TaxTMI 
TaxTMI 
1995 (10) TMI 129
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....ietary medicament not as Ayurvedic medicament as claimed by the appellants. 2. We have heard Shri A. Hidayatullah, Advocate and Shri V.S. Nankani, Advocate for the appellants. The department's case was represented by Smt. Vijay Zutshi, Director (Publication) and Shri Sharad Bhansali, SDR. We have also considered the written submissions filed by the Advocate for the appellants subsequent to the hearing. No submission was filed by the Departmental Representative. 3. The arguments put forth by Shri Hidayatullah are as follows : The appellants manufacture the goods in accordance with the licence issued under the Drugs and Cosmetics Act, 1940 for manufacture of patent or proprietary Ayurvedic medicine. This licence is issued by the competent authority after consulting an expert in the Ayurvedic System of Medicine as provided in Rules 154 and 154A of the Drugs and Cosmetics Rules, 1945. The licence is granted after due enquiry by the competent authority who has the required knowledge and expertise for that purpose. The licence is subject to annual renewal subject to fulfilment of conditions which embrace the premises of manufacturers' place, conditions relating to maintaini....
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....dy' containing 75% sugar is ayurvedic medicine, following the Panama Chemical judgment in the case of Dabur India v. Collector of Central Excise [1994 (71) E.L.T. 1069]. There is no decision of the Hon'ble Supreme Court or any High Court contrary to the decisions in Leukoplast India Ltd., Ramesh Chemical and Panama Chemical. The Calcutta High Court in Calcutta Clinical Research Science Ltd.. v. Union of India (1971 Taxation Law Report 1073), therefore, has applied reference of drugs as under Drugs Act and held that manufacture of drugs is only complete after labelling. Whereas a consistent view has been taken by four High Courts and the Tribunal has expressed conflicting views, the judgments of the High Court are binding, as held by the Tribunal in 1985 (21) E.L.T. 904, 1987 (27) E.L.T. 93, 1987 (28) E.L.T. 438, 1994 (70) E.L.T. 754 and 1994 (72) E.L.T. 735. The ratio of the Supreme Court's judgment in M.G. Abrol v. Shantilal & Company, [AIR 1966 SC 197] supports the view expressed by the High Courts. In that judgment, the Court held that when the Iron and Steel Controller, the licensing authority had certified that the consignment of iron and steel scrap was not useable in India a....
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....t the goods being patent or proprietary Ayurvedic medicament be excluded from the phrase `other than those medicaments' which should qualify the patent or proprietary medicaments in Heading 3003.10. He argued that the decision in Amrutanjan case is not good law as it is contrary to the judgments in the High Courts cited earlier. Further, it is for the competent authority under the Drugs Act to look into and interpret the scope of ayurvedic medicaments. He attempted to point out some further flaws in that decision. The view that use of synthetic ingredients would render the item non-ayurvedic was now contrary to the judgment of the Madhya Pradesh High Court in Panama Chemical Works in which the Court held the product `swad' which contained 75% liquid glucose which is an allopathic and ayurvedic medicine. He said that a plea of new argument in view of a subsequent discovery cannot affect the binding precedent as held by the Supreme Court in Ambica Prasad v. State of UP (AIR 1980 SC 1762). Since the Bhoruka Industries Pvt. Ltd. decision followed Amrutanjan that would also not be binding. He sought to distinguish (AIR 1968 SC 1450) cited by the Departmental Representative. He relied up....
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...., the Collector (Appeals), has in fact accepted that the appellants manufacture their products in accordance with the licence issued under the Drugs and Cosmetics Act. But, he says that this does not stop the department from going into the composition of the product for purposes of classification. We are not able to agree with the proposition that once an article is being manufactured in accordance with the licence issued under the Drugs Act, the department cannot go into the classification of the product. The definition of "drug" in the Drugs Act is much wider than the definition of medicaments classifiable under Heading 3003 of the Tariff. The Central Excise Tariff includes, as we have seen in para 7, a number of goods which would not be classifiable under Heading 3003. Some of the goods defined as drugs under the Drugs Act and manufactured in accordance with the licence under that Act would be classifiable under Heading 30.02 (Vaccines) 30.04 (Certain kinds of bandages) 29.36 or 29.37. These are only a few examples. The function of the department relating to classification of goods for the purposes of assessment to Central excise duty therefore, necessarily entails study, indepe....
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....He however, stops [short] of following his argument to its logical conclusion that it is only those patent or proprietary medicaments which are established to be exclusively ayurvedic, unani etc. which should be excluded from the scope of the heading. The advocate's argument proceeds on the assumption that the medicament is exclusively ayurvedic. If it were, the goods would not fall under sub-heading 10 of the Heading. We have to see whether these are in fact exclusively ayurvedic. 12. The Drugs and Cosmetics Act makes a clear distinction between ayurvedic medicaments and patent or proprietary ayurvedic medicaments. The former defined in Section 3(a) have to be exclusively manufactured in accordance with the formula described in the authoritative books on ayurveda specified in the First Schedule. The latter, defined in Section 3(h) covers formulations containing ingredients mentioned in the formula described in the authoritative books of ayurveda and excludes a formulation excluded in these authoritative books. Thus while both kinds of medicines must have ingredients mentioned in the formula described in the authoritative books. Patent or proprietary medicines however may n....
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....03.10. 15. In the result, therefore, we confirm the conclusion of the Collector (Appeals) that the product is classified under Heading 3003.10 and dismiss the appeal. Sd/- (Gowri Shankar) Dated : 28-7-1995 Member (T) 16. [Order per : S.K. Bhatnagar, Vice President]. - With due respects to Hon'ble Member (Technical) my views and orders are as follows : 17. The basic question before us is the determination of correct classification of pharmaceutical products 'Vicks medicated cough drops and Vicks vaporet throat drops' under the Central Excise Tariff. 18. The Assistant Collectors (and other officers of the Central Excise De partment) who have been vested with the authority to determine such issues for Central Excise purposes are therefore, naturally required to proceed in accordance with the Principles of Interpretation, the Section Notes, Chapter Notes and the relevant headings and sub-headings of the Central Excise Schedule. 19. In the process of applying these provisions if the Central Excise Authorities are required to keep the provisions of certain other enactments in view, normally, it is so stated explicitly in the....
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....1955 (16 of 1955). But there is no corresponding provision (in respect of `inclusions' in Chapter 30) referring to the Drugs and Cosmetics Act, 1940. 24. The Chapter Note 2 which indicates the meaning of `Medicament and 'Patent and proprietary medicament' and `Drugs' does not refer to Drugs and Cosmetics Act, 1940 (although it refers to the Trade and Merchandise Marks Act, 1958). In fact, there is every reason to believe that the Legislature has intentionally adopted a different definition for `Medicament', `Drug' and `Patent and proprietary medicament' etc. It is interesting to note in this connection that phrase `pharmaceutical products' is peculiar to Central Excise Schedule and does not find mention in the Drugs and Cosmetics Act and even the word `drugs' used in Note 2(ii) has been used in the Central Excise Schedule only to show that it falls within the ambit of the 'Medicaments' and that too in a sense different from the one used in the Drugs and Cosmetics Act where it has a specific connotation for the purpose of that Act as it excludes Ayurvedic, Siddha or Unani Drugs and includes not only medicines but other substances and devices; this is however, not the case in....
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....cs Act and orders issued therein (such as licence) shall be deemed to apply for Central Excise purposes and shall have effect accordingly. 30. I have mentioned this to show that merely because in certain cases, in the circumstances of those cases some Courts or the Tribunal had occasion to refer to the provisions of Drugs and Cosmetics Act, that by itself is not sufficient to hold that in all cases, in all circumstances all the provisions of the Drugs and Cosmetics Act shall always apply to Central Excise cases and/or the Central Excise Authorities are bound by the provisions of that Act or the orders (whether in the nature of licence, otherwise) issued by Drug Controller or other officers under the Drugs and Cosmetics Act. I, therefore, entirely agree with my learned colleague that the Central Excise officers, can independently determine the meanings of the words and phrases used in the Central Excise Tariff for the purposes of Central Excise Act, infer the intention of the legislature from the language used therein or the context or the purpose thereof; and act accordingly. 31. Of course, to the extent, there is a certain amount of commonality and the scope of sim....
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....ion or formulation in India in the same allopathic way result in a product which could be described and marketed as Ayurvedic Medicine? 35. The appellants' products are manufactured under a licence granted by the firm of Richardson Vicks Inc. USA and a processing agreement with Richardson Hindustan Limited (and a supplement agreement with Proctor and Gamble India Ltd.) in India and therefore, must be governed by the terms and conditions of the licence. 36. The appellants have not produced any material or other evidence to show that they have been licenced to produce these medicines according to the Ayurvedic principles and practice and yet sell them under the same Brand Name or Trade Mark by which they are known as Allopathic Medicines the world over. 37. The appellants have admittedly manufactured them by methods not known to Ayurveda. Therefore, even it could be shown that some of the ingredients were known to Ayurveda that would by itself not be sufficient to prove that these were Ayurvedic medicines. The Legal Notice published by the Govt. of India, Ministry of Health and Family Planning, Deptt. of Health as a part of Ayurvedic Formulary of India Part....
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.... this must be done in accordance with Ayurvedic principles and gain recognition as such and thereby get included in the Ayurvedic Materia Medica or Formulary or some other authoritative/recognised Ayurvedic text. 42. The material produced by the appellants themselves shows the difference in the principles followed by the two systems. The importance attached to method of preparation and use in Ayurvedic (and Homeopathic) systems is also a known fact. It will perhaps be more evident if we draw an analogy from the difference between Allopathic and Homeopathic systems. Thus, for example, the Homeopathic system fallows the principle of "Similia Similibus Curentur i.e., similars are cured by similars" and the drugs used in homeopathy are first given to healthy human volunteers and only after these provings they are included in Homoeopathy Materia Medica, and its medicines are prepared from `mother tincture' by following the method of ionisation or dilution. Thus, greater the dilution, the greater its potency and the system believes in administering minimum possible quantity of medicine. It is well known that Allopathic medicines are not prepared on these principles or by these me....
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....e admitted use of modern scientific methods was ignored, and for arguments sake it was accepted that the mere use of modern methods will not render a medicine the ingredient of which were known to Ayurveda, as non-ayurvedic then too the contention of the appellants that it was not classifiable under 3003.10 cannot be accepted for the simple reason that the evidence produced by the appellants themselves shows that it was "Patent and proprietary" in character and even going by the Drugs and Cosmetics Act upon which the Ld. Counsel has so heavily relied it is evident that there is a clear distinction between ayurvedic drug or medicine, a patent or proprietary ayurvedic drug or medicine and other drugs or patent or proprietary medicines. The proviso of Sections 3(a), 3(b) and 3(h) are clear and important. Section 3(a) lays emphasis on the manufacture exclusively in accordance with the formulae described in the authoritative books of ayurvedic system of medicine; Section 3(h) on formulations containing only such ingredients as specified in the First Schedule and Rule 161 of the Drugs and Cosmetics Rules relating to the Ayurvedic drugs emphasises the "method of preparation thereof as det....
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....and foremost there is nothing to show that the product was processed, prepared or manufactured in accordance with the formulae given in authoritative Ayurvedic Books or in accordance with the principles and procedures of Ayurvedic system of medicine. 50. Secondly, the product taken as a whole is a preparation included in Allopathic texts and manufactured according to the methods and principles of western system of medicine. It has been patented and marketed as Allopathic medicine and is known throughout the world as such. 51. The fact that one of the ingredients is extract of a herb `ARKE' known to Ayurved (used in addition to those used in the American or the British product of the same Trade Mark, is not and could not be a determining factor in accordance with the aforesaid Supreme Court's judgment itself. 52. Thus, even going by Drugs and Cosmetics Act it could not be considered as an Ayurvedic drug. 53. It must be noted that the Supreme Court's judgment in the Amrutanjan's case has not reviewed or overruled its judgment in the Ishwar Singh's case and has to be read along with it. In fact Amrutanjan's case only clarifies and pronounces only on those as....
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.... "exclusively Ayurvedic medicines" as known to Ayurvedic text and Ayurvedic science as has been discussed by both my Learned Brothers in their respective orders. 57. I wish to add the following reasons to my order. The appellants were issued with show cause notice dated 18-10-1989 in respect of two products namely, "Vicks Vaporet Throat Drops" and "Vicks Cough Drops Medicated" under loan licence issued by M/s. Procter & Gample India Ltd. They filed classification list claiming the products as Ayurvedic medicaments falling under Chapter sub-heading 3003.30 which attracted 'nil' rate of duty. Vicks Cough Drops and Vicks Vaporet Throat Drops are manufactured out of Pudinah Arka, Nilgiri Tel with Sugar base. The appellants claim that it has therapeutic and prophylactic use, as the said throat drops clear the nasal congestion and soothes the sore throat. The show cause notice alleges that in the manufacture of Ayurvedic medicaments crude drugs or the decoction or the extracts prepared by treating the medicinal vegetable substances such as roots, leaves and barks or drugs in water alcohol or milk are used. It is alleged that the ingredients used in Vicks throat drops and cough dr....
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....British Veterinary Codex; (g)The United States Pharmacopoeia; (h)The National Formulary of the U.S.A. (i)The Dental Formulary of the U.S.A.; and (j)The State Pharmacopoeia of the U.S.S.R.; or which is a brand name, that is, a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person, having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person." 60. As can be seen from the definition of "patent and proprietary" as laid down in Note 2(ii) the product in question clearly falls within the said definition. The goods in question bears on its container a specific name viz. "Vicks", which is not specified in a monograph, or in a Pharmacopoeia, or Formulary or other publications as noted in (a) to (j) of Note 2(ii). The product is used in America. It carries a trade name, symbol, monogram, which is ....
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....n the manufacture of `P & P Medicine in relation to Ayurvedic system of medicine should hav been mentioned in the formula described in the authoritative books of Ayurveda. The Rules 160 and 161 of the Drugs and Cosmetics Rules, 1945 state as follows : "160. Identification of raw materials. - Raw materials used in the preparation of Ayurvedic (including Siddha) or Unani drugs shall be identified and tested, wherever tests are available for their genuineness, and records of such tests as are carried out for the purpose and the methods thereof shall be maintained. PART XVII [LABELLING, PACKING AND LIMIT OF ALCOHOL IN] AYURVEDIC (INCLUDING SIDDHA) OR UNANI DRUGS 161. [Labelling, packing and limit of alnohol]. (1) There shall be conspicuously displayed on the label of the container or package of an Ayurvedic (including Siddha) or Unani drug, the true list of all the ingredients used in the manufacture of the preparation together with the quantity of each of the ingredients incorporated therein and a reference to the method of preparation thereof as detailed in the standard text and Adikarana, as are prescribed in the authoritative books specified in the Fir....
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....ll, while complying with the labelling provisions under clauses (i) to (viii), further bear on the label of the container the words "Physician's sample. Not to be sold" which shall be overprinted. (ix)(a) Preparation (Asavas) with high content of alcohol as base. Name of the Drug Maximum size of packing (i) Kapur Asava 15 ml. (ii) Ahiphenasava 15 ml. (iii) Mrgamadasava 15 ml. Preparation containing self-generated alcohol (ix)(b) Name of the drug Maximum content of alcohol (Ethylalcohol v/s) Maximum size of packing (i) Mritsanjivani 16 per cent 30 ml. (ii) Mahadrakshava 16 per cent 120 ml. Nothing in these rules shall be deemed to require the (4) labelling of any transparent cover or of any wrapper-case or other covering used solely for the purpose of packing transport or delivery." 63. As can be seen from the above rules it is clear that the raw material to be used in preparation of Ayurvedic Drugs shall be identifi....