TaxTMI 
TaxTMI 
2011 (10) TMI 92
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....iod 1999 - 2000, 2000-01 and 2001-02. 3. The Commissioner has held that the 'Nomark' cream manufactured by SDA was classifiable under heading 3304.00 of Central Excise Act as a cosmetic product instead of Ayurvedic medicine classified by Seagull under heading 3003.39 as Ayurvedic medicine. He has held that OPL through whom SDAwas selling bulk of their products was a related person of SDA in terms of Section 4 (4) (C) of Central Excise Act, 1944. he has also held that, in the facts of the case, extended period of limitation was rightly invoked. 4. We have heard the counsel for the appellants and the ld. DR for the Department and carefully perused the records. 5. We find that prior to starting of manufacture of Nomark cream, SDA was manufacturing Wanish cream for which they were granted Central Excise Registration w.e.f. 01.09.1997. Seagull had claimed the classification of Wanish cream as Ayurvedic medicine under heading 3003.39. The Department had issued a show cause notice to Seagul wherein it was alleged inter-alia that Wanish cream was classifiable as cosmetics under heading 3304 and was not an ayurvedic medicine as claimed by SDA. The Additional Commissioner vide....
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....ntention of the revenue that Wanish cream/ lotion was a cosmetic classifiable under chapter heading 3304.00 of CETA 1985. The Tribunal in para 6 onwards held as under:- "6. In the present case, the dispute is regarding classification of Wanish skin cream/ lotion manufactured by respondents. The respondents in this case produced evidence, which is relied upon by the Commissioner (Appeals) to show that Wanish skin cream/ lotion is sold at medical/ chemist shop on the prescription given by a doctor or a medical practitioner and it is used for treatment of pregnancy stretch marks and scars. 7. We find that this finding of Commissioner (Appeals), based on the evidence produced by the respondents, is not rebutted by the revenue before us. The contention of the revenue is that the product, in question, is not an ayurvedic medicine, but it is a cosmetic. The burden of proving that the product, in question, is a cosmetic, was on the revenue and the revenue has not discharged this burden as no such evidence is produced by revenue in support of their claim. On the contrary, we find that the product, in question, is manufactured out of ingredients mentioned in ayurvedic text book and i....
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....found in the diary. The said diary also contained composition of Wanish cream being manufactured by SDA prior to 1999-2000. Major part of both the creams/ lotions consisted of water, preservatives, additives etc. such as Bees wax, Emulsifying wax, G.M.S., S.M.S., Liquid light Paraffin, Glycerine etc. Other ingredients were found to be Aloe vera extracts, Neem extracts, Turmeric extracts, Sandal essence, Vitamin E acetate etc. The only difference between ingredients of Wanish cream/ lotion and Nomark cream/ lotion appears to be that in Wanish cream, wheat germ oil and chandan oil were used whereas in Nomark cream / lotion, vitamin E acetate and sandal Essence were used. The process of the manufacture mentioned on the Drug Licence clearly permits SDA to use carriers such as MSM/ petroleum and extracts of materials in the manufacture of Nomark cream/ lotion. It was argued by the ld. SDR that vitamin E and sandal substitute were synthetic in nature, which was accepted by SDA in their letter dt. 09.07.2002 addressed to DGCEI by Mrs. Geeta Sehgal, Proprietor of SDA. He further argued that Commissioner has clearly held that these two ingredients were of synthetic nature and hence th....
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....A 1985. 8.1 We find that SDA was manufacturing 'Nomark' under the proper Drug Licence issued by Drug Controller treating Nomark as Ayurvedic medicine. We have gone through the label of the product wherein it has been clearly mentioned that Nomark was meant for treatment of scars, pigmentation, pregnancy stretch marks. We have also gone through the contents of various statements recorded during investigation in the matter such as that of Mrs. Neeta Aggarwal, GM (Sales & Marketing) Ozone Ayurvedics, Shri Som Singh, Chemist SDA, Mrs. Geeta Sehgal, prop. SDA, Sh. S.C. Sehgal, MD OPL. It can be clearly discerned from these statements that formulation of both 'Wanish' and 'Nomark' were same; that 'Nomark' was meant for the patients with medical conditions like scars and marks, dark circles and pigmentation; promotion of the products was done at two levels, over the counter and through Doctors; 'Nomark' could not be compared with products like Lakme and Pond's as it (Nomark) had same medicaments like aloe vera, tulsi, neem & turmeric extracts. Hence we do not agree with the aforestated submissions of the ld. SDR and findings of the Commissioner on these aspects. The mere fact that ....
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....(c) It fulfills the requirement of a drug as understood in the common parlance (d) Its label or literature should refer to it as a drug. (e) The fact that medicinal element in the product was minimal does not detract it from being classified as a medicament. (f) It was not necessary that the item be sold under a doctor's prescription. (g) Availability of the product across the counter in shops was not relevant as it makes no difference. (h) The product would remain Ayurvedic medicine even if herbs are in form of extracts and purified to pharmaceutical grade. (i) Cosmetic products are meant to improve appearance of a person that they enhance beauty whereas medicinal product or medicament is meant to treat some medical condition. (j) Formula to manufacture ayurvedic medicament may not be as per the text books but a medicament can also be under a patented or proprietary formula, main criteria for determining the classification is normally the use it is put to by the customers who use it. (k) If the Central Excise authorities have any doubt as to whether a product is an ayurvedic medicine or not they should refer the matter to the office of Drug Controller, DGHS, New Delhi. (l....
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.... Sehgal was holding 10% shares of OPL and family of Mrs. Geeta Sehgal is holding 90% of the total share capital of OPL. We find that the department has not been able to establish any mutuality of interest between SDA and OPL. OPL was a limited company whereas SDA was a proprietory firm of Mrs. Geeta Sehgal. The mere fact that Mrs. Geeta Sehgal was holding 10% share capital of OPL is not sufficient to treat both as related persons. The department has failed to prove any mutuality of interest or money flow back in two units. Further we have perused the chart appended to the show cause notice and find that SDA was selling the same product to different buyers including OPL, at the same price. The department has not proved that SDA was selling these various products to OPL at depressed price. Hence findings of the Commissioner that SDA and OPL are related persons fail and are set aside. It is held that the price at which SDA was selling their products to OPL was the normal price as enshrined under Section 4 of the Central Excise Act. 12. It was contended by the ld. Counsel for SDA that they were paying central excise duty under Section 4A of CEA 1944 on product 'Semop' under head....