2023 (9) TMI 567 - AT - Central Excise

Tribunal remands case for reclassification of product based on Ayurvedic texts.

The Tribunal remanded the case to the adjudicating authority for a fresh order, highlighting the necessity for a thorough analysis of the product's ... Classification of medicament as Ayurvedic medicament - test for Ayurvedic ingredient presence - role of active versus non active ingredients in classification - reliance on Ayurveda Grantha and authoritative Ayurvedic texts - remand for fresh adjudication to verify ingredients and classificationClassification of medicament as Ayurvedic medicament - role of active versus non active ingredients in classification - reliance on Ayurveda Grantha and authoritative Ayurvedic texts - Whether the products Sensur Rubefacient and Herbyl Skin Ointment are Ayurvedic medicaments or P&P medicaments (other than Ayurvedic medicament), requiring reconsideration of their classification by examining ingredients and authorities relied upon. - HELD THAT: - The Tribunal reviewed competing contentions: appellant's case that the products are manufactured from Ayurvedic ingredients listed in Ayurvedic Grantha, sold and licensed as Ayurvedic medicines, and that certain components relied upon by the department are non active additives (preservatives, excipients, carriers, fillers) which do not alter Ayurvedic character; and the department's case that presence of ingredients such as boric acid, lanolin anhydrous, white soft paraffin, essence of jasmine, salicylic acid and beeswax (allegedly non Ayurvedic) precludes classification as Ayurvedic medicament. The Tribunal extracted from Supreme Court authorities a two fold prima facie test for classification: (1) the medicament should be manufactured out of Ayurvedic ingredients specified in Ayurvedic Grantha or authoritative Ayurvedic texts; and (2) the medicament should be sold as Ayurvedic medicine in trade parlance. Applying these criteria, the Tribunal found that the nature of the disputed ingredients (whether active or non active) and whether they are covered by Ayurvedic authoritative sources were not properly examined by the adjudicating authority. As the department's entire case turned on those ingredient determinations, the Tribunal concluded that the matter requires fresh consideration, including assessment against the cited Supreme Court precedents and proper examination of each ingredient's status and role.Impugned order set aside; matter remanded to the adjudicating authority for fresh adjudication and classification of the products after examining whether the ingredients are Ayurvedic (and whether they are active or non active) and applying the identified criteria and relevant Supreme Court decisions.Final Conclusion: The Tribunal has set aside the impugned order and remanded the classification dispute for fresh adjudication so that the adjudicating authority may examine the disputed ingredients (their Ayurvedic status and whether they are active or merely excipients/preservatives), apply the articulated two part test and the cited authorities, and pass a fresh reasoned order. Issues involved: Classification of product as Ayurvedic medicament under 3003.30 or P&P medicament under 3003.39 in Central Excise Tariff 1985.Detailed Judgment:Issue 1: Classification of productThe appellant claimed that the product, Sensur Rubefacient and Herbyl Skin Ointment, is an Ayurvedic medicine as it is manufactured using Ayurvedic ingredients specified in Ayurveda Grantha and is sold as Ayurvedic medicine with the Drug Authority's license. They argued that the presence of non-active ingredients like preservatives does not change the classification, citing various judgments in support. The Department contended that the use of non-Ayurvedic ingredients like Boric acid and Lanoline Anhydrous makes the product non-Ayurvedic. The Tribunal observed that to classify a product as Ayurvedic medicament, it should be made from Ayurvedic ingredients and sold as Ayurvedic medicine. The Tribunal agreed with the appellant's argument that even if non-active ingredients are present, as long as the active ingredient is Ayurvedic, the product can be classified as Ayurvedic medicament. However, the Tribunal found that a proper examination of the ingredients and their presence in Ayurvedic texts was lacking. Therefore, the matter was remanded to the adjudicating authority for a fresh order, considering the Supreme Court judgments cited by the appellant.Conclusion:The Tribunal remanded the matter to the adjudicating authority for a fresh order, emphasizing the need for a detailed examination of the ingredients used in the product and their presence in Ayurvedic texts to determine the correct classification as Ayurvedic or P&P medicament under the Central Excise Tariff.