TaxTMI 
TaxTMI 
2025 (9) TMI 871
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....ns filed with the Department, it is noticed that they have classified the said product DFFP under Chapter sub heading 30049011 of Central Excise Tariff Act, 1985 (CETA) as an ayurvedic medicament and paid applicable duties on the transaction value as per Section 4 of the Central Excise Act, 1944, during the relevant period. Alleging that the product manufactured by the appellant is classifiable under Chapter sub-heading 33049990 of CETA, 1985 and chargeable to duty under Section 4A of the Central Excise Act, 1944, show-cause notices were issued from time to time demanding differential duty with interest and proposing penalties under the provisions of Central Excise Act, 1944. All the demands were confirmed with interest and penalty. Aggrieved by the said order, the appellant preferred appeals before the learned Commissioner(Appeals) who in turn rejected their appeals. Hence, the present appeals. 3. At the outset, the learned senior advocate for the appellant has submitted that the appellant are registered for manufacture of ayurvedic products such as massage oils, facial creams, hair oil etc. In the present case, the appellant has manufactured 'DFFP' and classified the same unde....
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....as an ayurvedic medicine and used to treat skin conditions. All the ingredients are mentioned in the Authoritative Text Books such as Ashtanga Hridayam and Sahasrayogam and therefore, the said product cannot be classified under Chapter heading 3304. In support, they have referred to the following case laws:- i. BPL Pharmaceuticals Ltd. Vs. CCE [1995(77) ELT 485 (SC)] ii. CCE, Pondicherry Vs. Vale Exports (P) Ltd. [2018(359) ELT 211 (Tri. Chennai)] iii. Puma Ayurvedic Herbal (P) Ltd. Vs. CCE, Nagpur [(2006) 3 SCC 266] 6. It is their contention that the burden for correct classification of the goods rests on the Revenue and in the present case, the Revenue has not provided any evidence to show that the product is classifiable under Chapter 33. They have further submitted that the product in question cannot be classified under Chapter heading 3304 of CETA as to fall under the said Tariff heading, it must satisfy the conditions: (i) it must be suitable for beauty or make up preparation and (ii) the packaging along with labels, literature and other indications must indicate that it is a 'cosmetic' or toilet use. Further, they have submitted that the product....
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....Chapter sub-heading 30049011 on the transaction value whereas Department proposed to recover differential duty considering the classification under Chapter sub-heading 33049990, subject to MRP assessment under Section 4A of the said Act. Before analysing the rival claims, it is relevant to reproduce the competing entries, which are as follows:- Chapter sub-heading 30049011 Tariff item Description Unit Rate of duty (1) (2) (3) (4) 300490 -Other: -- Ayurvedic, Unani, Homoeopathic, Siddha or Bio-chemic systems medicaments, put up for retail sale: 30049011 --- Of Ayurvedic system Kg. 6% Chapter sub-heading 33049990 Tariff item Description Unit Rate of duty (1) (2) (3) (4) 3304 Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or suntan preparations; mani-cure or pedicure preparations 33049990 --- Other Kg. 12% The relevant Chapter Notes are as below:- Chapter Notes 1(d) and 1(e) 1(d) aqueous distillates or aqueous solutions of essential oil, s....
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....988-C.C.E., Hyderabad v. M/s. Richardson Hindustan Ltd. - Supreme Court's Order dated 10-1-1989. 4. The Government have accepted the above referred two tests for determining the classification of the products claimed to be as Ayurvedic medicine (excluding herbal or ayurvedic cosmetic) and these may accordingly, be kept in view while deciding similar cases. 5. The above clarification may be brought to the notice of the lower field formations and the trade interests may also be suitably advised. 6. All pending assessments of the type indicated above, may be finalised on the above basis. Ayurvedic medicines - Classification [Chapter 33] For subsequent modifications/developments, see Circular Nos._360/76/97-CX, dated 3-12-1997 & 379/12/98-CX, dated 16-3-1998.>Circular No. 333/49/97-CX, dated 10-9-1997 [From F. No. 102/6/97-CX.3] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Classification of Products under the Central Excise Tariff Act, 1985, which are claimed by the manufacturers as Ayurvedic medicines - Regarding. There have been di....
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..... 53 (Tribunal] have stated that "the fact of manufacture of an item under licence under the Drugs & Cosmetics Act is no guarantee that it is a medicament." 5. The Hon'ble Tribunal in the case of CCE, Mumbai v. M/s. Muller & Phipps Ltd. have stated, while holding that Johnson Prickly Heat Powder was a cosmetic classifiable under Chapter 33, that, "Product is available in the market, does not require any prescription of a Doctor and the people generally use it to prevent prickly heat and therefore in the circumstances the curative and prophylactic uses are subsidiary." 6. Even in the case of M/s. Richardson Hindustan Limited, the Hon'ble CEGAT vide judgment dated 10-2-1988 [1988 (35) E.L.T. 424 (Tribunal)] has stated while classifying Vicks Vaporub as an ayurvedic medicine; "that there is no definition of ayurvedic medicaments in the Central Excises and Salt Act or in the Central Excise Tariff and although ayurvedic medicines have been defined in Section 3 (a) of the Drugs and Cosmetics Act the same cannot be applied for the purpose of classification of a product for central excise duty under the Central Excises & Salt Act and the Central Excise T....
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....ted that medicaments are normally prescribed in doses, for a limited time, and for specific conditions/ailments. c. The drug licence may be used as a guide for the classification of product but not as the determining factor. The classification of a product under Chapter 30 or Chapter 33 may be done as per the Rules of Interpretation of the Central Excise Tariff Act, 1985 read with Chapter Note 1(d) to Chapter 30 and Chapter Note 2 to Chapter 33 and various judgments mentioned above. 10. This Circular supersedes all previous circulars/instruction issued by the Board regarding classification of any product claimed as Ayurvedic Medicine except in cases where there are specific orders regarding classification of certain products from Courts/Tribunal which are in force. A list of all products claimed as ayurvedic medicines in your commissionerates may be prepared and the classification of these products may be reviewed in the light of the above instructions. 11. You are also requested to send a report on the action taken to the Board by 15th October, 1997 positively. 13. In the show-cause notices issued to the appellant from time to time, it is proposed to ....
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....id Doctors have been prescribing the impugned product to patients suffering from Yavana Pediaka (pimples), Mukha Vyangam (blemishes). Therefore, it is their cumulative argument that they have fulfilled the twin test laid down by the Hon'ble Supreme Court in the case of CCE, Hyderabad Vs. Richardson Hindustan Ltd. (supra), which has been later the basis for issuing the circular for classification of the ayurvedic product and also later endorsed by the Hon'ble Supreme Court in a series of cases including Puma Ayurvedic Herbal (P) Ltd. (supra) and CCE, Chennai -IV vs. Hindustan Lever Limited [(2015) 34 GSTR 497]. 17. The classification of a product under ayurvedic medicament or cosmetics has been the issue before the Hon'ble Supreme Court in a series of cases. Discussing the principles laid down in various cases involving different products, the Hon'ble Supreme Court in Puma Ayurvedic Herbal (P) Ltd.'s case, while dealing with a series of products including 'Puma Neem Facial Pack', 'Puma Herbal Facial Pack', 'Puma Herbal remedy for Facial Blemishes' etc. analysing the meaning of medicament and cosmetics, observed as follows:- 18. From the above judgments it follows th....
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....sified as a medicament. 22. 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. 23. The learned counsel for the respondent drew our attention to Note 2 of Chapter 33 of the Central Excise Tariff which is as under : "Note 2. Heading Nos. 33.03 to 33.07 apply, inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings with labels, literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialized to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value." 24. On the basis of this Note it was argued that even if a product had some curative or prophylactic value, it will still be cosmetic. We cannot accept this argument. The learned counsel ....
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....is a bare allegation in the show-cause notice without mentioning any evidences on the basis of which the Revenue proposed to change the classification. Needless to mention that onus lies on the Revenue to lead the evidences to arrive at the correct classification of the product as held by Hon'ble Supreme Court in a series of cases including CCE Vs. Hindustan Lever Limited (supra), wherein their Lordships held as under:- 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 simply went by the pamphlet of the product, that too selectively picking up that portion where the product was described as good for care of the skin as well, ignoring the fact that the same very literature gives more emphasis to the therapeutic value of the product. On the other hand, the assessee had filed various affidavits of the dealers as well as consumers in support of its plea that the product was essentially a medicament, which material was blissfully ignored by the Department. 20. Their Lordships in the said case had confronted with the ques....
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....h 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 following manner : "22. Thus, the following guiding principles emerge from the above discussion : 22.1. Firstly, when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive. What is of importance is the curative attributes of such ingredients that render the product a medicament and not a cosmetic. 22.2. Secondly, though a product is sold without a prescription of a medical practitioner, it does not lead to the immediate conclusion that all products that are sold over/across the counter are cosmetics. There are several products that are sold over the counter and are yet, medicaments. 22.3. Thirdly, prior to adjudicating upon whether a product is a medicament or not, the courts have to see what the people who actually use the product....