Customs, Excise and Gold Tribunal - Mumbai
Shree Baidyanath Ayurved Bhavan Ltd. vs Commissioner Of Central Excise on 13 December, 2000
Equivalent citations: 2001(74)ECC691, 2001(138)ELT218(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The question for consideration in this appeal is the classification of the product "Dant Manjan Lal" manufactured by the appellant.
2. In the order impugned in this appeal, the Commissioner (Appeals), Bhopal has confirmed the finding of the Assistant Commissioner, Nagpur, that the product is to be classified not as an ayurvedic medicament under Heading 3003.31 of the Central Excise Tariff as claimed by its manufacturer, but as a tooth powder for oral hygiene under Chapter 33 of the tariff. The Assistant Commissioner, in his order, has confirmed the demand for duty consequent upon the determination of the classification, and also imposed a penalty on the appellant under Rule 173Q. The classification of the product manufactured by the appellant was, earlier, a subject-matter of the proceedings before this Tribunal and the Supreme Court. In its order , on the appeal filed by the assessee, the Tribunal had found the product, not to have the qualities of the medicament. It had found, absence of evidence to show that its use was as a medicine and not as an article of toiletry. It had preferred to go by the popular meaning, the meaning attached by the persons using the product, rather than the scientific and technical meaning. It declined to accept the certificates in affidavit given by validly as as to the usage of the product. This reason of the Tribunal has been endorsed in no uncertain terms by the Supreme Court in its judgment reported in 1996 (83) ELT 493 on an appeal filed by the assessee.
3. The Advocate for the appellant contends that this judgment of the Supreme Court is no longer to be applied. He contends that the question before the Tribunal and the Supreme Court, was whether the goods were entitled to exemption under Notification 62/78. The relevant entry in the table to the Notification 62/78 exempted "All drugs, medicines and pharmaceuticals and drug intermediates not elsewhere specified." The decision of the Tribunal and the judgment of the Supreme Court, related to classification of the goods under Item 68 of the tariff. By the budget resented in 1996, Chapter 30 of the tariff was amended by insertion of sub-heading 31 in heading 30.03. The fact of this amendment, insofar as the ayurvedic medicament was concerned, was to cover in this heading such medicament manufactures exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940. In the matter earlier before the Tribunal and the Supreme Court this question did not arise and their findings therefore would not be relevant to the classification under this heading. What was required to be seen is whether the goods fall under tariff heading now carved out. The formula for the medicament was contained in the "Ayurved Sar Sangraha" which was included in the First Schedule to the Drugs and Cosmetic Act, 1940 by notification of the Ministry of Health and Family Welfare dated 28.8.1987. Therefore, all that was required to be now considered was the classification of the product in accordance with the requirement in the tariff heading. Since that was satisfied, the classification claimed ought to be approved. Otherwise, the amendment made to the tariff would be rendered nugatory. He cited the judgments in support of this contention relating to the effect of statutory amendment. Circulars of the Board relating to classification of goods as ayurvedic medicament is also cited in support, an order by the Commissioner of Central Excise (Appeals), Patna.
4. The departmental representative emphasises that the product has been found not to have therapeutic properties by the Supreme Court. The Court had emphasised that for a substance to be classified as a medicament, it must be show (sic) [shown] to have such properties and that it must satisfy the requirement of a medicament which has to be prescribed by a physician for a specific period and for a specific medical conditions. In the light of these findings, it was not permissible now to take a different view. He relies on another circular of the Board withdrawing the earlier circular, cited by the appellant requiring classification of the product as an ayurvedic medicament.
5. The Supreme Court, in the judgment referred to earlier, had categorically affirmed the finding of the Tribunal that the product was not a medicine for the reason that it was not prescribed by a medical practitioner, used for a limited time, and not prescribed to deal with a specific disease. It also endorsed the Tribunal's view that the certificates given by validly as could not be accepted in the absence of evidence to show that the use of the product is as a medicine.
6. The circulars of the Board have at different times taken different views on the subject. In its Circular dated 25.9.1991 (103/10/90-CX). It had held that notwithstanding the Tribunal's judgment, the product to be manufactured by the appellant should be classified as a product of ayurvedic medicament. It relied upon the Supreme Court's judgment in CCE v. Richardson Hindustan (Appeal 2137/88) which, it says, upheld the true test to be applied to determine the classification of the product as an ayurvedic medicine that the product in common parlance is known as ayurvedic medicine and the ingredients are mentioned in the authorities put on ayurved. This circular was issued prior to the Supreme Court's judgment in regard to Dant Majan Lal . In a subsequent circular of 31.10.1996, it told its officers that the Supreme Court's judgment has been accepted by the Board and circulated it for necessary action with regard to classification on similar goods. By a letter dated 28.5.1997 to the Commissioner of Central Excise, in reply to this letter, seeking advice on the classification of the product, it said that the Supreme Court's judgment which was in the context of the earlier tariff, was not relevant to the case, in view of the changes made in the tariff, under creation of the sub-heading by 1996-97 budget.
7. Subsequent to its amendment in Budget 1996, the entry read as follows:
3001.31 Manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940) or Homeopathic Pharmacopoeia of India or the United States of America or the United Kingdom or the German Homeopathic Pharmacopeias, as the case may be, and sold under the name as specified in such books or pharmacopoeia.
8. The Assistant Commissioner has emphasised the fact that heading 3003.31 is an entry with the double dash(- -) occurring under the single dash (-) heading for medicament including those used in Ayurvedic, Unani, Sidha, Homeopathy or Biochemical system. He finds that the term "medicament" is not defined in any of these headings. Notification 75/94 also does not define medicament, nor was this expression defined in Notification 62/78, which was under consideration by the Supreme Court in its earlier judgment. He therefore concludes that the finding of the Supreme Court with regard to Notification 62/78 would apply with equal force, notwithstanding the change in the tariff heading. This is the same reasoning that the Commissioner (Appeals) adopts. He says "So given if it is accepted that the subject product is manufactured exclusively in accordance with the formula described in an authoritative book as specified under the first schedule to Drugs and Cosmetic Act, 1944, as claimed by the appellant, the fact still remains that this claim does not make the product an Ayurvedic Medicine for the reason that it has been clearly and lucidly brought out in the judgment of the Apex Court. What has been pronounced by the Apex Court provides a touch stone for distinguishing between the medicine and an article of toiletry. It would ensure the products which are basically articles of toiletry are not passed or claimed medicament to escape correct liability. Thus it is relevant for all times and not merely to a particular period with reference for a particular tariff item."
9. The Heading 3003.31, prior to its amendment, was markedly different. It read" Medicaments including those used in Ayurvedic, Unani, Sidha, Homeopathy or Biochemical System". The question to be considered therefore is whether the change made in the tariff heading is the extent and scope made in the tariff.
10. Prior to its amendment, the tariff heading did not indicate what exactly an Ayurvedic, Unani, Sidha, Homeopathy or Biochemical Medicament was. After the amendment, it does not in term define any of these medicaments. It however does provide that it is those medicaments manufactured exclusively described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, that are to be classifiable under sub-heading 31. There is no dispute that the product under consideration is manufactured exclusively in accordance with the formula described in the Ayurvedic Sar Sangraha, which is an authoritative book specified in the first schedule of the Drugs and Cosmetics Act. The reason for denial therefore would only be that the product is not a medicament. This is what the Supreme Court has said.
11. If it is accepted, notwithstanding the amendment to the tariff, the product cannot be considered as medicament because it was held by the Supreme Court not to be so, the question that has to be answered is, what is the effect of the amendment. In other words, what is the product which was not earlier classifiable under this heading that would now be classifiable under it. It goes without saying that the amendment has some significance and meaning. "A conscious and glaring departure from the previous language and be given its due significance" State of U.P. v. Malik Zarid Khalid AIR 1988 SC 132. The words in sub-heading have been added by the Legislature for a specific purpose. The Commissioner (Appeals) and the Assistant Commissioner have virtually ignored the amendment. The Commissioner (Appeals), as we have noted, who was so far has to say that the classification of Dant Manjan Lal has been settled for all times to come.
12. It cannot be disputed that the amendment has meaning and significance and cannot be ignored in the manner in which these officers have ignored it.
13. What is the test that is normally adopted for considering whether a particular substance is a medicament or not? Persons concerned with such medicaments would normally look to the publications of the trade or industry, more particularly the pharmacopoeia published in most countries. Inclusion of a product in such a pharmacopoeia as a medicament is generally considered sufficient to consider it to be a medicament. While this specific point was not argued before us, it is a matter of common knowledge that such substances in what is referred to as western or allopathic medicine find their way into this pharmacopoeia and other such publications based upon the claim of their manufacturer. Such claims are, as far as we are aware, invariably supported by the reports of tests of the efficacy of the product in treating or preventing a particular illness or disorder.
14. It is also a matter of common knowledge that the Governments of most countries have an agency to consider and to accept or reject a claim made by a manufacture (sic) [manufacturer] of the product that it is a medicament and examine the claim of its evidence in support of which the claim is made and if it considers such a claim valid, permits the medicament to be sold, limiting wherever necessary, the extent to which the conditions of which that medicament may be sold. Such an authority may in addition control the manufacture, distribution and sale of such medicaments.
15. The Drugs and Cosmetics Act and the Rules made there under contain these provisions in this country. Section 5 contains a provision of constituting the Drugs Technical Advisory Board. Section 6 provides for a Central Drugs Laboratory for carrying out the functions of the Act. Section 7 provides for Drugs Consultative Committee. Section 20 contains provisions for Drug Governments analysis, Section 26(a) embodied (sic) [embodies] the power of the Central Government to prohibit manufacture of a drug and cosmetic likely to risk the human beings and animals or the drug that does not have therapeutic value claimed for it. There are also penal provisions. The Rules provide for manufacture and sales of drugs to be controlled by a licence and testing of samples.
16. The Drugs and Cosmetics Act, 1940 provides for a licence to be obtained for manufacture of Ayurvedic, Sidha, Homeopathic and Unani medicines. Technical Advisory Board to advise Central and State Government on technical matters. Among the members of this Board are persons well versed in ayurvedic medicines, including teacher in Dravya Guna and Kalpana and a practitioner in ayurvedic medicine. It also provides for a Ayurvedic, Sidha and Unani Drugs Consultant Committee. The manufacture of ayurvedic medicament is subject to supervision and checks by officers appointed to carry out the provisions under the Drugs and Cosmetics Act, 1940.
17. Section 3(a) of the Drugs and Cosmetics Act, 1940 defines "Ayurvedic, Sidhaor Unani drug" as follows:
Ayurvedic, Sidha or Unani drug" includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation 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, Sidha or Unani Tibb systems of medicine, specified in the First Schedule.
A comparison of this definition and the entry now contained in heading 3003.30 of the Tariff shows that the two are virtually identical for the purpose of both the Drugs and Cosmetics Act and the Tariff, after its amendment, the medicament which is made exclusively in accordance with the formulae described in the First Schedule to the Act is to be considered as ayurvedic medicament.
18. The effect of insertion of the new entry in the tariff is that to bring it on a par with the Drugs and Cosmetics Act, 1940. The term "ayurvedic medicament" in the tariff will have the same meaning as the meaning in the Drugs and Cosmetics Act. Therefore, if the product under consideration conforms to the requirements specified in that Act and the tariff, it will be entitled to be so classified. There would be no requirement that the Central Excise authorities must independently test it for its efficacy as medicament by apply (sic) the provisions of Note (2) to the chapter.
19. It must be emphasised that these considerations were are not present before the Supreme Court which passed its orders on the classification of Dant Manjan Lal. The Tribunal, and on appeal the Supreme Court, was concerned with the classification of the goods under Item 14E of the earlier Central Excise Tariff. The Tribunal has therefore rightly applied the test as to whether the product was a medicament, as is normally understood by persons in the trade, was shown to possess the therapeutic or prophylactic properties, was demonstrated as to be medicament by being prescribed for a limited period, for a specific disease or disorder. By virtue of the amendment made to the tariff, these considerations cannot be gone into. The judgment of the Supreme Court therefore cannot be a deciding factory (sic) [factor] in determining its classification under the heading as it now stands. This in fact is the view that has been expressed by the Commissioner (Appeals), Ratna, whose order was cited by the Advocate for the appellant. We therefore hold that the product was rightly classifiable under heading 30.03 as claimed by the appellant.
20. Appeal allowed. Impugned order set aside.