TMI Blog2003 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... in the cases referred to above and the circular issued by the Government of India in the light of Richardson Hindustan case. The Tribunal placed undue reliance on the definition of Ayurvedic medicament in Section 2(a) of the Drugs Act. In our opinion, all the products ought to be classified as Ayurvedic medicaments under sub-heading 3003.30 of the Central Excise Tariff. For the foregoing reasons, we have no hesitation to allow both the appeals and set aside the orders impugned in these appeals passed by the CEGAT, New Delhi, in appeal - 2072 of 1996 - - - Dated:- 11-11-2003 - P. Venkatarama Reddi and Dr. A.R. Lakshmanan, JJ. [Judgment per : Dr. A.R. Lakshmanan, J.]. - The points involved in both the appeals are one and the same and, therefore, they were heard together by consent of parties. 2.The issue involved in Civil Appeal No. 2072 of 1996 is : Whether or not medicated cough drops and throat drops manufactured by the appellants in accordance with and under the licence issued under the Drugs and Cosmetics Act, 1940 for the manufacture of "Ayurvedic Drugs" are classifiable as Ayurvedic Medicaments for the purpose of levy of central excise duty. 3.The issue for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Medicaments under sub-heading 3003.10 instead of appellant's claim as Ayurvedic medicine under sub-heading 3003.30. The Vice-President opined that the matter needs to be referred to a Larger Bench keeping in view the importance of the issue involved in the industry as a whole. However, he agreed with the Member (Technical) on many points. Aggrieved by the said order, the appellants preferred the present appeal under Section 35L(B) of the Central Excises and Salt Act, 1944. 5.Civil Appeal No. 10744 of 1996 : The short facts are : The appellants manufactured two medicaments known as "Sloan's Balm" and "Sloan's Rub" out of the ingredients which are mentioned in the texts on the Ayurvedic system of medicine and in accordance with the principles therein. According to the appellants, the issue in their appeal stand covered by the decisions in the case of Richardson Hindustan Limited v. Collector of Central Excise, 1988 (35) E.L.T. 424 (T) as confirmed by this Court reported in 1989 (42) E.L.T. A100 and the decision in the case of Shri Baidyanath Ayurved Bhawan Private Limited v. Collector of Central Excise reported in 1991 (51) E.L.T. 502 and 1985 (22) E.L.T. 844 which decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent in both the appeals. 7.Mr. Lakshmikumaran, learned Counsel took us through the pleadings, exhibits marked and the relevant provisions of law and of the orders passed by the authorities concerned including the Tribunal and of this Court both for and against. Mr. Joseph Vellapally, learned Senior Counsel, also invited our attention to the relevant records and of the orders passed by the statutory authorities and of this Court in various decisions. 8.We have perused the pleadings, annexures and the decisions cited by both sides and heard elaborate arguments advanced by the Counsel for both the parties. 9.Mr. Lakshmikumaran submitted that the authorities below rejected the appellant's claim on the basis of decision of the Tribunal in the case of Amrutanjan Limited v. Collector of Central Excise, 1991 (32) ECR 538. The order of the Tribunal in Amrutanjan Limited is, however, set aside by this Court in the case of Amrutanjan Limited v. Collector of Central Excise reported in 1995 (77) E.L.T. 500. He would, therefore, contend that the issue involved in the present case is covered by the judgment of this Court in the case of Amrutanjan Limited (supra). Notwithstanding the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Bio-Chemic systems Nil The effective rate of excise duty under Tariff sub-heading 3003.30 read with Notification 32/89-C.E., dated 1-3-1989, is Nil. 13.Mr. Lakshmikumaran, learned Counsel for the appellant, submitted that the definition of Ayurvedic medicines in Section 3(a) of the Drugs and Cosmetics Act cannot be applied for the purposes of the classification of a product for Central Excise duty under the Central Excises and Salt Act, 1944 and the Central Excise Tariff Act, 1985 and that when there is no definition of any word in the relevant statute, the word must be construed in its popular sense i.e. how the common man who uses it, understands it. Arguing further the learned Counsel for the appellant submitted that the Tribunal has not only ignored both the tests but has on the contrary based its order on the definition of Ayurvedic Medicine in Section 3(a) of the Drugs and Cosmetics Act. It is submitted the Chapter Note 2 which indicates the meaning of "medicament" and "patent" and "proprietary medicament" and "drugs" does not refer to Drugs and Cosmetics Act, 1940 and that there is every reason to believe that the Legislature has intentionally adopted a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 3003.10 excludes patent or proprietary medicaments other than those medicaments which are exclusively Ayurvedic, Unani, Siddha, Homoeopathic or Bio-Chemic from the class of patent or proprietary medicaments covered thereunder. According to the appellant that merely because the word "Exclusively" appeared in sub-heading 3003.10, it does not mean that the same would take colour and have the same meaning as the word "Exclusively" appearing in definition of "Ayurvedic drug" in Section 3(a) of the Drugs Act. In this context, it is submitted that the Tribunal has failed to appreciate that the word "Exclusively" appearing in sub-heading 3003.10 is used to cover Patent or Proprietary Allopathic Medicaments as distinct from Patent or Proprietary Ayurvedic, Unani and Siddha medicaments. On the other hand, the word "Exclusively" appearing in Section 3(a) of the Drugs Act was to distinguish the Ayurvedic medicaments from Patent or Proprietary Ayurvedic medicaments defined in Section 3(h) of the Drugs Act and not to distinguish between the Allopathic medicines on one hand and Ayurvedic, Unani and Siddha medicaments on the other hand. Therefore, it is submitted that the world "Exclusively" app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the arguments advanced by the Counsel for the appellant submitted that the Tribunal has rightly held that the cough drops and throat drops cannot be classified as "Exclusively" Ayurvedic medicaments as its product is not manufactured in accordance with the formulae prescribed in Avurvedic texts and therefore, the Tribunal has rightly held that though the ingredients may be Ayurvedic, the formulation is not Ayurvedic and, therefore, cannot be classified under sub-heading 3003.10. According to Mr. Raju Ramachandran, a bare perusal of the three sub-headings, namely, 3003.10, 3003.20 and 3003.30 would indicate that the first sub-heading covers all patent or proprietary medicaments, the second sub-heading covers other medicaments which are not patent or proprietary and the third sub-heading covers medicaments used in Ayurvedic, Unani, etc. systems and, therefore, it is important to note that sub-heading 3003.30 uses the word "used in"….. "systems". It is submitted that a system of medicine pre-suppose a systematic practice of medicine where there is a patient and practitioner. For a medicament to qualify to fall under this sub-heading it is necessary to establish that a practitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would surely be on those who claim that exception and in the instant case this onus has not been discharged inasmuch as it has not been found that these are medicines used exclusively in the Ayurvedic system of medicine. Referring to the judgment of this Court in the Himtaj Ayurvedic Hair Oil reported in 2003 (154) E.L.T. 323 (S.C.), it is submitted by learned Counsel for the respondent that the said cases were decided as a culmination of show cause notices issued by the Revenue seeking to classify the product in question as a perfumed hair oil and not as a medicament. There was, therefore, no occasion for the Revenue to ever argue on their appropriate classification within Chapter Heading 3003, namely, 3003.10 or 3003.30. It is, therefore, submitted that the observation both of the Tribunal and of this Court in the Himtaj Hair Oil cases have to be understood as obiter dictum, do not preclude this Court from arriving at an independent conclusion. 18.Referring to the case of Vicks Vaporub which confirms the judgment of the Tribunal it is submitted by the learned Counsel for the respondent that it does not again militate against the contention of the Revenue. In that case, the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EGAT wherein the Tribunal held that the products were having pharmaceutical name but the assessee was using Hindi name only to claim classification as Ayurvedic Medicine. This order of the Tribunal was overruled by this court in the case of Amrutanjan Ltd. v. CCE reported in 1995 (77) E.L.T. 500 (S.C.). Unfortunately, the Assistant Commissioner and the Commissioner (Appeals) relied on the overruled judgment of the CEGAT, because the judgment of this Court was not available at the time they decided the matter. The Tribunal distinguished the same. It was held by this Court in Amrutanjan's case that the ingredients, which are used in preparation of ayurvedic medicines even if they are used after refinement or bringing them to pharmaceutical quality, they do not become synthetic in nature. It is immaterial that the same articles bearing a different nomenclature are also known and used in allopathic system. Though the question whether the formula for preparation should be in accordance with authoritative ayurvedic texts was not dealt with by Their Lordships, the appellant's claim gets considerable support from this decision. By the same token of reasoning, the drugs in question can also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court while dismissing the appeal filed by the Revenue. The order reads thus :- "Having regard to the facts and the circumstances of the case and in view of the findings made by the Tribunal and the points upon which it has remanded the matter to the Assistant Collector, we are of the opinion that the Tribunal has proceeded in the facts of this case on a correct basis and the order of the Tribunal does not call for any interference. The appeal fails and is, therefore, dismissed accordingly." 26.We are told that after remand, the adjudicating authority classified Vicks Vaporub and Inhaler under sub-heading 3003.30. 27.At the time of hearing, our attention was drawn to Circular No. 25/91, dated 3-10-1991 issued by the Department after the decision in Richardson Hindustan's case (supra) laying down the twin tests, namely (i) that the product should be known as Ayurvedic medicament. In the common parlance and (ii) the ingredients should be mentioned in Ayurvedic text books. It is beneficial to reproduce the circular for better understanding of the case. The circular reads thus :- "Circular : 25/91 dated 3 Oct. 1991 Ayurvedic medicine - Classification of [Chapter 30] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed to be the Ayurvedic medicines and the statutory authorities were directed to keep this in view while deciding similar pending assessments of the type indicated in the circular and be finalised on the above basis. It is also seen from the circular that the aforesaid two tests have been upheld by this Court in the case of C.A. No. 2127 of 1998 - C.C.E., Hyderabad v. M/s. Richardson Ltd., Order dated 10-1-1999. 29.Thus, it is seen that the CEGAT's decision and the circular of the Board does not lay down any tests regarding the formulae of manufacture as per authoritative Ayurved text books. 30.However, Mr. Raju Ramachandran argued that the circulars of the Department on which the appellants place reliance do not advance their case and that the circulars only indicate that the Government has accepted the two tests for determining a medicine as Ayurvedic medicine and that the acceptance of these tests do not absolve the assessee from the onus of proving the exclusive character of drug as Ayurvedic medicament and that the said onus the appellants have failed to discharge, we are unable to countenance the said submission. As already noticed, the Government have issued a circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assifiable under sub-heading 3003.30, that is, Ayurvedic medicament or 3003.10, that is, Perfumed Hair Oil. The CEGAT has held that Himtaj Oil is classifiable as an Ayurvedic medicament. In doing so, it has followed the decision of the Larger Bench of CEGAT reported in 2002 (139) E.L.T. 610. This Court in the judgment in C.A. No. 1512 of 2001 reported in 2003 (154) E.L.T. 324, Commissioner of Central Excise, Calcutta v. Pandit D.P. Sharma held that Himtaj Oil is classifiable as an Ayurvedic medicament and thus approved the Larger Bench decision of CEGAT. 33.In D.P. Sharma's case, the Assistant Collector accepted the respondents' case that the Oil fall under sub-heading 3003.30 but so holding the Assistant Collector inter alia, relied on the following material :- (a) Drug licence issued by the Drug Controller. (b) A letter issued by the Superintendent of Ayurvedic Department, Benaras which stated that the product was an Ayurvedic medicine. (c) A study report of the Institute of Postgraduate Education and Research in Ayurved, Calcutta on "Himtaj oil" which classified this oil as an Ayurvedic product which relieved pain in headaches and migraine and also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct is less, does not also ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda text books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put by the customers who use it. The burden of proving that Bhanphool Oil is understood by the customers as an hair oil was on the revenue. Thus burden is not discharged as no such proof is adduced. On the contrary we find that the oil can be used for treatment of headache, eye problem, night blindness, reeling, head weak memory, hysteria, ammenesia, blood pressure, insomnia etc. The dosage required are also set out on the label. The product is registered with Drug Controller and is being manufactured under a drug licence." 36.From the above, it is clear that a patent Ayurvedic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are natural products from herbs and plants which were only refined. 38.In terms of the order passed by the CEGAT in the case of Richardson Hindustan Ltd. v. Collector of Central Excise [1988 (35) E.L.T. 424 (Tribunal)] which has been affirmed by this Court and similar view taken in other cases referred to supra, the following clear propositions and findings emerge :- "(a) That the words 'Ayurvedic Medicine' not having been defined in the Central Excise and Salt Act, 1944 or the Central Excise Tariff Act, 1985, the common parlance test would have to be resorted to find out whether a medicine is treated as an Ayurvedic medicine by the public; (b) That it is necessary that the ingredients of Ayurvedic Medicine should be mentioned in authoritative books on Ayurvedic Medicines." 39.We are also of the opinion that when there is no definition of any kind in the relevant taxing statute, the articles enumerated in the tariff schedules must be construed as far as possible in their ordinary or popular sense, that is, how the common man and persons dealing with it understand it. If the customers and the practitioners in Ayurvedic medicine, the dealers and the licensing o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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