ORDER
G.A. Brahma Deva, Member (J)
1. This appeal arises out of and is directed against the Order No, 10/2000, dated 20-9-2000 passed by the Commissioner of Central Excise, Mananchira Calicut.
2. At the first instance, matter was posted to hear the stay petition. After hearing for some time with reference to the stay petition on last occasion i.e. on 19th June, 2002, both the sides were asked to be ready to argue the main matter and accordingly, appeal was taken for regular hearing with the consent of both sides.
3. Shri G. Shiv Das appearing for the appellants submits that this matter is coming before the Tribunal for a second time, The impugned order has been passed by the Commissioner as a consequence to the order dated 2-8-99 passed by the Tribunal remanding the matter to the Commissioner for re-consideration of the issue. He said that the dispute is in respect of classification of the products viz ‘Nenmeni Snana Choornam’ and ‘Qusadha Thali’. Whether they are classifiable as Ayurvedic medicines under Chapter heading 3003.30, which are exempted from payment of duty, as claimed by the party or under Chapter headings 3307.30 and 3305.90 respectively as per the Department is an issue to be considered herein. He said that both the items are Ayurvedic medicaments and correctly classifiable under 3003.30. On merits, he said that as early as in 1991, the Revenue had issued a circular on 3-10-91 accepting the prescription of the two tests for a product to be considered as an Ayurvedic medicament. Referring to the Circular No. 25/91, dated 3-10-91, he drew our attention to the relevant para 3 of the circular which reads as under :-
“3. The Government have further examined the matter in the light of parameters presented by the Tribunal m their Order No. 116/88-C, dated 10-2-1988 m the case of Richardson Hindustan Ltd v C.C.E. Hyderabad. The Tribunal held that a preparation would merit classification as an Ayurvedic medicine, if in the common parlance, it is known as an Ayurvedic medicine and all its ingredients are mentioned m the authoritative book(s) on Ayurvedic medicine. It has also been observed that the aforesaid two tests have been upheld by Hon’ble Supreme Court in the case of Civil Appeal No. 2127 of 1988 C C.E., Hyderabad v. Richardson Hindustan Ltd. Supreme Court’s Order dated 10-1-1989.”
He said according to the circular, the prescription for classifying the item as an Ayurvedic medicine, it should be known as Ayurvedic medicine in common parlance and all its ingredients are mentioned in the authoritative books on Ayurvedic medicines. The Commissioner in the impugned order has accepted that the ingredients of goods m question are indicated in the Ayurvedic books and therefore the test is satisfied Nevertheless,, he proceeded to determine the classification of the product under different heading other than 3003.30 as claimed by the party on the ground that item was not manufactured as per the formula prescribed in the Ayurvedic Text Books. He said that the item is classifiable under Heading 3003.30 as an Ayurvedic medicine though not manufactured exclusively in accordance with the formula prescribed in such books and sold under name specified therein as it was held by the Larger Bench of the
Tribunal in the case of Himtaj Ayurvedic Udyog Kendra v. CCE, Allahabad reported 2002 (139) E.L.T. 610 (T – LB).
4. He submitted that as regards the second test the applicants had produced the Drug licence issued by the Deputy Drugs Controller, State Govt. of Kerala which certified that the product in question is an Ayurvedic product. The appellants have also produced prescriptions from various doctors, letters from the dealers as well as from the users to substantiate that items in question as ‘Ayurvedic medicines’.
5. Shri Narasimha Murthy justified the action of the department in classifying the item under Heading 3307.30 and 3305.90 on the ground that the item was not prescribed by a medical practitioner and further it is used for limited time and not for every day. In this context he drew our attention to the relevant finding portion of the Commissioner as appeared in Para 8 of the impugned order and the same is as under :-
“08. The Hon’ble Supreme Court in the case of Sree Baidyanath Ayurveda Bhavan Ltd., reported in 1996 (83) E.L.T. 492 (S.C) has held that (1) medicine is ordinarily prescribed by a medical practitioner and it is used for limited time and not every day unless it is prescribed to deal with specific diseases like diabetics. (2) In classification of goods scientific and technical meaning of the items and expressions used in tax laws like Excise Act not to be resorted to and the goods are to be classified according to the popular meaning attached to them by those using the product. Therefore, in order to decide whether ‘Nenmeni Snaria Choornam’ and ‘Ousadha Thali’ are medicaments or not, it is to be examined whether the products conform to the above guidelines prescribed by the Hon’ble Supreme Court. The Assessee has produced certificates from a few ayurvedic medical practitioners to the effect that they have prescribed the products for curing skin ailments. They have also produced letters from certain customers indicating that they use the products for cure of skin ailments. But it is a fact that the products can be purchased from the market without the prescription of a medical practitioner and no time limit for use is indicated on the package of the products or in the pamphlet containing indication for use. The products are available in general stores also. The marketing and advertising agency of the assessee viz Sudha Herbal Products sell these products through their direct sales division engaging sales personnel for door to door distribution. They have categorized the products in the price list/pamphlets, under consumer product. In the pamphlet, it is shown that the product can be used in the place of soap. The assessee has not disputed these facts. The Hon’ble Supreme Court has observed that the goods are to be classified according to the popular meaning attached to them by those using the product. From the evidence on record, it is clear that the products are not perceived in the market as medicines. It is evident that both products do not conform to the guidelines prescribed by the Supreme Court in the case of Sree Baidyanath Ayurveda Pharmacy Ltd., for treating the products as medicines.”
He said that as can be seen from the labels and pamphlets issued by the party to advertise the product, it can be assumed as only a consumer product and the item was also sold in the general stores and accordingly it is only a product of cosmetic/hair oil. He also submitted that at best it can be considered as an Ayurvedic product and not Ayurvedic medicine.
6. We have carefully considered the submissions made by both sides and perused the record. The Commissioner has proceeded to classify
the items as cosmetic items based upon the labels and pamphlets issued by the party and same could be sold in general stores. He also observed that the items were not manufactured as per the formula prescribed in the ayurvedic text books though they were having same ingredients as mentioned in the ayurvedic text books. This view is no longer good in view of the decision of the Larger Bench of the Tribunal in the case of Himtaj (supra), wherein it was clearly held that there should also be ayurvedic medicaments which are manufactured in accordance with the formula of the manufacturer and still can be considered as medicaments classifiable under Chapter heading 3003.30 and are exempt from payment of duty. It was also observed in that case, the product of the appellant having ingredients exclusively mentioned in the authoritative books but manufactured in accordance with the formulation of the manufacturer and sold in the brand name of himtaj oil is an ayurvedic medicament even though not a classical one. Accordingly both classical as well as patent or proprietary ayurvedic medicaments are classifiable under 3003.30.
7. As regards the second test it is clear from the records that the party has produced licence issued by the Deputy Drugs Controller, State Govt. of Kerala which certified that the product in question is an ayurvedic product. In the absence of any contrary opinion of expert being on record, the opinion of the experts and that of the Drug Controller can not be held to be erroneous as it was held by the Madhya Pradesh High Court in the case of Panama Chemical Works v. Union of India reported in 1992 (62) E.L.T. 241. The relevant finding portion is in para 35 of the said decision and the same is as under :-
“35. The Central Excise Authorities, after filing of the report of the Director, Food and Drugs, in favour of the petitioner discharging the notice issued to them have filed a rejoinder wherein it has been stated that the opinion of the Director is erroneous and should not be acted upon. We fail to understand as to how the opinion of the experts and that of the Drug Controller can be held to be erroneous in absence of any contrary opinion of experts being on record. Much emphasis has been laid that according to the definition of Ayurvedic preparation there is a clear interdict on the use of any ingredient than the one shown in the text and that is why the word ‘only’ has been used in the definition. It is manifest that the word ‘only’ has been used in respect of the ingredients of the product and the preservative items in a particular product cannot be treated as active ingredients. Consequently we hold that the product of the petitioner is an Ayurvedic preparation and has rightly been classified by the Assistant Collector under Item 3003.30 of the Central Excise Tariff.”
8. We are also not convinced with arguments advanced on behalf of the Revenue that at best it can be considered as an ayurvedic product and not an ayurvedic medicine. We do not find any distinction between ayurvedic product and ayurvedic medicine while classifying the item. The terms ‘Ayurveda’ refers to Veda of Ayur. Ayur means ‘life’ and Veda means ‘knowledge’. In other words, ‘Ayurveda’ is a Veda which deals with medicines for life. The Circular No. 25/91, dated 3-10-91 dealing with the issue and addressed to itself as “The doubt relate to the question as to whether the products claimed to be Ayurvedic medicine are in fact so, and whether these would merit classification under sub-heading 3003.30 of the Schedule to the
Central Excise Tariff Act, 1985.” Accordingly there is no distinction between Ayurvedic product and Ayurvedic medicine. Irrespective of the fact whether it is an ayurvedic product or ayurvedic medicine, once it is a product of Ayurveda having ingredients of ayurvedic preparation it cannot be said to be that item is different and cannot be classifiable under 3003.30. Since the item in question is an Ayurvedic medicament even though not manufactured exclusively in accordance with the formula prescribed in the text book, nevertheless having all the ingredients and in view of the certificate issued by the Drug Controller and in the absence of any expert opinion brought out on record by the Department, we do not find any justification in not classifying the item under Chapter 3003.30. We also take note of the arguments advanced on behalf of the party that advertisements, pamphlets and labels have only an advertising effect or value and nothing more and it will not determine the classification by themselves relying upon the decision of the Madras High Court, in the case of UOI and Ors. v. TSR & Co reported in 1985 (22) E.L.T. 701.
9. In view or our fore-going conclusion, we find that the items are correctly classifiable under Chapter 3003.30 and accordingly appellants succeed on the point at issue. In the result appeal is allowed with consequential relief, if any.