TaxTMI 
TaxTMI 
2018 (5) TMI 210
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....07-14-15, dated 29.09.2014. E/22009/2015 HYD-EXCUS-004-COM-012-15-16, dated 10.06.2015. E/30736/2017 O-I-A no. HYD-EXCUS-004-APP-81-16-17, Dtd. 28.02.2017 E/3222/2012 47/2012-Adjn (Commr) CE, dated 30.08.2012 The appeal No. E/3222/2012 is filed by Revenue against Order-in- Original No. 47/2012-Adjn (Commr), CE, dt. 30.08.2012 is for non confiscation of the goods which were seized during the visit of the authorities. 2. The relevant facts that arise for consideration, after filtering out unnecessary details are that the appellants herein are engaged in manufacturing of Ayurvedic drugs and one of the products is "NUZEN GOLD HERBAL HAIR OIL" (hereinafter referred to as NGHHO). The appellant was under the impression that this product is an oil based Ayurvedic Proprietary Medicament (Anubhutayogams) used for the purposes of hair and scalp related ailments classified the same under chapter 3003 of Central Excise Tariff Act, 1985. 3. Revenue authorities were of the view that the said product merits classification under chapter 33 as perfumed hair oil and the seized stocks of NGHHO found in the factory premises. A ....
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....t, 1940; that the ingredients declared on the labels viz. Narikela, Methika, Japa Pushpa, Japa Patra, Amalaki, Vatada, Nimbukam, Bhringaraja, Narikela Tailam are mentioned in the authoritative books of Ayurved like "Bhava Prakasha" and "Ayurvedic Pharmacopoeia of India" which are listed to in the first schedule to Section 3(a) and (h) of the Drugs & Cosmetics Act, 1940; the Director of Department of Ayush in his statement has clearly mentioned that the licence was issued to appellants for manufacture of proprietary products which meant that the formula was derived over years by experience but submits that there is no dispute as to the fact that the product NGHHO was manufactured in accordance with the Drugs Licence granted to them; that the product NGHHO is used for treatment of dandruff, falling hair or hair loss, premature baldness and these are medical conditions which require treatment and appellant's product is used as an ayurvedic medicament for treating these conditions; the product manufactured by the appellant has curative and therapeutic qualities for treatment/cure of the hair related diseases in the human body; relies upon the following decisions: ....
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....is always for a limited purpose and for specific time and for specific ailments and does not include the kind of product manufactured by the appellant; even applying the common parlance test, the therapeutic and prophylactic activity should be principally medicament and not subsidiary in nature; the product which is sold by the appellant is indicated as "can be used for growth of new, dense, dark and strong hair, prevents dandruff" which is a function of any hair oil; granting of drug licence is not a determining factor as the Director, Ayush Department has stated that the formula for the product manufactured by the appellant is based upon "anubhutayogam" and all the ingredients are not prescribed in ayurvedic text; rules of interpretation of Central Excise Tariff read with chapter note 1 (d) of chapter 30 needs to be considered in its correct perspective and all this has been detailed by the adjudicating authority in the Order-in-Original. She relied upon the decision of Hon'ble Supreme Court in the case of Alpine Industries vs. CCE, New Delhi [2003(152) ELT 16 (SC)] for the proposition that even if a product has some curative effect, it cannot ....
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....made thereunder. (c) That the label of the product which is reproduced in the Order-in- Original specifically indicates that this is an "ayurvedic proprietary medicine." (d) The ingredients are used for manufacturing of said product are mentioned and the directions for use of the said product. (e) That the statement of the Director indicating the process of manufacturing of NGHHO is accepted. (f) That the ingredients of NGHHO are mentioned in authoritative books of Ayurveda. 11. The adjudicating authority in the findings has held against the appellant in classification under chapter 30 mainly on the ground that the licence which is granted to the appellant is based on anubhutayogam, as per the statement of Drugs Controller, Department of Ayush that classification under chapter 30 is ruled out by chapter note 1 (e) to chapter 30; that the ingredients mentioned in the product label are not found in the authoritative books as per statement of Drugs Controller, Department of Ayush; that baldness or loss of hair is not a disease and the investigating authorities have recorded statements of retailers who had stated that the goods NGHHO have been sol....
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....nce number is also indicated. We find that the issue as to whether these kind of products would get covered under chapter 30 or chapter 33 was being agitated before various forums including the Apex Court. In the case of Hindustan Lever Limited (supra), Apex Court in para 14 of the judgment has stated how to consider the entire issue and laid down guiding principles. In the said judgment, Hon'ble Apex Court was considering whether Vaseline Intensive Care Heel Guard is a medicament or otherwise. The said guidelines are reproduced: "14) Main feature which needs to be taken note of from the aforesaid discussion is that small percentage of the ingredients of pharmaceutical constituents would not be a reason by itself to conclude that pharmaceutical constituents are subsidiary in nature. On the other hand, what is more relevant is the purpose for which the product is used, namely, functional test. On that basis, the product in that case was treated as medicament. What is important is that the Court, in the process, laid down the guiding principles which are to be kept in mind while determining the classification. These principles are formulated in the fo....
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....e walking. It also found that this product was manufactured under a drug licence as drug authorities had treated the same as a medicament. The Tribunal also found that the usage of this product was related to the effect of therapeutic or mitigating substance of prophylactic substances added. Thus, the effect of mitigation of an Page 20 20 external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament and classified under Chapter 30. 17) Interestingly, all the aforesaid features of the product are accepted by the Department. However, only on the ground that salicylic acid contained in the product is marginal, the Department took the view that it was a subsidiary substance. Having regard to the exposition of law narrated above, this was clearly an erroneous approach on the part of the Revenue as percentage of the said substance is immaterial to label it as subsidiary. 18) Another more important factor which needs to be stated at this stage is that though the burden was on the Department, it did not lead any evidence or produce any material to discharge this onus. It s....
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....n is the primary use of the product. (vi) The extent or the quantity of medicament used in a particular product will also not be a relevant factor. Normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. The medical ingredients are mixed with what is in the trade parlance called fillers, or vehicles in order to make the medicament useful. The fact that use of medicinal element in a product is minimal does not detract from it being classified as a medicament. (vii) In order to be a medicinal preparation or a medicament, it is not necessary that the item must be sold under a doctor's prescription. Similarly availability of the products across the counter in shops is not relevant as it makes no difference either way. (viii) The common parlance test on the basis of which the case of Shree Baidyanath Ayurved Bhavan's case (supra) was decided, is not the "be all and end all" of the matter. 31.Examining the facts of the present case in the light of the aforesaid principles enunciated by the Supreme Court, the product in question, viz., "Trichup Oil" is certified to ....
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....he ingredients or all the ingredients acting in combination confer on the other oils any therapeutic or prophylactic properties. In this regard, it may be pertinent to refer to the certificate issued by the Food and Drugs Control Administration which certifies the product in question to be an Ayurvedic Medicament. If the department was of the view that the product was not an Ayurvedic Medicament, it could have referred the matter to the Adviser, Ayurveda/Sub- Commissioner in terms of the C.B.E. & C.'s Circular. Last but not least, the Revenue has not discharged the burden of proving that the product is understood by the customers as hair oil. In the absence of any material to prove that the ingredients used by the petitioner in the proportion in which they are used are not therapeutic or prophylactic in nature, Revenue has failed to establish the onus that lay on it to prove that the product does not fall under Chapter 30 of the Tariff Act." 16. Following above ratio, the Bench of the Tribunal headed by President in the case of Haridev Formulations vide Final Order Nos. 20062- 20063/2018, dated 06.02.2018 and Final Order No. 20123/2018 of the same date in the case of MVM Ayurved....
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....red by different companies. The matter has reached to the Supreme Court where the Hon'ble Supreme Court has decided in some cases in favour of the appellant and in some cases in favour of the Department. In the case of Dabur India Ltd. Vs. CCE, Jamshedpur - 2005 (182) E.L.T. 290, the Hon'ble Supreme Court has decided the matter in favour of the appellant and considered the Hair Oil as Ayurvedic product. Similarly, the Commissioner (Appeals) has discussed number of case-laws decided by the Hon'ble Supreme Court in his order [Puma Ayurvedic Herbal Pvt. Ltd. Vs. CCE, Nagpur - 2006 (196) E.L.T. 3 (S.C)] where it was considered Ayurveda medicine . So there are the judgments available on both sides. (5). In the instant case, it appears that the Commissioner (Appeals) has already examined and discussed the ingredients and brought the same under Chapter 30 of the Central Excise Tariff Act, 1986. As per the description of the product under consideration, it was meant for the dandruff, premature graying and split ends can be cured. The Drug Controller and Licensing Authority has considered the same as Ayurvedic medicine and during the course of arguments, the learn....