2000 (12) TMI 201 - AT - Central Excise

Tribunal reclassifies 'Dant Manjan Lal' as ayurvedic medicament under Central Excise Tariff

The Tribunal allowed the appeal, setting aside the previous order and determining that the product 'Dant Manjan Lal' should be classified as an ayurvedic ... Medicament - Interpretation of statutes Issues Involved:1. Classification of the product 'Dant Manjan Lal'2. Applicability of the Supreme Court's earlier judgment3. Impact of the amendment to Chapter 30 of the Central Excise Tariff4. Consideration of statutory amendments and circulars issued by the Board5. Definition and interpretation of 'ayurvedic medicament'Detailed Analysis:1. Classification of the product 'Dant Manjan Lal':The primary issue in this appeal is the classification of the product 'Dant Manjan Lal' manufactured by the appellant. The Commissioner (Appeals) confirmed the Assistant Commissioner's finding that the product should be classified as a tooth powder for oral hygiene under Chapter 33 of the tariff, rather than as an ayurvedic medicament under Heading 3003.31 of the Central Excise Tariff. The Assistant Commissioner had also imposed a penalty on the appellant under Rule 173Q following the classification determination.2. Applicability of the Supreme Court's earlier judgment:The appellant's advocate contended that the Supreme Court's earlier judgment should no longer apply. The previous proceedings before the Tribunal and the Supreme Court involved the classification of the goods under item 68 of the tariff and exemption under Notification 62/78, which exempted 'All drugs, medicines and pharmaceuticals and drug intermediates not elsewhere specified.' The Supreme Court had endorsed the Tribunal's view that the product did not qualify as a medicament because it lacked therapeutic properties and was not prescribed by a physician. However, the appellant argued that this judgment was not relevant to the current classification under the amended tariff heading.3. Impact of the amendment to Chapter 30 of the Central Excise Tariff:The amendment to Chapter 30 of the tariff, introduced in the 1996 budget, inserted sub-heading 31 in Heading 30.03, covering ayurvedic medicaments manufactured exclusively in accordance with the formulae described in authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940. The appellant argued that since the product was manufactured according to the 'Ayurved Sar Sangraha,' included in the First Schedule, it should be classified under the new sub-heading. The departmental representative, however, emphasized that the Supreme Court had found the product lacked therapeutic properties, and the previous judgment should still apply.4. Consideration of statutory amendments and circulars issued by the Board:Circulars from the Board had taken different views over time. A 1991 circular classified the product as an ayurvedic medicament, relying on the Supreme Court's judgment in CCE v. Richardson Hindustan. However, a subsequent circular in 1996 accepted the Supreme Court's judgment regarding 'Dant Manjan Lal' and advised classification accordingly. Another letter in 1997 suggested that the Supreme Court's judgment was not relevant due to the tariff amendment.5. Definition and interpretation of 'ayurvedic medicament':The Assistant Commissioner and Commissioner (Appeals) concluded that the product did not qualify as an ayurvedic medicament despite being manufactured according to the formula in an authoritative book. They relied on the Supreme Court's earlier judgment, which distinguished between medicine and toiletry articles. The Tribunal noted that the amendment to the tariff heading had significant meaning and should not be ignored. The definition of 'ayurvedic medicament' in the tariff now aligns with the definition in the Drugs and Cosmetics Act, 1940, which includes all medicines intended for diagnosis, treatment, mitigation, or prevention of disease or disorder in humans or animals, manufactured according to specified formulae.Conclusion:The Tribunal concluded that the effect of the amendment to the tariff was to align it with the Drugs and Cosmetics Act, 1940. Therefore, if the product conformed to the requirements specified in the Act and the tariff, it should be classified as an ayurvedic medicament. The considerations present before the Supreme Court in its earlier judgment were not applicable to the current classification under the amended tariff. Consequently, the Tribunal allowed the appeal, set aside the impugned order, and held that the product was rightly classifiable under Heading 30.03 as claimed by the appellant.