True character test governs Ayurvedic product classification; labelling and repacking bulk goods into retail packs can amount to manufacture.

Classification of Keshyog Ayurvedic/Herbal Hair Oil and Keshyog Ayurvedic Shampoo depended on their true character, assessed from ingredients, label, literature and commercial understanding; because the material showed therapeutic character, Chapter 30 as Ayurvedic medicine prevailed over Chapter 33 as a cosmetic or toilet preparation. The goods received in bulk were then labelled, repacked into retail packs and made fit for sale; that post-receipt activity fell within the relevant chapter note deeming such processes to be manufacture. The goods remained classifiable under Chapter 30, but the processing was still treated as manufacture for excise purposes.

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Issues: (i) Whether the product "Keshyog Ayurvedic/Herbal Hair Oil and Keshyog Ayurvedic Shampoo" was classifiable under Chapter 30 as an Ayurvedic medicine or under Chapter 33 as a cosmetic or toilet preparation; (ii) whether the processes of labelling, repacking and making the goods fit for retail sale amounted to manufacture.

Issue (i): Whether the product "Keshyog Ayurvedic/Herbal Hair Oil and Keshyog Ayurvedic Shampoo" was classifiable under Chapter 30 as an Ayurvedic medicine or under Chapter 33 as a cosmetic or toilet preparation.

Analysis: The classification turned on the true nature of the product, its ingredients, label, literature and accepted commercial understanding. A product is not excluded from being an Ayurvedic medicament merely because it is sold across the counter or may also have a cosmetic use. Where the material shows therapeutic character and the goods are understood as medicinal preparations, Chapter 30 prevails over Chapter 33.

Conclusion: The product was rightly classified under Chapter 30 as an Ayurvedic medicine, in favour of the assessee.

Issue (ii): Whether the processes of labelling, repacking and making the goods fit for retail sale amounted to manufacture.

Analysis: The goods received in bulk were put into combi-packs, labels were affixed and the products were rendered marketable for retail sale. Such activity fell within the scope of the relevant chapter-note deeming certain post-manufacture processes, including labelling and repacking from bulk to retail packs, to be manufacture.

Conclusion: The activity undertaken by the assessee amounted to manufacture, though this did not alter the classification of the goods under Chapter 30.

Final Conclusion: The appeals failed because the goods were treated as Ayurvedic medicines, while the post-receipt processing was nevertheless treated as manufacture for excise purposes; the High Court found no substantial question of law and upheld the Tribunal's view.

Ratio Decidendi: Classification of a preparation depends on its true character as revealed by ingredients, label, literature and commercial understanding, and labelling or repacking bulk goods into retail packs can amount to manufacture where the applicable chapter note so provides.

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