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2016 (11) TMI 7 - CESTAT NEW DELHI

2016 (11) TMI 7 - CESTAT NEW DELHI - TMI - Classification of goods - Roop Amrit - Complete solution - cosmetic under heading 3304 or medicament under heading 3003? - Held that: - To classify a product under Central Excise tariff the first and foremost test should be the common parlance understanding, unless a specific definition is provided in the entry itself. It is nobody's case that the cosmetic or toilet preparations should not have curative property. Similarly, PP ayurvedic medicament may h .....

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milar to complete solution) is not a medicament - products classified as cosmetic or toilet preparations, the valuation done under Section 4A of Central Excise Act, 1944 read with Notification No. 13/2002-CE (NT) dated 01.03.2002. - Denial of SSI exemption - Held that: - the appellant-assessee had produced certificate from the local surpanch of the village which was cross verified by the jurisdictional Assistant Commissioner to ascertain the fact. In fact, the appellant-assessee also had a c .....

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rtificate from the Drug Controller etc. It is not clear as to type of effort regarding clarifying the excise duty liability - bonafide belief alone cannot be the ground for not invoking demand for extended period. - Imposition of penalties on partners - Held that: - since penalty of equal to duty amount has been imposed on the firm, there is no justification to impose penalty on the partners of the firm. In any case, we note that penalty imposed on the partners have been set-aside by the Com .....

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the Respondent : Sh. Amit Jain, Advocate ORDER Per B. Ravichandran As the issue involved in all these five appeals and one Cross objection are same, they are taken up together for disposal. The brief facts of the case are that the appellant-assessee (M/s Davo Laboratories) are engaged in the manufacture of Ayurvedic medicaments/ Cosmetic preparations in their unit located in Indore. In September, 2004, the manufacturing facility was shifted to Bhopal and thereafter in August, 2015 the unit was s .....

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aid duty in respect of Roop Amrit and Complete Solution . The show cause notices proposed classification of goods under tariff heading 33.04 upto 28.02.2005 and under heading item 33.04 9910 and 33049990 thereafter. The show cause notice also proposed valuation in terms of Section 4A and sought to deny the SSI exemption availed by the appellant-assessee. The show cause notice relating to Bhopal unit was decided by the Commissioner, Central Excise, Bhopal. Vide the impugned order dated 10.08.2007 .....

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aid 25% of penalty imposed to close the matter. The duty demanded had already been paid. 2. In respect of Indore unit the Additional Commissioner, Indore passed the order holding that Roop Amrit to be classified as Ayurvedic medicine and valuation to be done under Section 4. He upheld the invocation of extended period and imposition of penalty. However, the SSI exemption was allowed to the appellant-assessee. A duty demand of ₹ 9,63,749/- was confirmed in the said impugned order. On appeal .....

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cation of Roop Amrit . The Commissioner (Appeals) confirmed the classification of the product under heading 3304, to be valued under Section 4A and also denied the benefit of SSI exemption. Against this order of Commissioner (Appeals) dated 19.08.2008, three appeals have been filed, one by main appellant-assessee and two by partners of the appellant firm. 5. We have heard both the sides and perused appeal records. The points for determination in these appeals are: (a) The correct classification .....

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he classification of Roop Amrit and Complete solution . The case of the Revenue is that these products are to be classified as cosmetic or toilet preparations under heading 3304. The appellant-assessee claims classification under heading 3003 as medicaments. 7. We have perused the original order dated 10.08.2007 of Commissioner of Central Excise, Bhopal. He had examined the nature of product, the tariff headings and case laws and arrived at the conclusion that these products are correctly classi .....

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1940. The original authority observed that based on these two grounds that the products are to be called as PP Ayurvedic medicine. He further relied on the Hon ble Supreme Court decision in CCE, Calcutta vs. Sharma Chemical Works- 2003 (154) ELT 328 (SC) to support his views. A reference was also made to Supreme Court decision in Puma Ayurvedics Herbal (P) Ltd., vs. CCE, Nagpur 2006 (196) ELT 3 (SC). 8. The nature of the products and their usage as explained by the appellant assessee themselves .....

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firmness by stimulating new cell growth in mammary gland. This herbal formula is the first ever of its kind natural breasts enhancement alternative. It is recognized for its positive results of firm and fuller breasts for the women who use it . A plain reading of the description of the product as given by appellant- assessee in their catalogue reveals that both the products are more in the nature of items used for enhancing one s appearance and beauty. The appellant-assessee strongly pleaded th .....

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e tariff the first and foremost test should be the common parlance understanding, unless a specific definition is provided in the entry itself. It is nobody s case that the cosmetic or toilet preparations should not have curative property. Similarly, PP ayurvedic medicament may have incidental outcome of beauty enhancement. In such situation, it is necessary to go by the common parlance of the practice of trade. 9. Hon ble Supreme Court in Alpine Industries vs. Collector, Central Excise, New Del .....

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e tariff. What is to be noted from Chapter 30 of the Tariff Act is that under Note No. 1(d) preparations covered by Chapter 33 even if they have therapeutic or prophylactic properties are excluded from Chapter 30. Medicament has been defined in Note No. 2(i) to mean goods which are either products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic use. On a reading of Note No. 1(d) with Note No. 2(I) of Chapter 30 under Heading Pharma .....

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hese headings and put up in packing 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. [Underlining for emphasis] Based on Note No. 2, the main emphasis in the arguments advanced on behalf of the appellant is that the produ .....

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c value . 10. This submission on Note No. 2 under Chapter 33 behalf of the appellant based on overlooks Note No. 5 of the said Chapter which reads thus :- Heading applies, No. 33.04 5. inter alia, to the following products : beauty creams, vanishing creams, cold creams, make-up creams, cleansing creams, skin foods, skin tonics, face powders, baby powders, toilet powders, talcum powders and grease paints, lipsticks, eye shadow and eyebrow pencils, nail polishes and varnishes, cuticle removers and .....

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erlined portions of Note 2 and find ourselves in the agreement with the majority opinion of the Tribunal that the product Lip Salve is a kind of barrier cream or a protective cream against skin irritants. It, therefore, clearly falls under entry 33.04 and conforms to the description preparation of the care of the skin other than medicaments . The learned Counsel of the appellant has not been able to persuade us to take a different view from the one taken in the majority opinion of the Tribunal. .....

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s of the Tribunal and the reasoning therein supported before us on behalf of the appellant. For the reasons aforesaid, we are unable to agree with the minority view. In the result, we find no merit in these appeals and the same are hereby dismissed . 10. The Hon ble Supreme Court in case of Shree Baidyanath Ayurved Bhavan Ltd. vs. CCE 1996 (83) ELT 492 (SC) upheld the view of the Tribunal to the effect that ordinarily a medicine is prescribed by a medical practitioner and it is used for a limite .....

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roducts. In Puma Ayurvedic Herbal P. Ltd. vs. CCE 2006 (196) ELT 3 (SC) the Supreme Court held that cosmetic products are meant to improve the appearance of a person, whereas a medical product or a medicament is meant to treat some medical condition. The Hon ble Supreme Court held that Puma Herbal Massage Oil (which is similar to complete solution) is not a medicament. 11. We also note that the Tribunal in Richardson Hindustan Limited vs. CCE 1988 (35) ELT 424 (Tri.), observed that there are two .....

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ic improvement in appearance. The Tribunal in case of Dabur India - 2002 (145) ELT 441 (Tri.), held that manufacture under licence issued by Drug authorities is of no relevance for classification as medicament under Central Excise tariff. As such, we find that the products under question cannot be considered as ayurvedic medicines. They are more appropriately classifiable under Chapter 330449910, 33049990 as submitted by Revenue. 12. Since the products are to be classified as cosmetic or toilet .....

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appellant- assessee also had a certificate issued by Tehsildar confirming that the factory is located in rural area. As such, we find that denial of SSI exemption to the appellant on this ground is not sustainable. 14. The appellant-assessee contested the demand for extended period, we find that the appellant-assessee were not registered with the department for payment of Central Excise duty. The main plea of the appellant is that they were under bonafide belief regarding their product being ayu .....

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