Ayurvedic medicament classification and limitation in excise depend on common parlance evidence and departmental notice.

Excise classification of a product as an ayurvedic medicament or hair oil turns on its composition, licensing, labelling, supporting medical evidence, and common parlance perception; the Revenue must establish the correct tariff entry, and failure to produce contrary evidence defeats classification as hair oil. The article also states that where the assessee filed a declaration disclosing manufacture and the department remained inactive despite that notice, invocation of the extended limitation period is not justified. On those facts, the classification demand and related penalties cannot be sustained, and the demand on branded clearances is treated as time-barred.

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Issues: (i) Whether the product manufactured by the assessee was classifiable as an ayurvedic medicament under Chapter 30 or as hair oil under Chapter 33. (ii) Whether the demand raised on the branded clearances was barred by limitation.

Issue (i): Whether the product manufactured by the assessee was classifiable as an ayurvedic medicament under Chapter 30 or as hair oil under Chapter 33.

Analysis: The products were manufactured under a drug licence, the ingredients were of ayurvedic origin, the cartons described them as ayurvedic medicines, and affidavits of ayurvedic doctors supported their medicinal use. The Revenue did not produce contrary evidence showing that the goods were understood in common parlance as hair oil. In classification matters, the burden lies on the Revenue to establish the correct tariff entry, and the popular meaning and user perception of the product are material. On the evidence available, the Revenue failed to discharge that burden.

Conclusion: The product was held to be classifiable as an ayurvedic medicament and not as hair oil, in favour of the assessee.

Issue (ii): Whether the demand raised on the branded clearances was barred by limitation.

Analysis: The assessee had filed a declaration with the departmental authorities showing manufacture of the product, and the department remained inactive for years despite being aware of the disclosure. Where the department does not act on the declaration and seeks no further clarification, invocation of the extended period is not justified. On the facts, the demand for the relevant branded clearances was beyond limitation.

Conclusion: The demand on the branded clearances was held to be time-barred, in favour of the assessee.

Final Conclusion: The classification demand and consequential penalties could not be sustained, and the assessee succeeded on both merits and limitation.

Ratio Decidendi: In excise classification disputes, the Revenue must prove that the goods are understood in common parlance as falling under the alleged tariff entry, and the extended period cannot be invoked where the department had notice of the relevant facts through declaration but failed to act.

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