TMI Blog2009 (4) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ted ('Baidyanath', for short). While Baidyanath contends that the product DML is a medicament under Chapter Subheading 3003.31 of the Central Excise Tariff Act, 1985, the stand of the Department is that the said product is a cosmetic/toiletry preparation/tooth powder classifiable under Chapter Heading 33.06. 2. The true classification of the product DML has been subject of fluctuating opinion among the benches of the Customs, Excise and Gold (Control) Appellate Tribunal (for short, 'Tribunal'). West Regional Bench of the Tribunal decided the classification in favour of Baidyanath and held that DML is classifiable under Chapter Sub-heading 3003.31. The similar view has been taken by East Regional Bench of the Tribunal. However, the larger bench of the Tribunal to which the issue of classification of DML was referred, has held that DML is classifiable under Chapter Sub-heading 3306.10. It is for this reason that the Department as well as Baidyanath have preferred separate appeals. 3. The litigative journey with regard to classification of this product has reached this Court earlier in Shree Baidyanath Ayurved Bhawan Ltd. Vs. Collector of Central Excise, Nagpur (1996) 9 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cine, that it manufactures the same under a drug licence; that all the ingredients of DML are mentioned in the authoritative book of Ayurved System of Medicine; and that the product is an Ayurvedic Medicine in the trade and common parlance. The Baidyanath, thus, claimed that it was eligible for the benefit extended under the Notification No.62/78-CE. 9. The view of adjudicating authorities who issued show cause notices was not uniform. Their opinion has been varied. While some of the adjudicating authorities held that DML was an Ayurvedic Medicine; the others took the view that it was not so. All these matters ultimately found their way to the Tribunal. On July 14, 1985, the Tribunal delivered its judgment in the matter and held that in common trade parlance, DML is neither treated nor understood as an Ayurvedic Medicine and hence could not be classified as such. The Tribunal, thus, held that the product DML was not eligible for the benefit extended under Notification No.62/78-CE as it was not covered by the category of goods mentioned at Sr.No.19 of the schedule to the said notification. Pertinently, the goods mentioned in the said category included 'drugs, medicines, pharmac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representation putting forth the plea that after the introduction of New Tariff Act and the amendments made in 1996, there is a specific definition of Ayurvedic Medicine and hence classification of its product DML should be done on the basis of that definition alone and not the common trade parlance test. The Board thereafter on May 27, 1997, sent communication to the Commissioner of Central Excise, Nagpur, concerning the classification of DML to decide the classification of the product in the light of opinion of Drug Controller of India as well as instructions contained in the circulars dated March 29, 1994 and April 3, 1996. 14. On September 10, 1997, the Board withdrew its circular dated May 27, 1997 and directed classification of DML in terms of judgment of this Court in Baidyanath 1 with regard to this very product. 15. In pursuance of the circular issued by the Board on October 31, 1996, several notices came to be issued to Baidyanath by various Excise Authorities at Patna; Allahabad (Naini); Jhansi and Nagpur asking them to show cause as to why DML should not be classified as a toiletry under Chapter 33 of the New Tariff Act and duty be demanded accordingly. The sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the First Schedule to the Drugs and Cosmetics Act, 1940 and the product is sold in the name which is the name specified for the said product in the authoritative text, there is no duty on the product; (iii) that the New Tariff Act contains definition of Ayurvedic Medicines post-1996 and now there is clear distinction drawn between classical or pharmacopoeial Ayurvedic Medicines and patent and proprietary medicines. Once there is a definition provided in the Tariff Act, that definition alone shall prevail and common trade parlance test is not applicable. The common trade parlance test is to be applied only in the absence of definition; (iv) that therapeutic and prophylactic uses of DML as pharmacopoeial Ayurvedic Medicine clearly stand established as the formulae has been in existence for the past several 100 years which is contained in the book 'Ayurved Sar Sangraha' and the said book is notified in the First Schedule of the Drugs and Cosmetics Act, 1940 and the product is accepted as a medicine under the Drugs Act; (v) that entry in Chapter Sub-heading 3003.31 being more specific entry, it must be preferred over general residuary entry of 3306.10. By applying general rules of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s' and 'uses' import different concepts. Mr. K. Radhakrishnan would submit that the restrictive definition of the word 'medicaments' in Note 2 of Chapter 30 is for the purposes of Heading 30.03. Chapter Heading 30.03 deals with medicaments including veterinary medicaments and medicaments for therapeutic and prophylactic use. Medicaments cover the entire Heading 30.03 including every Sub-heading. Thus, for a product to qualify under 'medicament', 'use' and 'not properties' of the product must be therapeutic or prophylactic. The common parlance test, the learned senior counsel would submit, is inbuilt in the definition of 'medicament' in Note 2 of Chapter 30 as the emphasis is on the word 'uses'. In the submission of the learned senior counsel for the Department, common parlance test is well recognized as one of the twin tests which should be applied to classify a product as medicament or cosmetic even post 1996. Without satisfying the common parlance test, the classification cannot be applied. Mr. K. adhakrishnan submitted that as to whether the product described against the Sub-heading 3003.31 is a medicament or not can be ascertained only after resorting to Note 2 of Chapter 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occipitur. He, thus, submitted that the product DML is classifiable under Heading 33.06 being a tooth powder. 24. We deem it appropriate at this stage to set out relevant portions in the Tariff Items, Chapter Notes and the Rules for the interpretation of the Schedule which have bearing for consideration before us. 25. Rules for interpretation of the Schedule as stated in New Tariff Act are as follows: "1. The titles of Sections and Chapter are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the provisions hereinafter contained. 2. (a) .. (b) The classification of goods consisting of more than one material or substance shall be according to the principles contained in rule 3. 3. When an application of sub-rule(b) of rule 2 or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) .. 2. For the purposes of the heading No.30.03, (i) 'Medicaments' means goods (other than foods or beverages such as dietetic, diabetic or fortified foods, tonic beverages) not falling within heading No.30.02 or 30.04 which are either : (a) products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic uses; or (b) unmixed products suitable for such uses. 3. .. 4. .. 5. .. 6. .. 27. Relevant portions in Chapter 33 is thus: CHAPER 33 ESSENTIAL OILS RESINOIDS; PERFUMERY, COSMETIC OR TOILET PREPARATIONS NOTES 1. . 2. Heading Nos. 33.03 to 33.08 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 of other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialized 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 prophyla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparation and accordingly rejected the claim of the appellant. We have heard the learned counsel at some length. He also invited our attention to the provisions of the Drugs and Cosmetics Act, 1940, the opinion of the experts, the statements of a few consumers as well as the description given in certain Ayurvedic books and contended that the preparation would fall within the relevant entry in the exemption notification. The Tribunal rightly points out that in interpreting statutes like the Excise Act the primary object of which is to raise Department and for which purpose various products are differently classified, resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, that is to say the meaning attached to them by those using the product. It is for this reason that the Tribunal came to the conclusion that scientific and technical meanings would not advance in case of the appellants if the same runs counter to how the product is understood in popular parlance. That is why the Tribunal observed in para 86 of the judgment as under: "So certificates and affidavits given by the Vaidyas do not advance the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or proprietary medicaments other than those which are exclusively Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemic. Sub-heading 3003.20 refers to medicaments including those used in Ayurvedic, Unani, Sidha, Homoeopathic or Bio-chemic system. Inter alia Sub-heading 3303.31 refers to medicaments used in Ayurvedic system of medicine exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940 and sold under the name as specified. 34. Does Chapter Sub-heading 3003.31 contain specific definition of Ayurvedic Medicine? We do not think so. What is provided in column 3 of Schedule is description of goods against sub-heading 3003.31. We are afraid description of goods cannot be treated as definition. There is merit in the contention of the learned senior counsel for the Department that Chapter Sub-heading 3003.31 provides process for manufacture of certain medicaments including those used in Ayurvedic system and sale of the same; it is not a definition clause. Classification of a product, interpretative Rule 1 of rules for interpretation of the Schedule says, is to be determined according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment accepts that the test is determinative for the issue involved. The tests are: I. Whether the item is commonly understood as medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it will not be an item of common use. A user will use it only for treating a particular ailment and will stop its use after the ailment is cured. The approach of the consumer towards the product is very material . One may buy any of the ordinary soaps available in the market. But if one has a skin problem, he may have to buy a medicated soap. Such a soap will not be an ordinary cosmetic. It will be medicament falling in Chapter 30 of the Tariff Act. II. Are the ingredients used in the product mentioned in the authoritative textbooks on Ayurveda?" 36. In Puma Ayurvedic Herbal (P) Ltd., the question that arose for consideration before this Court was whether the products manufactured by the appellant therein were covered under the category of medicaments or cosmetics. The following products were under consideration: 1. Puma neem facial pack (Neem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance test is not applicable. As a matter of fact, this contention is based on misplaced assumption that Chapter Sub-heading 3003.31 by itself provides the definition of Ayurvedic Medicine and there is no requirement to look beyond. 39. West Regional Bench of the Tribunal in its order dated 13.12.2000 which is subject matter of Civil Appeal 4048/2001 observed thus : "The Drugs and Cosmetic Act, 1940 provides for a licence to be obtained for manufacture of Ayurvedic, Sidha, Homoeopathic 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 Kalplana 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 Cosmetic Act, 1940. Section 3 (a) of the Drugs and Cosmetics Act, 1940 defines "Ayurvedic, Sidha or Unani Drug" as follows: Ayurvedic, Sidha or Unani drug" includes all medicines intended for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant." We do not agree. The approach of the West Regional Bench is fallacious in what we have indicated above as it overlooks and ignores common parlance test which is one of the well recognized tests to determine whether the product is classifiable as medicament or cosmetic and that has been consistently followed by this Court including with regard to this very product. It also overlooks the well-settled legal position that without a change in the nature or a change in the use of the product and in the absence of a statutory definition, the product will not change its character. The product DML remains the same in its composition, character and uses. We have already held above that Sub-heading 3003.31 does not define Ayurvedic Medicine and, therefore, there cannot be any justification enough for changing the classification of the product DML which has not been held to be Ayurvedic Medicine by this Court. 40. The learned senior counsel for Baidyanath heavily relied upon the statement of the Finance Minister during the parliamentary debate on the question of levy of excise duty on Ayurvedic medicines. In the entire debate there is no reference to the product DML with which we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved. Second, and more importantly, with regard to the very product (DML), this Court held that it could not be classified as Ayurvedic Medicine and rather the product is toilet requisite. Baidyanath I, no doubt relates to old Tariff period i.e. prior to enactment of new Tariff Act but since the product in its composition, character and uses continues to be the same, even after insertion of new subheading 3301.30, we have already held that change in classification is not justified as common parlance test continues to be relevant for classification. Vicco Laboratories is of no help to the assessee. 44. In what we have already discussed above, it is not necessary to refer to other decisions cited by the learned Senior Counsel for Baidyanath. Be it noted here that Mr. C.A. Sundaram, learned Senior Counsel submitted before us that matters should be decided by this Court as raising neat question of law about classification of product DML on the available material and any further inquiry or remand was unnecessary. 45. Before we part with the case, we may address to the plea of res judicata raised by the learned Senior Counsel for the Department. Mr. K. Radhakrishnan pressed into ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
