Burden of proof in excise classification favored Ayurvedic medicine classification over cosmetics and invalidated the duty demand.

Goods manufactured under a valid Ayurveda, Siddha or Unani drug licence and GMP certificate were treated as Ayurvedic medicines under Chapter 30, not as cosmetics or toilet preparations under Chapter 33. The decisive point was that the Revenue did not produce any test report or other documentary evidence to show that the products fell within the cosmetic entry, while the available licensing material and the Directorate opinion supported their Ayurvedic character. In classification disputes, the burden rests on the Revenue to establish the competing tariff entry it invokes, and that burden was not discharged. On that basis, the duty demand, interest, penalties, and confiscation of seized goods were unsustainable.

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Issues: Whether the goods manufactured by the appellants were classifiable as Ayurvedic medicines under Chapter 30 of the Central Excise Tariff Act, 1985, or as cosmetics and toilet preparations under Chapter 33, and whether the resulting demands of duty, interest, penalties, and confiscation of seized goods were sustainable.

Analysis: The appellants held a valid drug manufacturing licence and GMP certificate for Ayurveda, Siddha or Unani drugs. The record also contained an opinion from the Directorate of ISM Drugs Control indicating that the products were Ayurvedic medicines, and that opinion had not been relied upon in the show-cause notice. The decisive consideration was that the Revenue did not produce any test report or other documentary evidence to establish that the products were cosmetics or toilet preparations. In classification disputes of this nature, the burden lies on the Revenue to prove that the goods fall within the competing tariff entry invoked by it. The absence of contrary scientific evidence, coupled with the licensing material and the Ayurvedic character of the goods, supported classification as Ayurvedic medicines.

Conclusion: The products were held to be Ayurvedic medicines falling under Chapter 30 of the Central Excise Tariff Act, 1985, and not cosmetics or toilet preparations under Chapter 33. The demand of duty, interest, penalties, and confiscation of seized goods was held unsustainable.

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