1991 (9) TMI 309 - AT - Central Excise

Prolita Syrup classified as food supplement, not P and P medicine under relevant tariff sections.

COLLECTOR OF C. EX. & CUS., PUNE Versus LI TAKA PHARMACEUTICALS LTD.

COLLECTOR OF C. EX. & CUS., PUNE Versus LI TAKA PHARMACEUTICALS LTD. - 2004 (175) E.L.T. 127 (Tri. - Del.) Issues involved:1. Change of company name in the title.2. Classification of 'Prolita Syrup' under the Central Excises and Salt Act, 1944.3. Determination of whether 'Prolita Syrup' is a food supplement or a P and P medicine.4. Consideration of the therapeutic value of 'Prolita Syrup.'5. Applicability of previous rulings and judgments on similar products.6. Burden of proof for classification.7. Impact of trade parlance and commercial understanding on classification.8. Relevance of packaging, branding, and marketing in determining the product category.Detailed Analysis:1. Change of Company Name in the Title:The respondents filed a Misc. application seeking change of the title. On perusal of the same, the Bench allowed the change in name of the company and an order passed in the Open Court.2. Classification of 'Prolita Syrup' under the Central Excises and Salt Act, 1944:The Revenue, as appellants, challenged the order passed by the Collector of Central Excise (Appeals), Bombay, which rejected their appeal under Section 35-3(4) of the Central Excises and Salt Act, 1944. The respondents claimed classification of 'Prolita Syrup' under TI 1B with full exemption under Notification No. 17/70. The Assistant Collector approved this classification and granted exemption.3. Determination of Whether 'Prolita Syrup' is a Food Supplement or a P and P Medicine:The core issue was whether 'Prolita Syrup' should be classified as a food supplement or a P and P medicine under TI 14-E. The Collector (Appeals) held that the product, containing Soya protein hydrolysate, carbohydrates, folic acids, and vitamins, was a food supplement, not a drug, as it had no therapeutic or prophylactic values and was marketed as a food concentrate fortified with vitamins and iron.4. Consideration of the Therapeutic Value of 'Prolita Syrup':The Revenue contended that the product had therapeutic value due to its ingredients and should be classified as a P and P medicine. They argued that the product was sold on a doctor's prescription and had a specific dosage, indicating its medicinal nature. However, the Collector (Appeals) and the Tribunal found that the product's therapeutic value alone was insufficient to classify it as a P and P medicine.5. Applicability of Previous Rulings and Judgments on Similar Products:The respondents relied on previous rulings, including the case of Indo-Pharma Pharmaceutical Works Ltd., where a similar product was classified under TI 1-B, and the Madhya Pradesh High Court's ruling in Ramesh Chemical Industries v. Union of India, which held that glucose, a food item, was not classifiable under TI 14-E as a P and P medicine. The Tribunal upheld these precedents, finding no reason to deviate from them.6. Burden of Proof for Classification:The Tribunal emphasized that the onus to prove the classification was on the Revenue. The Revenue failed to provide sufficient evidence to support their contention that 'Prolita Syrup' was a P and P medicine. The respondents, on the other hand, provided evidence from the Drug Controller and Municipal authorities, indicating that the product was considered a food item.7. Impact of Trade Parlance and Commercial Understanding on Classification:The Tribunal highlighted that trade parlance and commercial understanding of a product are crucial for its classification in the absence of a specific definition in the Tariff Item. The product was marketed as a food supplement, and this understanding was supported by Trade Notices and HSN Notes, which classified vitamin syrups as food supplements.8. Relevance of Packaging, Branding, and Marketing in Determining the Product Category:The Revenue argued that the product's packaging, branding, and marketing indicated its medicinal nature. However, the Tribunal found that these factors alone were insufficient to classify the product as a P and P medicine. The product's therapeutic value, prescription requirement, and dosage indication did not override its classification as a food supplement.Conclusion:The Tribunal upheld the lower authorities' order, dismissing the Revenue's appeal. The product 'Prolita Syrup' was classified as a food supplement under TI 1-B, and not as a P and P medicine under TI 14-E, based on the evidence presented, trade parlance, and commercial understanding. The Tribunal found no merit in the Revenue's contentions and ruled in favor of the respondents.