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of <h1>Court classifies 'Keshyog Ayurvedic Products' as medicine not cosmetics, affirms duty under Central Excise Law</h1> <h3>M/s. Global Tele Mall, M/s. GTM Teleshopping Pvt. Ltd., Thru Anuj (Director) Versus Union of India</h3> M/s. Global Tele Mall, M/s. GTM Teleshopping Pvt. Ltd., Thru Anuj (Director) Versus Union of India - 2018 (18) G. S. T. L. 227 (M. P.) Issues Involved:1. Classification of the products as Ayurvedic medicine or cosmetic/toilet preparation.2. Whether the processes undertaken by the appellant amount to manufacture.Detailed Analysis:1. Classification of the Products:The primary issue in the appeals was whether the products 'Keshyog Ayurvedic/Herbal Hair Oil and Keshyog Ayurvedic Shampoo' should be classified under Chapter 30 as Ayurvedic medicine or under Chapter 33 as cosmetic/toilet preparation. The appellants argued that the products, containing ingredients specified in Ayurvedic texts, should be classified as Ayurvedic medicine. The Revenue contended that the products should be classified as cosmetics, even if they had therapeutic qualities.The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) had previously remanded the case back to the Original Authority for fresh decision on classification. The Tribunal noted that the adjudicating authority did not address the appellant's claim that the products were Ayurvedic medicines. The Tribunal, upon reconsideration, concluded that the products were rightly classifiable under Chapter 30 as Ayurvedic Medical Preparation, relying on precedents such as B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise and Commissioner of Central Excise v. Sharma Chemical Works.2. Process Amounting to Manufacture:The second issue was whether the activities undertaken by the appellant, such as labelling and packing, amounted to manufacture under Central Excise law. The appellant argued that their activities did not constitute manufacture as they only involved labelling and packing pre-sealed bottles. However, the Revenue and the Original Authority held that these activities did amount to manufacture under Note 6 of Chapter 30, which states that labelling and repacking from bulk to retail packs render the product marketable and thus amount to manufacture.The Tribunal upheld the finding that the processes undertaken by the appellant constituted manufacture. It was noted that the appellant received bulk consignments and repacked them into retail packs, labelled them, and made them marketable. This activity was deemed to fall within the scope of manufacture as defined under the relevant chapter notes.Judgment:The High Court agreed with the Tribunal's findings that the products should be classified as Ayurvedic medicine under Chapter 30 and that the processes undertaken by the appellant amounted to manufacture. The court dismissed the appeals, affirming the Tribunal's decision that the products were correctly classified and that the appellant's activities constituted manufacture, thus attracting Central Excise duty. The penalties imposed on individuals were set aside, but the penalties on the companies were upheld. The court also referenced several Supreme Court judgments that supported the classification of products based on their therapeutic qualities and common parlance understanding rather than strict adherence to manufacturing processes described in Ayurvedic texts.
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