1999 (9) TMI 480 - AT - Central Excise

Summary

Issues involved:
Classification of a product described as "Ayurvedic Oil Himtaj" under Central Excise Tariff, benefit of exemption under Notifications 140/83 and 75/94, conflicting test reports on the nature of the product, criteria for considering a product as an ayurvedic medicine, relevance of specific formula prescribed in recognized ayurvedic texts, applicability of SSI exemption under Notification 140/83.

Classification under Central Excise Tariff:
The respondents claimed the product "Ayurvedic Oil Himtaj" to be an ayurvedic medicament under CET sub-heading 3033.30, seeking exemption under Notification 140/83 and 75/94. A show cause notice proposed classification under CET sub-heading 3305.10 as perfumed hair oil. The lower appellate authority upheld the product as an ayurvedic medicament, leading to the Revenue's appeal. The Tribunal analyzed conflicting test reports and relevant case law to determine classification. The Tribunal held that for a product to be considered ayurvedic, it must not only contain ingredients from recognized texts but also be manufactured according to prescribed formulas.

Criteria for Ayurvedic Medicine:
The Tribunal referred to precedents like Naturelle Health Products case to establish that adherence to prescribed formulas in recognized ayurvedic texts is crucial for classification as an ayurvedic medicine. The decision emphasized that merely containing ingredients mentioned in ayurvedic texts is insufficient; the product must be prepared in accordance with specified formulas. The Tribunal differentiated cases where products were not prepared as per prescribed formulas and classified them based on their actual nature and usage.

Applicability of SSI Exemption:
The lower appellate authority's finding that the product did not bear a brand name belonging to another person, making the respondents eligible for SSI exemption under Notification 140/83, was not contested by the Revenue. Consequently, the duty demand was deemed unsustainable. The Tribunal partially allowed the appeal, confirming the classification of the product as perfumed hair oil under CET sub-heading 3305.10 but acknowledging the eligibility for SSI exemption under Notification 140/83 due to the absence of a challenge from the Revenue.

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