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TMI Blog2007 (11) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... notice was issued pursuant to the liberty given by this Court in C.A. Nos. 7896-97/2003 disposed of by a three-Judge Bench by order dated December 7, 2004. The High Court accepted the position that normally the High Court should not interfere at the show cause notice stage. But in view of the factual scenario the Court entertained the writ petition and decided in favour of the respondent. 4. Background facts in a nutshell are as follows : The respondent is a manufacturer of various products including Vicco Vajradanti and Vicco Turmeric which are stated to be ayurvedic medicines. A show cause notice dated 8th November, 1976 was issued requiring the respondent to satisfy as to why the said products should not be classified as "cosmetics" and not "ayurvedic medicines". This show cause notice is hereinafter referred to as the "1st SCN". After hearing the respondent, the Commissioner under order, dated 4th June, 1977 classified the said products as "cosmetics". The same was challenged by the respondent by way of Civil Suit No. 143 of 1978 in the Court of Civil Judge, Senior Division, Thane, which came to be decreed in favour of the respondent holding that the said products were "ayurv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 (9) SCC 402. Consequently, fresh show cause notices dated 2nd May, 1997, 18th September, 1997 and 27th October, 1997 came to be issued requiring the respondent to satisfy as to why the products should not be classified as "cosmetic" falling under Chapter 33. These three show cause notices are hereinafter referred to as the "3rd SCNs". Meanwhile, by Telex dated 8-9-1997, the Board further clarified that the circular dated 31-10-1996 is general in nature and the Vicco products having been subjected to the specific judgment and order of the High Court affirmed by this Court, the circular would not have overriding effect. The department further sought opinion of the Law and Judiciary Department on 13-11-1997. Thereafter, the Union of India moved an application being IA-1 of 1999 in this Court in Civil Appeal No. 2123 of 1993 arising out of the SLP No. 14082 of 1988 which was filed by the respondent for clarification of the order dated 19th April, 1993 with reference, to Shree Baidyanath's judgment (supra). 7. On 17-7-2000 the said application was withdrawn stating that the authorities will act in accordance with the provisions of law, which statement was recorded by this Court while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dabur India Ltd. and upheld the judgments of CEGAT wherein it had been held that the product "Dant Manjan Lal" is a toilet preparation and not a medicinal preparation (Ayurvedic) and therefore not classifiable as a medicine (Ayurvedic) and accordingly not eligible for the benefit of exemption notification. The judgment of Supreme Court is being circulated to all the field formations of CBEC for necessary action in the matter. 4. Therefore, keeping in view the aforesaid judgment of Supreme Court the Board has decided to withdraw its aforesaid instructions contained in letter No. F.No. 1031/14/88-CS.3 dated 12-5-1989. You may therefore decide classification of the goods in question in the light of Hon'ble Supreme Court's said judgment under intimation to the Board. 11. It was submitted that fresh materials had been considered and it has been found that the products are to be classified under Entry 33.04 and 33.06 and not by Entry 3003.31. Reference is also made to the Notes in Chapter 30 and Chapter 33. So far as Chapter 30's notes are concerned reference is made to notes 1 and 2 and notes of Chapter 33 which read as follows : "Chapter 30 1. This Chapter does not cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogram, 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 indicating of the identity of that person. Chapter 33 2. Heading Nos. 33.03 to 33.07 apply, inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings with labels, literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialised to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents or are held out as having subsidiary curative or prophylactic value. 4. In relation to products of heading Nos. 33.03, 33.04 and 33.05, conversion of powder into tablets, labelling or relabelling of containers intended for consumers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in Amrutanjan Ltd. v. CCE - [1996 (9) SCC 413] this Court held that "the mere fact that the ingredients are purified or added with some preservatives does not really alter their character." 18. First round of show cause notice dated 8-11-1976 states as follows : "M/s Vicco Laboratories Ltd. furnished Photostat copies of the certificates bearing Nos. A/Cert/12/75 dated 6-1-1976 and A/Cert/388/76 dated 6-1-1970 issued by Food and Drug Administration, Maharashtra State, Bombay in support of their claim. M/s Vicco Laboratories, Dombivli are hereby required to show cause to the Asst. Collector, Central Excise, Kalyan Division, Kalyan why "Vicco Vajradanti Paste" and Vicco Turmeric Vanishing Cream should not continue to be classified as tooth paste. T.I. No. 14FF and Cosmetic & Toilet preparation T.I. 14FF respectively as these products are marketed and are known in the Trade parlance as tooth paste and vanishing cream and not as Ayurvedic medicines." 19. Suit No. 143/1998 was filed challenging the show cause notice. 20. Whether the two products Vicco Vajaradanti and Vicco Turmeric Skin Cream were Ayurvedic Medicines or Cosmetics (tooth paste, vanishing cream, cosmetic cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third witness examined on behalf of the defendants has not carried the matter any further and her evidence is almost totally useless as far as these proceedings are concerned. In addition to this, we have the classifications made by various governmental authorities including the Sales Tax Commissioner accepting the status of the two products as Ayuvedic medicines. Last but not the least, we have unshaken testimony of P.W. 11 Dr Antarkar, admittedly an expert on Ayurvedic medicines. There is overwhelming evidence, therefore, on the record which is almost one sided to establish that the two products under consideration must be regarded as Ayurvedic medicines although they may also be used as tooth paste and are used as cosmetic cream." 23. The High Court however held that the plea of plaintiff Vicco Laboratories raised an oral arguments that the products were "exclusively ayurvedic medicines (and therefore, wholly exempt under Entry 14E) could not be accepted since there were no pleadings to that effect: therefore they were taxable at 121/2% as "patent and proprietary medicines". (Entry 14E). 24. The respondent and the Revenue both approached this Court by SLPs being SLP No. 1408 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se products namely Vicco Vajradanti Powder Paste are meant for oral or dental hygiene and are used as tooth powder and tooth paste, the same appear to be classifiable under sub-heading 3306.00 and chargeable to duty at 15%. Similarly, Vicco Turmeric appears to be a Vanishing Cream falling under sub-heading 3304.00 and; Whereas no material change in the composition of above mentioned products has been taken place, these products appear to be tooth powder, tooth paste and vanishing cream classifiable under heading 3306.00 and 3304.00 respectively, and Whereas, Vicco Turmeric Cream has mainly prophylactic cosmetic effect and it cannot be considered Ayurvedic medicine, it appears to be Vanishing Cream only and; Whereas as per Note 1(d) of Chapter 30 Preparation of Chapter 22 even if they have therapeutic and Prophylactic properties, they are classifiable, under Chapter 33 and are excluded from Chapter 30 and; Whereas, Vicco Vajradanti Powder is put up in the form of "Dant Manjan" and paste has been put up in the form of "Tooth Paste" and Vicco Turmeric has been put up in the form of Cosmetic/Vanishing Cream; and Whereas, for the last so many years you were advertising and marketin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting countries and the modification made in the labels, which are otherwise used in the country. Having examined the matter, it is opined that there may be no objection in export of subject products labeled as herbal products. This permission is limited to export purpose only. Sd/- Illegible. (Ashwini Kumar) For Drug Controller General (I) Copy to : Shri G.K. Pendharkar, Vicco Laboratories, 25, Jerbai Wadia Road, Parel, Bombay -400012" 30. Normally, the writ court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the concerned authorities and to satisfy the concerned authorities about the absence of case for proceeding against the person against whom the show cause notices have been issued. Abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities is the normal rule. However, the said rule is not without exceptions. Where a show cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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