
(d) "Chavanprash" is not prepared as per the ayurvedic text books but using some other formulae.
In respect of the situations envisaged in (a) & (b) above, full exemption from excise duty would be leviable. The exemption would not be attracted in the case of (c). In the case of (d) also, the medicament will not qualify for exemption. It is immaterial under what name the medicament is sold in this case.
In respect of bio-chemic medicines, excise duty will be leviable only when such goods are sold under a brand name. The term "Brand Name" has been defined in the Explanation to the notification as any mark which indicates a connection in the course of particularly between men and some person having the right to use the name or mark. Accordingly, only such branded bio-chemic products will be subjected to excise duty.
It may be mentioned that it is understood that under the Drugs and Cosmetics Act, in respect of ayurvedic, unani, siddha or homoeopathic systems, a drug licence is required for production of such medicines. Consequently, in order to determine whether a particulai product is prepared as per the specifications in the standard text books or not, the drug licence may also be referred to which would indicate whether the products are prepared as per the specifications in the standard text books or otherwise. The packing also indicates these details.
There should not be thus any difficulty in administering the exemption to medicaments which are prepared as per the standard text books and sold under the generic name. If there is still any difficulty in administering the exemption, this may kindly be brought immediately to the notice of Collector or the undersigned.
[Bhttbaneswar Collectorate Instructions No. 33-GL-30-94, dated 20-4-1994; Parallel Madurai Collectorate No. 38/94, dated 19-4-1994]
3. The Revenue's contention is that in terms of the four situation discussed in the above circular, the assessees' case would fall under the illustration (c) as noted above which clarifies that where the Ayurvedic text book refers the product as "CHAVANPRASH", but however, not sold as "Chavan-prash"; but for example, it sold, say as "Kesri Jivan" and then, in that case, the benefit of the notification would not be applicable. In the present case, the appellants had prominently and in very block letters changed the text of the name from "Maha Bhringaraj Oil" to "Maha Bhringol" has been used thereby the benefit of Notification is required to be denied. Now the Revenue's contention that the Commissioner in his order has totally not applied this circular and has yet granted the benefit which should have been denied and hence this appeal.
4. We have heard Shri S. Kannan, Ld. D.R. for the Revenue and Shri Chidambaram, Ld. Consultant for the respondent who has also filed written submissions.
5. Ld. Consultant took liberty to file an affidavit of Shri Debais Saha, Chief Executive of the Calcutta Chemical Co. Ltd. to say that although they are affixing on the lablel and bottle as well as on the carton the name "Maha Bhringol" in prominent letter, yet they will have no objection if somebody else also using the said name. They contend that in any case, the product is manufactured only as "Maha Bhringaraj Oil" in terms of the formula described in authoritative "Ayurvedic Books" recognised for this purpose. The Ld. Consultant on the basis of this affidavit and the cited Tariff Note and the Board's Circular argued that it is immaterial whether the manufacturer puts his mark or logo or monogram on the sample, etc. while marketing such medicine, so long as they have also indicated the original Ayurvedic Text book name also in the label along with company's name in which it is sold. Even then the benefit of the notification cannot be denied. He refereed to the judgment of the Apex Court in the case of Astra Pharmaceuticals Ltd. as reported in 1995 (75) E.L.T. 214 which held that exemption cannot be denied on formulation marked with a 'Product mark or brand name'. He also contended that the authorisation given by the Commissioner was not proper and legal as there was no indication in the authorisation that the Commissioner has applied his mind while preparing the grounds of appeal, therefore on this ground the appeal is required to be rejected.
6. On a careful consideration of the matter and the written submission besides the case law, we are of the considered opinion that Revenue has made out a case for reversing the Commissioner's order and to uphold the Or-der-in-Original. The appellants have very prominently in block letters indicated the name of the product as "MAHA BHRINGOL". The question is as to whether the benefit of the Notification can be extended even if the appellants have changed the name of the Ayurvedic product as found in the text book and sold in a different name. The clarification given by the Board in the form of illustrations as already extracted above shows that this particular case falls within the illustration (c) because the appellants are not using the product as 'Maha Bhringaraj Oil' and that they are selling in a different name 'Maha Bhringol', which is written in big block letters. The assessee has filed an Affidavit to say that any other person could also do the same and they will not object to it. This is not a point for consideration. We are only required to examine the Notification in question which merely grants benefit to the Ayurvedic Medicaments which are sold under the name as specified in such books or Pharmacopoeia as laid down in the Notification No. 75/94 CX dated 25-9-1994. On a plain interpretation of the notification, it is very clear that the item is not sold as 'Maha Bhringaraj Oil' which is admittedly the name given in the authoritative Ayurvedic text. Nothing prevented the assessees to continue to sell in that name. Having changed the name as 'Maha Bhringol' they have thereby marketed the goods in this name in the market so as to associate this name with the product. This is not a company's name or logo, which is being put on the label or on the product, only in such cases, the Apex Court in the Astra Pharmaceuticals case, held that if the name or logo of other company is affixed that by itself cannot be construed as a brand name and this finding was in the context of a different notification, which denied benefit on affixing of brand name or trade name. The question also before us is not to consider any such provision of the notificaton which denies the benefit on the use of a brand name. As stated, the notification merely refers to the medicaments used in Ayurveda should be manufactured exclusively in accordance with the formula described in the authoritative books specified in First Schedule to Drugs and Cosmetics Act, 1940 and "sold" under the name as specified in such books or Pharmacopoeia. There is no indication of trade name in this notification, so as to give a finding that the company's name or its logo is not a brand name as held by Honble Apex Court judgment in the case of Astra Pharmaceuticals Ltd., supra. So long as the appellants who manufactured the product exclusively in accordance with the formula described in the authoritative books, but sells the same under different name not specified in such books or Pharmacopoeia, then the benefit is simply to be denied as clarified by the Board and in terms of the illustration "(c)" already noted. The other judgments referred to by appellants also are in a different context, than the one under issue, therefore we have to respectfully differ with the Ld. Consultant's pleas to accept their contention and to reject the Revenue appeal. The other contentions of the Ld. Consultant that the authorisation is not proper, and on this count, appeal is required to be dismissed is also not sustainable. We have examined the authorisation issued by the Commissioner of Central Excise and we find that the authorisation has been properly issued in terms of the Sub-Section 2 of Section 35A of the Central Excise Act and he has clearly given his opinion that the order passed by the Commissioner of Central Excise (A) Madras under Section 35A is not legal and proper and therefore this is sufficient to hold that the Commissioner has applied his mind in expressing his opinion. Hence the plea taken by the Consultant which is supported by same judgments has been given in cases, where there are no such words "legal and proper" in the authorisation,which is not so in the present case. We, therefore, set aside the impugned order and allow the Revenue appeal.