2007 (9) TMI 36 - AT - Central Excise

Classification of products as ayurvedic medicaments upheld over confectionery - Burden of proof on department

The Commissioner (Appeals) upheld the classification of products 'Test-up, Coolex, Cold-drops' as ayurvedic medicaments under Heading 3003.30, setting ... Classification - Appellant claimed that the manufactured goods (Test-up, Coolex, Cold-drops) are Ayurvedic medicines classifiable under Heading 3003.30 and are fully exempted - Held that appellant contention was correct and allowed Issues Involved:Classification of products 'Test-up, Coolex, Cold-drops' as either confectionery or ayurvedic medicaments.Analysis:1. Classification of Products in Appeal No. E/2545/2003:The appellant claimed that the products are ayurvedic medicines exempted under Notification No. 31/89-C.E. The department argued they are confectionery. The Commissioner classified them under Chapter Heading 1704.90 but dropped the duty demand as time-barred.2. Classification of Products in Appeal No. E/1417/2005:Similar issue as E/2545/2003. The original authority demanded duty, but Commissioner (Appeals) ruled in favor of the party, classifying the products as ayurvedic medicaments under Heading 3003.30.3. Arguments by Appellant and Department:Appellant argued burden of proof lies on the department, products contain ayurvedic ingredients, and are marketed as ayurvedic medicaments. Commissioner (Appeals) upheld this view. Appellant cited various judgments supporting their classification.4. Findings and Reasoning:Commissioner classified products as confectionery based on high sugar content and lack of precise ayurvedic composition details. However, Commissioner (Appeals) emphasized the primary use and active ingredients, not the percentage of ayurvedic content. Several Supreme Court judgments were cited to support this view.5. Legal Precedents:The judgment referenced several Supreme Court cases emphasizing the primary function and active ingredients in determining classification as medicaments. The quantity of medicinal ingredients and method of sale were also considered irrelevant factors.6. Final Decision:The classification claimed by the appellant as ayurvedic medicaments was upheld by Commissioner (Appeals), setting aside the Commissioner's classification as confectionery. The appeal by the party in E/2545/2003 was allowed, while the department's appeal in E/1417/2005 was rejected.This comprehensive analysis highlights the key issues, arguments, findings, legal precedents, and the final decision in the judgment regarding the classification of the products in question.