TaxTMI 
TaxTMI 
2009 (4) TMI 759
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....ted against the very same Order-in-Original, though filed by different appellants, they are being disposed off by a common order, as the issue involved is same. 2. The relevant facts that arise for consideration are the main appellant M/s. Glaxo Smithkline Asia (P) Ltd. (hereinafter referred to as appellant-1) are manufacturers of 'ENO fruit salt'. Appellant-1 entered into an agreement for the manufacture of 'ENO fruit salt' on the job work basis with M/s. Southern Drugs Pharmaceuticals (hereinafter referred to as appellant-2). Appellant-1 had taken drug licence to manufacture 'ENO fruit salt' as P or P Ayurvedic medicaments. Appellant-2 were supplied with the main raw materials for the manufacture of the 'ENO fruit salt' and appellant-2 after manufacturing the goods on job work basis cleared the same from their factory premises classifying the said products as 'P or P Ayurvedic Medicaments' under chapter heading 3003.39/3004.90 11 of First schedule to the Central Excise Tariff Act, 1985. The duty liability was discharged by the appellant-2 on the basis of cost construction method. Investigations were carried out by the revenue authorities on the claim of both i.e. appellan....
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....et another show cause notice dated 27-10-2006 was also issued on the same ground for the demand of differential duty of Rs. 5,38,41,526/-. "36. Further, a notice vide C. N.V/15/33/2006-Adj.VSP-ll dated 27-10-2006 for the subsequent period 10/2005 to 09/2006 was issued to SDP and Glaxo Smithkline Asia (P) Limited, demanding the differential duty of Excise of Rs. 5,38,41,526/- (Rupees Five Crores Thirty Eight Lakhs Forty One Thousand Five Hundred and Twenty six only) towards CENVAT and Rs. 10,76,820/- (Rupees Ten Lakhs Seventy Six Thousand Eight Hundred and Twenty only) towards Education Cess alongwith interest under Section 11AB of Central Excise Act, 1944 and imposition of penalty under Rule 25 of Central Excise Rules, 2002." 2.2 All the appellants herein contested the show cause notice on various grounds. The main ground raised by the appellants before the Adjudicating Authority was that the product 'ENO fruit salt' is a P or P Ayurvedic Medicament and is manufactured under a licence given by the Drug Authorities. The main raw material going into the manufacturing of the said final product is ayurvedic in nature and they are covered by various decisions of the Supreme C....
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....us. 3. The learned counsel appearing on behalf of the appellant would assail the order on the following grounds. (i) Ingredients and final products both certified to be ayurvedic by the Drug Controller (a) The Appellants submit that M/s. Hiena Pharma, supplier of the main raw materials, has been granted a Drug License for manufacture of Svarjikshar (Shudh) and Nimbukamlam (Shushkam) on 11-5-1996 which has also since been renewed. The Drug Controller has also noted the authoritative books in which these two ingredients have been referred to. The Drug Controller at the time of grant of the license to M/s. Hiena Pharma has also taken note of the fact that the said authoritative textbooks have been duly listed in the schedule to the Drugs and Cosmetics Act, 1940. (b) The Appellants submit that Eno Fruit Salt manufactured by the Appellants has also been certified to be a P or P Ayurvedic medicament by their jurisdictional Drug Controller. While granting the said license which is valid till 2011, the Drug Controller, after taking note and verifying the ingredients of Eno Fruit Salt has certified the same to be a P or P Ayurvedic medicament. (c) The Appe....
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....cts manufactured by them are Ayurvedic in nature and a proper FDA licence has been obtained by them. Though it is stated therein that a further investigation with regard to the classification of their products by M/s. Hiena Pharma was being undertaken the Officers of Thane Commissionerate, the classification of the products manufactured by M/s. Hiena Pharma continues to be as ayurvedic medicament only. (c) The Appellants submit that once the activity undertaken by M/s. Hiena Pharma has been accepted as manufacture by the Jurisdictional Excise officer and duty on such activity has been collected at the manufacturer's end, no dispute could be raised with respect to the classification of the products. The appellant, therefore, submits that Adjudicating Authority has no jurisdiction to dispute the same. In this regard reliance is placed on the following decisions:- (i) Sarvesh Refractories (P) Ltd. v. CCE - 2007 (218) E.L.T. 488 (S.C.) (ii) Blow Plast Ltd. v. CCE - 2006 (195) E.L.T. 211 (Tri.- Mum) (iii) Prem Cables Pvt. Ltd. v. CCE - 2001 (127) E.L.T. 400 (Tri.-Del.) Affirmed by Hon'ble High Court of Rajastha....
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....since the department has filed an appeal before the Supreme Court, he would proceed to confirm the duty demand on both SDPL and GSK. (c) The Appellants submit under the Central Excise Act, 1944 only the manufacturer or the producer of the excisable goods is liable to pay the excise duty. It is further submitted that it is now settled law that there cannot be two manufacturers for the same excisable goods and consequently, duty demand, if any, can be raised only against the actual manufacturer who is liable to pay duty and not on the raw material supplier also simultaneously. (d) In spite of the settled principles of law, the Show-Cause Notice and the-impugned Order-in-Original proceed to demand the Excise Duty from both the Appellant and Glaxo Smithkline without determining the liability as required by the law. The appellants, therefore, submit that the duty demand having also been raised against the raw material supplier is not sustainable against them as the department cannot recover the same from them also. (v) ENO fruit salt fully satisfies the test laid down by the board vide Circular dated 25-10-1991 (a) It was submitted that the case of the de....
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....ly an Additional Director of the Department of Indian Systems of Medicine, Government of Andhra Pradesh vide his letter dated 29-3-2006 furnished a detailed opinion alongwith the authorities and references to Shastras. (Pgs. 956-964 of the paper-book) (b) The expert also enclosed a booklet issued by the Director General of Technical Development, Ministry of Industry, New Delhi about the manufacture of Citric acid through the fermentation process. From the said technical booklet, it is clear that Citric acid is also produced from cane molasses and the Citric acid so produced through this process is used in Pharmaceutical Industries (Pages 981-985 of the paper-book). (c) As far as Swarjikshara is considered, the expert in his opinion dated 29-3-2006 (Pages 957-961 of the paper-book) has opined that. * The Ayurvedic Formulary of India published by the Government itself recognizes Svarjikshara as sodium bicarbonate. * The well-known Sanskrit lexicon "Sabdasthoma Mahanidhi" mentions that Svarjikshara is also available as a mineral in river. * The Ksharas i....
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....stablished that the raw materials for both Svarjikshara (Sodium bicarbonate) and Nimbukamlam (Citric acid) are from natural sources for and are not manufactured out of manmade (synthetic) raw materials. (c) The Appellants submit that on the contrary no evidence has been let in by the department to show that sodium bi-carbonate and citric acid procured by M/s. Hiena Pharma are not produced from natural sources. The only basis is the vague averment made in the letter of the Government Ayurvedic Hospital that nowadays certain ingredients are synthesized. The Appellants, submit that this opinion of the Government Ayurvedic Hospital deserves to be rejected as unreliable. (d) The Appellants have, produced an Expert Opinion from Dr. I Sanjeeva Rao who has explained that sodium bi-carbonate is obtained from many natural sources including sea water. Dr. I. Sanjeeva Rao has also quoted, with authority, the process involved in the production of citric acid from starch/molasses, which are both natural sources. (viii) Citric acid and sodium bicarbonate is also considered as ayurvedic products (a) Notwithstanding the submissions made, the fact that modern Ayurvedists a....
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....l from the website of M/s. Tata Chemicals. * Sea water was used in the Solvay process to manufacture sodium bicarbonate. * Sea water was a natural raw material. * The sodium bicarbonate was manufactured through a process of synthesis in the Solvay process. * The same responses was applied to Nimbukamlam also. * He did not have any literature from KIC Institution while referring to Nimbukamlam. * Molasses used for manufacture of anhydrous citric acid is of natural origin. * It is a fact that no opinion was sought out from him by the department on Eno Fruit Salt. (c) The Commissioner in para nos. 61-62 of the impugned Order-in- Original has strongly relied on the report rendered by the Chemical Examiner and concluded that the samples procured from the appellants are pure chemical and synthetic in nature. (d) The-Appellants submit that the chemical examiner's report does not even refer to the manufact....
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....'exclusively ayurvedic'. Chapter 30 of the present tariff also does not contain any classification parameters to be adopted while considering any product as ayurvedic. The Appellants submit that the present tariff entry in the Central Excise tariff is substantially different from the tariff entry prevalent during the earlier proceedings. (xii) ENO fruit salt is covered by the exclusion under Section 2(h) of the drug price control order (a) Without prejudice to their other contentions, the Appellants submit that assuming without admitting that Eno Fruit Salt would be classifiable under sub-heading 3003.10, the provisions of Notification No. 2/2005-C.E. (N.T.), dated 8-1-2005 would not be applicable to them for the following reasons. (b) Notification No. 2/2005-C.E. (N.T.), dated 8-1-2005 charges duty on the basis of Retail Selling Price of products falling under sub-heading 3003.10 and 3003.20 and further stipulates in the Explanation appended thereto, that the expression 'Retail Selling Price' used therein means the Retail Selling Price displayed by the manufacturer under the provisions of the Drugs (Price Control) Order, 1995. (c) Para 15 of the Dru....
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....e ayurvedic, even if any drug licence is given. For this proposition, he would rely upon the decision of the Supreme Court in the case of Alphine Industries v. CCE, New Delhi - 2003 (153) E.L.T. 16 (S.C.). It is his submission that there is no legal basis to hold that grant of drug licence by drug authorities is binding on the Central Excise authorities and Central Excise authorities are free to take their own conclusion based on' the Central Excise law. For this purpose, he would rely upon the Order-in-Original. 4.1 He would submit that the chemical analysis report of the same product i.e., raw materials viz., Svarjikshara and Nimbukamlam would indicate that the samples which were taken from the government stores and the samples which have been procured from the assessee are different. It is his submission that Svarjikshara and Nimbukamlam, which does find mention in the authoritative books are different than which is being used by the appellant-1 and appellant-2. It is his submission that the chemical analysis report clearly indicates that the inputs which are used by the appellant-1 and appellant-2 are clearly synthetic in nature and they are more pure than the one which....
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.... He would rely upon the decisions of the Tribunal in the case of Ayurchem Products v. CCE, Mumbai-III - 2005 (190) E.L.T. 275 (Tri.-Mumbai), Panram Ayurved Pvt. Ltd. v. CCE, Belgaum - 2000 (125) E.L.T. 639 (Tribunal): Panama Chemical Works v. CCE, Indore - 2004 (173) E.L.T. 425 (Tri.-Del.), Panama Chemical Works v. UOI - 1992 (62) E.L.T. 241 (M.P.) for the proposition that synthetic materials used in the manufacturing of final product cannot make the product as ayurvedic medicament. He would submit that the evidence which has been relied upon by the revenue has been summarized by the learned Commissioner in his Order-in-Original in paragraph No. 49. 5. In rejoinder, the learned counsel for the appellants submits that the evidence produced by the learned special counsel for the revenue regarding application of the appellant -1 to the drugs authorities in 1999 was never a part of the show cause notice. Despite this, he would bring to the notice of the bench that the said licence, even though applied for and given by the authorities, was not put into use and was cancelled by them immediately on 28-1-2000. He shows us the letter, dated 28-1-2000 addressed to the Drug Control Au....
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....arned counsel for the appellants had brought to our notice that the said product would fall under the Authoritative Ayurvedic Drug Formulary of India by drawing our attention to the affidavit filed by the experts. There is no doubt that the main ingredients Svarjikshara and Nimbukamlam do find mention in the authoritative ayurvedic textbooks. The Adjudicating Authority has considered that these products are not ayurvedic medicaments on a finding which is as under "therefore, a product to be classified as an ayurvedic medicament primarily, it should be manufactured out of the ingredients obtained naturally from the herbs and plants and same should also be mentioned in the authoritative textbooks. This is the inference drawn from the judgment of Hon'ble Supreme Court in the case of M/s. Naturalle Health Products Ltd." We are unable to accept this reasoning of the Adjudicating Authority, inasmuch as that the Hon'ble Supreme Court in the recent decision in the case of CCE, Delhi v. Ishaan Research Lab Ltd. - 2008 (230) E.L.T. 7 (S.C.) held as under : "29. Lastly the same question came to be considered in details in Puma Ayurvedic Herbal Pvt. Ltd. v. Commissioner Central Excise,....
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....t that the expert opinion was pressed into service before the Tribunal of Dr. V.N. Pandey who had in details analysed all these products and noted that the products contained the elements having Ayurvedic medicinal value. It was also noted rightly by the Tribunal that all these products were produced under the drugs licence issued under the Drugs and Cosmetics Act. Shri Radhakrishnan could not dispute this fact. 31. Further it was obvious from the labels of the products which we have ourselves inspected in the court that there is a claim made in each of the liable of the medicinal properties of the product. It is also found that there was a specific claim that this is not a cosmetic product. In this behalf Shri Radhakrishnan took us through the show-cause notice and tried to point out that the products were sold to the Hotels, Beauty Parlours etc. Our attention was also invited to various orders as also to the literature and it was tried to be suggested that these products were treated to be the cosmetic products, if not by the assessee, at least by the customers. We have already pointed out that the common parlance test is not "be all and end all" of the matter on the basi....
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....ENO fruit salt' as P or P ayurvedic medicament and also asked a question whether the drug ENO fruit salt, even, if manufactured by synthetic raw materials can still be considered as ayurvedic medicament. Despite such a letter from the authorities, the drug authorities have renewed the licences granted to the appellant, which clearly indicates that the drug authorities are considering these products as P or P ayurvedic medicaments. 6.4 We are also in agreement with the submissions of the learned counsel that the decision of the Hon'ble Supreme Court in the case of Amrutanjan Ltd. (supra) squarely covers the issue. We may reproduce the said ratio. "We are concerned in this appeal against the decision of the Customs, Excise & Gold (Control) Appellate Tribunal only with the appellant's product known as "Amrutanjan Pain Balm Ayurvedic". The appellants sought classification of the same on the basis that it was an ayurvedic medicament under Tariff Heading 3003.30 of the Central Excise Tariff Act, 1985 and attracted nil rate of duty. The authorities below as also the Tribunal did not accept this classification. The Tribunal, in the order under appeal, upheld the contention of th....
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....erent traditions. The Hon'ble Supreme Court has laid down the law that if the articles were known both to ayurvedic and western sciences and were found fit for use in the medicament, they would be considered as ayurvedic products. 6.5 We also find strong force in the contention raised by the learned counsel that the decision of the Hon'ble Supreme Court in the case of Naturalle Health (P). Ltd. v. CCE, Hyderabad as reported at 2003 (158) E.L.T. 257 (S.C) would squarely cover the issue in favour of the appellants. We find that the ratio of the Hon'ble Supreme Court in paragraphs 21-23, which we may reproduce. "21. It is not in dispute that the products in question are Vicks Medicated cough drops and Vicks Vaporub throat drops. The appellants manufacture these products under Ayurvedic Drug Licence. All the ingredients contained in these products are admittedly mentioned in authoritative Ayurvedic Text Books mentioned in Schedule III to the Drugs and Cosmetics Act. However, the formula of preparing the products is proprietary to the appellant in C.A. No. 2072/1996. The appellant submitted that the ingredients contained in the products are manufactured from natural herb....
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....e product to be claimed as an ayurvedic medicament (i) the common parlance test (ii) ingredients of ayurvedic medicines should be mentioned in authoritative books on ayurvedic medicines. At the same time in the very same judgment at paragraph 39, the Hon'ble Supreme Court held as under. "39. We are also of the opinion that when there is no definition of any kind in the relevant taxing statute, the articles enumerated in the tariff schedules must be construed as far as possible in their ordinary or popular sense, that is, how the common man and persons dealing with it understand it. If the customers and the practitioners in Ayurvedic medicine, the dealers and the licensing officials treat the products in question as Ayurvedic medicines and not as Allopathic medicines, that fact gives an indication that they are exclusively ayurvedic medicines or that they are used in Ayurvedic system of medicine, though it is a patented medicine. This is especially so when all the ingredients used are mentioned in the authoritative books on Ayurveda. As rightly contended by the Counsel for the appellants, the essential character of the medicine and the primary function of the medicine is der....