ORDER
V.K. Agrawal, Member (T)
1. The issue involved in this Appeal, filed by M/s. Panama Chemical Works, is whether the products namely, ‘Panjon Cough Drops’, Panjon Balm’ and ‘Panjon Rub’, manufactured by them, are classifiable as Ayurvedic medicaments.
2.1 Shri G.S. Agrawal, learned Advocate, mentioned that the products in question have been approved by the Food and Drugs Authorities of State of Madhya Pradesh as Ayurvedic Medicines; that the ingredients used by them in their different products are as under :
1. PANJON CO UGH DROPS (i) Eucalyptus Oil (ii) Menthol (iii) Camphor (iv) Thymol (v) Sugar Base and Liquid Glucose 2. PANJON BALM (i) Eucalyptus Oil (ii) Menthol (iii) Thymol (iv) Clove oil (v) Cinnamon Oil (vi) Camphor (vii) Vaseline Base 3. PANJON RUB (i) Pudin Satwa (ii) Tarpine Oil (iii) Nilgiri Oil (iv) Ajwain Phool (v) Pudina Oil (vi) Kapoor (vii) Laong Oil (viii) Base Vaseline
2.2 The learned Advocate submitted that the charge levelled by the Revenue is that the Appellants are using Eucalyptus oil I.P. (Nilgiri Tel) and Wintergreen Oil (Gandh Puri ka Tel) (synthetic) in Panjon Balm; that in Panjon Cough Drops and in Panjon Rub the ingredients contained include Eucalyptus Oil I.P.; that Methyl Salicylate (synthetic) is used in the manufacture of Panjon Balm only and not other two preparations in question; that all the three impugned products are Ayurvedic medicaments as the same are prepared in accordance with Ayurvedic system; that there is no evidence that Oil of Wintergreen and Menthol used by them are synthetic; that the Ministry of Health and Family Welfare has confirmed vide letter dated 8-12-1987 that the Menthol and Eucalyptus oil are normally used in Ayurvedic Industry; that the list of purchase shows purchase of Methyl Salicylate (synthetic) 60 Kgs on 20-7-82; that Methyl Salicylate was also purchased in 1983-84 and 1984-85, but the word “synthetic” does not appear; that Menthol is natural menthol bold crystals; that similarly in respect of Eucalyptus oil purchased, the description given is Eucalyptus I.P. and there is no indication that it is of synthetic origin. He contended that as Methyl Salicylate has not been used in the manufacture of Panjon Rub and Panjon Cough Drops, no duty can be demanded in respect of these products; that Methyl Salicylate is faithful duplicate of Gandhpura ka tel and does not differ in its property and/or composition; that it is true substitute and its use as an ingredient does not take away the product namely Panjon Balm from the category of Ayurvedic medicines. He relied upon the decision in the case of Panama Chemical Works v. Union of India, [1992 (62) E.L.T. 241 (M.P.)] wherein the Madhya Pradesh High Court has held that “SWAD” having 3% active ingredients as per Ayurvedic Text and 97% sugar/liquid glucose for taste and as a preservative is an Ayurvedic preparation.
2.3 Learned Advocate also mentioned that as per the Adjudicating Authority, Ayurvedic drugs should be strictly manufactured in accordance with the formulae described in the authoritative books of Ayurvedic medicine; that it has been held by the Supreme Court in the case of Naturalle Health Products (P) Ltd. v. CCE, Hyderabad [2003 (158) E.L.T. 257 (S.C.)] that a patent Ayurvedic medicament could be one where all the ingredients find mention in the authoritative text books on Ayurveda; that the formula for preparation of the medicament may not be in accordance with the formula given in those text books; that in view of this decision of the Supreme Court, their products which contain all the ingredients mentioned in the authoritative text books of Ayurved are ayurvedic medicines. Finally, he submitted that the show cause notice has been issued on 20-4-85 for demanding the duty for the period 1982-83 to 1984-85; that there was no suppression of facts on their part as the Department was in the knowledge of the medicines manufactured by them; that the Central Excise officers were visiting their factory frequently; that further information, if any, withheld by them was not deliberate with an intent to evade payment of duty; that they were filing the classification list with the Department which is evident from letter dated 29-9-84 of the Range Superintendent, wherein it is specifically mentioned that the classification list filed by them is pending for approval; that in view of these facts, the extended period of limitation can not be invoked by the Revenue for demanding the Central Excise duty. Reliance has been placed on the decision in the case of CCE v. Champhor Drugs and Liniments [1989 (40) E.L.T. 276 (S.C.)] wherein it has been held that in order to make a demand under Section 11A of the Central Excise Act for beyond a period of 6 months and up to a period of five years something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required to be established.
3. Countering the arguments Ms. Charul Barnwal, learned Senior Departmental Representative, submitted that during the visit of the Appellants factory on 14-3-85, the Central Excise officer found that Methyl Salicylate I.P. (synthetic) and Eucalyptus Oil (IP) was used by them in the manufacture of impugned products; that Shri Naginchandra Kothari, partner in his statement has stated that they were using Eucalyptus Oil (IP) and Methyl Salicylate (I.P.) and Thymol synthetic in the manufacture of their ayurvedic medicines such as Panjon Cough Drops, Panjon Balm and Panjon Rub; that Shri Kripashankar Sharma, Chemist, has also admitted in his statement dated 14-3-85 that oil of wintergreen which is used in the manufacture of Panjon Balm was found to contain the words “Methyl Salicylate (I.P.) (synthetic), manufactured by Atta Laboratories Pvt. Ltd. Bombay”. She, further, mentioned that the Controller, Foods and Drugs Administration, MP in his letter dated 25-3-85 has opinion that synthetic material can not be used in the manufacture of Ayurvedic medicine. She, therefore, contended that as the Appellants are using synthetic ingredients in the manufacture of impugned products the same can not be regarded as Ayurvedic medicaments; that extended period of limitation is invocable for the purpose of demanding duty beyond the period of six months as they had never disclosed to the Department that they were using synthetic material in the manufacture of impugned products. She relied upon the decision in the case of Commissioner of Central Excise Ahmedabad v. Srivallabh Glass Works Ltd. [2003 (153) E.L.T. 494 (S.C.)] wherein the Supreme Court has confirmed the demand of duty when approved classification list showed glass cleared and sold by the respondents was of a particular thickness whereas what was actually cleared and sold was glass of greater thickness. Learned Senior Departmental Representative also submitted that the decision of Supreme Court in the case of Naturalle Health Products is not applicable as the Appellants therein were using the ingredient contained in the products were from natural herbs. In reply the learned Advocate submitted that the Adjudicating Authority has gone beyond the scope of show cause notice by adding Menthol to the list of offending ingredients; that it is well settled that an order going beyond the show cause notice is bad in law. He relied upon the decision in the case of Jawahari Lal Vaid v. Additional Collector of Customs [1991 (52) E.L.T. 278 (Tribunal) = 1991 (32) ECR 571].
4. We have considered the submissions of both the sides. It has been held by the Larger Bench of the Tribunal in the case of Himtaj Ayurvedic Kendra v. CCE, Allahabad [2002 (139) E.L.T. 610 (Tri. – LB) = 2002 (48) RLT 264 (CEGAT-LB)] that a product containing ingredients exclusively mentioned in authoritative text books on Ayurveda will be an ayurvedic medicine even if it is not manufactured according to formulae described in authoritative text books. The Appeal filed by the Revenue has been dismissed by the Supreme Court as reported in 2003 (154) E.L.T. 323 (S.C.). The Supreme Court also in the case of Naturally Health Products has held that the patent ayurvedic medicament could be one where all the ingredients find mention in authoritative text books on Ayurveda, though the formula of preparation of medicament was not in accordance with the formula given in those text books. In the present matter, it is the case of the appellants that all the ingredients used by them in the manufacture of impugned products are mentioned in the authoritative text books on Ayurveda whereas the Department has not considered their products as Ayurveda in view of the fact that synthetic material or IP grade material have been used by them in the manufacture of these products. A synthetic material certainly can not be equated with the ingredients mentioned in the authoritative text books on Ayurveda. According to the New Oxford Dictionary of English Language, word “Synthetic” (of a substance) means- “Made by chemical synthesis, especially to imitate a natural product”. Thus a product containing a synthetic ingredient which is an imitation of a natural product cannot be said to contain ingredient as per Authoritative Text Book on Ayurveda. Oil of Wintergreen is used in the manufacture of Panjon Balm. The appellants are using synthetic Methyl Salicylate in the manufacture of Panjon Balm. When the appellants are using a synthetic product it can not be claimed by them that the Panjon Balm has been manufactured by them using the ingredients mentioned in the authoritative text books on Ayurveda. Accordingly, the test laid down by the Supreme Court as well as Larger Bench of the Tribunal for treating a particular product as ayurvedic medicament is not satisfied in respect of Panjon Balm. The synthetic nature of the Methyl Salicylate is confirmed from the Statement of Shri Kripashanker as marking on the drum of oil of wintergreen clearly mentioned the word “synthetic”.
5. Eucalyptus oil and Menthol are two ingredients which are used in the manufacture of Panjon Cough Drops. It has been stated by Shri Naginchandra Kothari, partner of the appellant firm in his statement that they used to purchase Menthol and Pudina oil from Richardson Hindustan Ltd., Thane and it is in synthetic form. Thus the appellants are using the synthetic ingredients in the manufacture of Panjon Cough Drops which will take it out from the purview of Ayurvedic medicament as ingredients is not as per authoritative text book on Ayurveda. Similarly Menthol is also used in the manufacture of Panjon Rub and on account of use of synthetic material, it also ceases to be an ayurvedic medicine. It has been contended by the learned Advocate that the show cause notice did not mention about Menthol and as such any reference to Menthol by the adjudicating authority is beyond the scope of show cause notice. A perusal of the show cause notice dated 20-4-85 reveals that the show cause notice was issued to them as synthetic/allopathic ingredients were found to be used in the manufacture of impugned products. In view of this specific allegation of using the synthetic/allopathic ingredients in the manufacture of impugned products, it can not be claimed by the appellants that the Commissioner has travelled beyond the scope of show cause notice by mentioning the name Menthol as one of the synthetic ingredients for treating the impugned product as a patent ayurvedic medicament. In Naturalle Health Products case, the ingredients used by the appellants therein had sources as natural herbs and extracts taken from such herbs and were not synthetic products. Further in Para 23 of the judgment the Supreme Court has referred to the decision in the case of Amritanjan Ltd. v. CCE [1995 (77) E.L.T. 500 (S.C.)] wherein it was held by the Supreme Court that the ingredients, which are used in preparation of Ayurvedic medicines even if they are used after refining or breaking them into pharmaceutical quality, they do not become synthetic in nature. This observation of the Supreme Court clearly goes to establish that synthetic material is entirely different from the natural materials which have been purified to the pharmaceutical grade. Accordingly, we hold that the impugned products are not Ayurvedic medicines as they have not been manufactured out of the ingredients specifically mentioned in the authoritative text books on Ayurveda.
6. Coming to the question of invocability of extended period of limitation for demanding the Central Excise duty, we observe that fact of using the synthetic ingredients in the manufacture of impugned products was never disclosed by the Appellants to the Department. This was within the specific knowledge of the appellants only and therefore, the extended period of limitation will be available to the Department. Even applying the test laid down by the Supreme Court in the case of Chemphor Drugs & Liniments, we find that non-disclosure of using synthetic material was something positive other than mere inaction or failure on the part of the appellants as they were aware of use of synthetic material in the manufacture of these products. We, therefore, uphold the demand of Central Excise duty against the appellants. The seized goods are also liable to confiscation as these were not entered in the statutory records. Redemption fine imposed on them is not on the higher side at all and accordingly we uphold the same. The Commissioner has also imposed a penalty of Rs. 30,000/- which is quite reasonable and as such we uphold the same. The Appeal is thus rejected.