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of <h1>Product classified as Ayurvedic medicament under Tariff Item 3003.30; revenue bore burden to prove otherwise, appeals dismissed</h1> SC held the product is classifiable as an Ayurvedic medicament under Tariff Item 3003.30, dismissing the appeals. The Court found the burden to prove a ... Classification as a 'perfumed hair oil' under Tariff Item 3305.10 or as an 'Ayurvedic Medicament' under Tariff Item 3003.30. - Burden of proof - HELD THAT:- It is a settled law that the onus or burden to show that a product fall within a particular Tariff Item is always on the revenue. Mere fact that a product is sold across the counters and not under a Doctors prescription, does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumaran that merely because the percentage of medicament in a product is less, does not ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda text books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it. The burden of proving that Banphool Oil is understood by the customers as an hair oil was on the revenue. This burden is not discharged as no such proof is adduced. On the contrary we find that the oil can be used for treatment of headache, eye problem, night blindness, reeling, head weak memory, hysteria, amnesia, blood pressure, insomnia etc. The dosages required are also set out on the label. The product is registered with Drug Controller and is being manufactured under a drug licence. The Board circular dated 5th December, 1991 clearly stipulates that in case of doubt the matter should be referred to the Drug Controller. The matter was referred to the Drug Controller who, as stated above, has opined that it is an Ayurvedic medicament. If the department was still entertaining any doubts, they could have referred the matter to the Adviser, Ayurveda/Sub-Commissioner in the Office of Drug Controller, Director General of Health Services, New Delhi. This was not done. We are in agreement with the majority opinion of the Tribunal that the Banphool Oil is classifiable as an Ayurvedic medicament under Tariff Item 3003.30. In this view of the matter, we see no infirmity in the impugned judgments. The Appeals accordingly stand dismissed. Issues Involved:1. Classification of Banphool Oil as a 'perfumed hair oil' or an 'Ayurvedic Medicament'.2. Interpretation of relevant Tariff Items and Chapter Notes.3. Burden of proof regarding the classification of the product.4. Admissibility and relevance of expert opinions and circulars.Issue-wise Analysis:1. Classification of Banphool Oil:The primary issue in these appeals is whether Banphool Oil should be classified as a 'perfumed hair oil' under Tariff Item 3305.10 or as an 'Ayurvedic Medicament' under Tariff Item 3003.30. The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) had a split decision, with the majority classifying it as an Ayurvedic Medicament. The Supreme Court agreed with the majority opinion, noting that the product is used for treating various ailments and is registered with the Drug Controller, manufactured under a drug license.2. Interpretation of Relevant Tariff Items and Chapter Notes:The Additional Solicitor General argued that Banphool Oil should be classified under Chapter 33, which deals with perfumed hair oils. He cited Chapter Note 1(d) of Chapter 30, which states that preparations under Chapter 33, even with therapeutic properties, remain as toilet preparations. The respondent countered that Chapter 30 covers all types of medicines, and the ingredients of Banphool Oil are listed in Ayurvedic texts. The Supreme Court emphasized that the primary criterion for classification is the product's use by consumers, which in this case, is for medicinal purposes.3. Burden of Proof:The Court reiterated that the burden of proof to show that a product falls within a particular Tariff Item is on the revenue. The revenue failed to provide evidence that Banphool Oil is understood by consumers as a hair oil rather than a medicament. The Court noted that the product's label indicates its medicinal uses and dosages, supporting its classification as an Ayurvedic Medicament.4. Admissibility and Relevance of Expert Opinions and Circulars:The respondent highlighted a Board Circular dated 5th December 1991, which directs that in case of doubt regarding the classification of a product as an Ayurvedic Medicament, the matter should be referred to the State Drug Licensing Authority. The Drug Controller had opined that Banphool Oil is an Ayurvedic preparation. The Court held that the revenue should have followed this circular and referred the matter to the Adviser, Ayurveda, if doubts persisted.Conclusion:The Supreme Court upheld the majority opinion of the Tribunal, classifying Banphool Oil as an Ayurvedic Medicament under Tariff Item 3003.30. The appeals were dismissed, with no order as to costs. The Court emphasized the importance of consumer perception and expert opinions in determining the classification of products under the Excise Act.
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