TaxTMI 
TaxTMI 
1990 (9) TMI 369
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....assification list dated 05-03-1986 seeking classification under sub-heading 3003.30 with nil rate of duty. The same was approved provisionally on 26-05-1986 under Rule 9B pending further enquiries by the Department in respect of this item being classifiable as an a ayurvedic medicine under Heading 3003.30. 3. The appellants had filed the following evidence before the department along with the classification list to claim the product Amrutanjan Pain Balm Ayurvedic as an ayurvedic one. (i) A copy of the Licence No. 368 in Form 25-D issued by the State Drug Controller under Rule 154 of the Drugs and Cosmetics Act, 1940 for the manufacture of Amrutanjan Pain Balm Ayurvedic, licensing them to manufacture Amrutanjan Pain Balm Ayurvedic at premises in Madras; (ii) A copy of the Certificate issued by the Principal and Chief Physician of the Ayurvedic College and Dispensary, Madras, giving out the ingredients used in the manufacture of the said Amrutanjan Pain Balm with their English and Sanskrit names and the references of the authoritative ayurvedic books where in mention has been made of the ingredients; (iii) Labelling particulars giving the formula of the ....
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....own in Sanskrit and Hindi. They denied the charges that they had not used the same ingredients as declared to the Drug Controller in their product "Amrutanjan Pain Balm" and they have asserted that the ingredients declared by them on the labels and also in the formulae were nothing but their names in English popularly known and commercially accepted. They, however, did not dispute the synthetic nature of some of the ingredients but have taken a stand that the presence of one or two synthetic ingredients along with other ayurvedic ingredients could not disqualify the products from being classified as ayurvedic. They had further contended that the use of Sulphur BP, Camphor BP and Mercury BP in ayurvedic preparations had the approval of the Board vide their letter F.No. 7/26/61-C. VI dated 23-06-1961. They had further contended that [in] the popular understanding and in trade parlance, the product was accepted as an Ayurvedic medicine. The appellants had, however, admitted that the product was not prepared in accordance with any formula given in the authentic Ayurvedic treatises. The Learned Assistant Collector of Central Excise rejected the contentions of the appellants and held tha....
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....1534/89-C are as under- This appeal has arisen from the order-in-appeal No. 56/87 dated 27.2.87 passed by the Collector of Central Excise (Appeals) Madras confirming the order-in-original No. 47/86 dated 21.10.86 passed by the Asstt. Collector of Central Excise, Hyderabad. The appellants have taken licence L-4 No. 6/77 (P or P Medicines) Hyderabad for manufacturing the product "Amrutanjan Pain Balm Standard" They filed a classification list on 28.10.85 under the description of "Amrutanjan Strong Pain Balm" and claimed exemption from whole of duty on the ground that it is an ayurvedic preparation and non-excisable. On 5.5.1986, the appellants filed another classification list under the description "Amrutanjan Pain Balm Ayurvedic" seeking classification under sub-heading 3003.30 and claimed exemption from the whole of duty. 7. The ingredients of the medicine "Amrutanjan Pain Balm standard, Amrutanjan Strong Pain Balm and Amrutanjan Pain Balm Ayurvedic" are given as under- Amrutanjan Pain Balm Standard 1. Camphor IP 10% 2. Thymol IP 1% 3. Menthol IP 4.5% 4. Methyl Salicylate IP 7% 5. Turpentine Oil IP 7% 6. Euc....
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.... on the labels and the containers. It was also ascertained that the ingredient methyl Salicylate IP(sic) which they purchased from M/s. Pandya Chemicals and M/s. Chandlal & Co. and M/s. Litha Chemicals Madras had despatched to M/s. Amrutanjan Ltd. under the name Wintergreen oil. The superintendent also contacted M/s. Dujadwala Madras who supplied D.D. Turpentine to M/s. Amrutanjan Ltd. and ascertained that M/s. Amrutanjan Ltd. in their letter ST 8-715-85 dated 14.10.85 instructed M/s. Dujerdwala Industries to supply D.D. Turpentine under the Ayurvedic name Turpentine ka tel. 10. The Superintendent visited the factory on 10.6.86 and obtained a statement from Shri K.S. Anantanarayan, Deputy Factory Manager during the course of investigation. They stated that the ingredients of Amrutanjan pain Balm Standard and that of Amrutanjan Strong Pain Balm and Amrutanjan Pain Balm Ayurvedic are one and the same except with a variation in the ratio of their composition and excepting 'Pudina ka Tel' as an additional Ingredient in Amrutanjan Strong Balm and Amrutanjan Pain Balm Ayurvedic. The raw material stores was checked and verified and the following materials were found. The off....
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....nstructions to their suppliers to quote the name of the ingredients as found in the Ayurvedic treatise. They reiterated that they had done so to satisfy the conditions under Drug Control Licence and their act was not a clandestine one. The medicines were prepared under licence issued by the Director of Indian Medicine and Homeopathy, Govt. of Andhra Pradesh. The formulae has been accepted by them. Their medicines do not come under Drug Price(Control) Order, 1979. The appellants relied upon the affidavits from the ayurvedic chemists, letters from dealers and users to claim their product to be ayurvedic. Reliance was heavily placed by them on the ruling given by CEGAT in the case of Shri Baidyanath Ayurved Bhawan, reported in 1985 (22) E.L.T. 844. The Assistant Collector of Central Excise, Hyderabad, after a careful consideration of the entire materials on record and the submissions made by the appellants, rejected the claim of the appellants to classify the products as Ayurvedic medicine. The Assistant Collector of Central Excise, Hyderabad, in his order-in-original held that the assessee had used IP raw materials satisfying the pharmacopoeial standards. The assessee in order to cir....
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....anslucent white crystals. Further in the same page 250 of "The Indian Materia Medica" regarding its constituents "All parts of the camphor tree yield, on distillation a semi-soiled [solid?] oil from which camphor can be separated by mechanical means. The oil from the wood and root is of the highest value as in addition to camphor it contains another valuable substance called "Safrole". Regarding its uses it is mentioned that it is used in ayurvedic, Siddha. The ingredient Ajowan also finds place in "The Indian Materia Medica" as "2065 PTYCHOTIS AJOWAN DC". Among its uses, it states that oil and flowers of Ajowan combined with soda forms a nice remedy for acidity, dyspepsia, flatulence etc. It further states that the chief importance of ajowan seeds is for production of the thymol which is a very valuable anthelmintic. Further at page 1030, it states "Crude Thymol popularly called Ajwan Ka Phul". He submitted that turpentine is an extract form Pine Tree and it is referred as "Turpentine Ka Tel" in "The Indian Materia Medica". "Nilgiri Ka Tel" is an extract from tree Eucalyptus Globulus and it is referred to in "The Indian Materia Medica"; so also Chaha, a Tel which is an extract fro....
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....he ayurvedic system by the different manufactures of Pain-killing balms like Baidyanath Ayurvedic Ltd. Nagpur etc. 15. Shri A.N. Haksar then referred to the letters given by the patients and distributors and chemists to show that in trade parlance and in commercial parlance, the products have been understood as an ayurvedic medicine and therefore, he submitted that the appellants seeking exemption as an ayurvedic medicine should be upheld. In conclusion, he placed before the Bench, the extract of the Ayurvedic Formulary of India, Part-I, First Edition, published by Govt. of India, Ministry of Health and Family Planning, Department of Health and referred to the Introductory Chapter in which it is stated that-- The system of Ayurveda embraces within its fold drugs of plant, animal and mineral origin, both single drugs and compounded formulations. Although Ayurveda does not rule out any substance from being used as a potential source of medicine, presently about 1000 single drugs and 8000 compound formulations of recognised merit are in vogue. All the main classical works on Ayurveda, such as Caraka Samhita, Susruta, Samhita, Astanga Sangraha and Astanga Hridaya deal with ....
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....e break of continuity over the ages, drugs which were at one time identified with one term have now been equated with others of the same name. All these factors have contributed, as in the case of formulations, to a state of uncertainty about the identity and use of the drugs. The practice of the individual physician identifying drugs and preparing medicines himself for the use of his patients has been largely supplanted by the pharmaceutical industry. No longer, except in a few cases, does the physician, particularly in the urban areas, undertake to prepare his own requirements of drugs; he prefers to purchase them straight from the market. Even the patient has become more sophisticated and prefers purchasing a readymade drug from a manufacturer instead of obtaining it from his own physician. On account of increasing urbanization, the tendency is towards more and more dependence on readymade preparations. The increasing needs of the population and the chronic shortage of authentic raw materials have made it incumbent that some sort of uniformity in the manufacture of Ayurvedic medicines should be brought about. The need has also been felt for statutory control to ensure s....
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....nd the same had not been manufactured as per the ayurvedic formulations prescribed in the ayurvedic treatises. He submitted that the process of manufacture of ayurvedic medicines should also be according to the manner of preparation of drugs as laid down in the ayurvedic sastric books. In support of this contention, letter dated 26-08-1989, issued by the Indian Medicine and Homeo Department of Andhra Pradesh was placed, which stated that Amrutanjan Pain Balm and Amrutanjan Strong Pain Balm are not the sastric drugs and the formulae of the same are not available in the authentic books of the Schedule-I of Drugs and Cosmetics Act. 19. The main plank of the Revenue's stand has been that the products of the appellants do not conform to the ayurvedic texts and that the appellants have not followed the method of preparation of ayurvedic medicine as per the sastric treatises. They have used extensively IP, BP grade inputs and synthetic raw-materials of which the major constituent between 45 to 65% as a base, is the petroleum jelly and turpentine oil, both are petroleum products. The use of synthetic raw-materials like menthol, thymol BP, methyl salicylate, camphor BP, has made the ....
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....s follows. "Indian medicine is ancient. Its earliest concepts are set out in the sacred writings called the Vedas, especially in the metrical passages of the Atharvaveda which may possibly date as far back as 2nd millennium BC. According to a later writer, the system of medicine called ayurveda was received by certain Dhanvantari from Brahma and Dhanvantari was defined as the God of medicine". He further referred to the following portion therein:- The Indian Materia Medica was extensive and consisted mainly of vegetable drugs, all of which were from ingredient plants. Caraka knew 500 medicinal plants and Susruta knew 760. But animal remedies such as the milk of various animals, bones, gallstones and minerals (sulphur, arsenic, lead, copper, sulfate, gold) were also employed. The Physicians collected and prepared their own vegetable drugs. Among those that eventually appeared in Western pharmacopeia are cardamom and cinnamon. 21. Shri L.C. Chakraborty referred to each of the letters of the customers produced by the appellants and countered that they do not satisfy the trade parlance test. He referred to the affidavit of Dr. SHS Hussainy and submitted that it only stated ....
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.... P medicines falling under tariff Item 14E of erstwhile tariff upto 28-02-1986 and under tariff Item 3003.19 as non-ayurvedic product - medicaments (including veterinary medicaments) - others, attracting a duty liability of 15% ad valorem. The Tariff Item 14-E as it stood then and Tariff heading 3003.30 and 3003.19 of C.T.A. 1985 are reproduced below:- Explanation-I 'Patent or proprietary medicines' means any drug or medicinal preparation. In whatever form, the use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a Pharmacopeia . For merely or other publications notified in this behalf by the Central Govt. in the Official Gazette, or which is a brand name, that is a name or a registered trade mark under the Trade and Merchandise Marks Act, 1988 (43 of 1988) or any other mark such 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 a....
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....has found that the impugned products have not been prepared as per the formulae described in the authoritative books of ayurvedic. The Revenue has also found that the ingredients used in all the three impugned products are with suffix IP satisfying the pharmaceutical standards and that it is only with a view to circumvent tax obligation of the assessee had put the nomenclature of the ayurvedic names and dropped the suffix IP. 24. The appellants do not deny these facts. They are all admitted except that the ingredients although synthetic ones, are having ayurvedic names as well, and that there mention is found in the authoritative books. In support, they had placed the affidavits of various persons but however, the Revenue rejected these evidences and have held that mere mention of ayurvedic nomenclature is not sufficient but the medicines have to be prepared as per the formulae in the authoritative books. 25. Both the sides have relied on the ruling of this Bench in the case of Shree Baidyanath Ayurved Bhawan v. Collector of Central Excise as reported in The appellants have also relied on the ruling of this Tribunal given in the case of Richardson Hindustan as reported in The....
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....y of India. These monographs should be read subject to the restrictions imposed by those wherever they are applicable. 2. It is expedient that enquiry be made in each case in order to ensure that the provisions of any law are being complied with; 3. In general, the provisions of the Drugs and Cosmetics Act, 1940, Chapter-IVA as are applicable to Ayurvedic Drugs and the Rules framed thereunder should be consulted. 4. Standards for the several single drugs of plant, animal and mineral origin included in the Pharmacopoeial List of Single Drugs included as an Appendix to the Ayurvedic Formulary have yet to be worked out. In the manufacture of medicines included in this Formulary, it should be ensured that the Vaidya-in-Charge of the Pharmacy has reasonably satisfied himself about the identity and purity of the drugs. 5. Use of substitute drugs (pratinidhi dravyas) wherever the original drugs are not available, is permissible in the Ayurvedic classics and practice. It must however be ensured that only the substitutes as are mentioned in the texts are included in the Formulary are used. 6. Formulations included in the Ayurvedic Formulary may a....
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....ay in many cases be repeated three to four times in 24 hours. The medical practitioner will exercise his own judgement and act on his own responsibility in respect of the amount of any therapeutic agent he may prescribe or administer or the frequency of its administration. When, however, an unusually large dose appear to have been prescribed, it shall be the duty of the pharmacist or dispenser to satisfy himself that the prescriber's intention has been correctly interpreted. If it is necessary to administer a drug by a route other than oral, the single dose for such administration is mentioned. Doses are expressed in metric system of weights or measures. A conversion table is appended to the Formulary giving the classical Ayurvedic system of weights and measures and their metric equivalents. It is to be noted that the relation between the dose in metric and ayurvedic systems set forth in the text is of only approximate equivalence. These equivalents are for the Convenience of the prescriber and are sufficiently accurate for pharmaceutical or other purposes, Weights and Measures: In the Formulary only the metric system of weights and measures is indica....
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....pared. The Formulary therefore, represents the consensus of opinion of the Ayurvedic profession as a whole and as a consequence the Committee hopes it will be acceptable to the profession at large.. The Committee urges the Central Government to recommend the adoption of this Formulary by all the Ayurvedic institutions maintained by Govt. in the States, as well as Semi-Government and other institutions managed by public voluntary organisations. The Committee hopes that to start with, the Central Govt. will adopt it in its own institutions like the Central Govt. Health Scheme Ayurvedic Dispensaries, the Gujarat Ayurveda University and the Post Graduate Institute of Indian Medicine, Banaras Hindu University. 2. In the absence of adequate scientific standards of single drugs and compound formulations, a work which has only been recently started, the committee has not been able to recommend standards for either of them. The Committee while appreciating the efforts made by the Government to initiate work on standardisation, is aware of the fact that steps taken so far have been inadequate and need to be further accelerated. Therefore, the Committee very strongly recommends that ....
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....as recognised by Ayurvedic science. When ayurvedic science recognises only use of natural extracts from medicinal plants, it cannot be substituted by modern chemical ingredients. The appellants have imported from abroad synthetic grade IP chemicals and have asked the supplier to change the invoices and labels with ayurvedic nomenclature to suit their design. It is a clear case of intention to evade duty liability. The menthol salicylate is changed as "Pudina Ka Phool" dementholised oil as "Pudina Ka Tel", Thymol and Turpentine IP grade substituted with the name as "Ajwan Ka Phool" and "Turpentine Ka Tel"; Methyl Salicylate IP as winter green Tel. 32. The appellant's reliance of both the rulings of Shree Baidyanath's case and Richardson Hindustan (supra) will not be of much help and assistance as the issues in these cases are different from the one at hand. The questions before the Bench in both these cases were different. There was no admission of the ingredients being synthetic in both the cases. The Tribunal took the view that use of few Pharmacopoeial items by itself will not make the preparation non-ayurvedic, provided the use of these ingredients is recognised in au....
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....) of Section 3 of the Drugs Act, 1940. The High Court has found that renumbered definition 3(h) was earlier 3(d) and read as follows:- 3(d): Patent or proprietary medicine means a drug which is a remedy or prescription prepared for internal or external use of human beings or animals and which is not for the time being recognised by the Permanent Commission on Biological Standardisation of the World Health Organisation or in the latest edition of the British Pharmacopoeia or the British Pharmaceutical Codex or any other pharmacopoeia authorised in this behalf by the Central Government after consultation with the Board. Thus, patent or proprietary medicines meant a drug which was defined in the Drugs Act and not in the Act. The High Court rightly held that Ayurvedic medicine was not a drug at all. The definition of drug expressly excluded them. So the definition of patent or proprietary medicine was exclusive of Ayurvedic medical preparations, those being excluded from the definition of drug. The definition of patent and proprietary medicines till then did not apply to ayurvedic preparations. This position continued indeed till the amendment of Drugs Act by the Drug....
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.... Formulary of the United States, the International Pharmacopoeia and the State Pharmacopoeia of the Union of Soviet Socialist Republics vide SO 701 Gazette of India 1961 Pt. II Section 3(ii) p. 725. There was thus no ayurvedic pharmacopoeia prescribed for the purpose of that Act. Pharmacopoeia is a book containing the list of drugs with directions for use. The fact that no Ayurvedic Pharmacopoeia had been notified at the relevant time was because Ayurvedic preparations were not drugs for the purpose of Drugs Act and for that matter of Medicinal and Toilet Preparations (Excise Duties) Act, at the relevant time. It could be for this reason that in the original Schedule the expression medicinal and toilet preparations 'not otherwise specified' was used and Ayurvedic preparations of different categories were put under Item 2. In the Schedule as amended by the 1962 Act, this expression continued in Item 3. The same definition of 'drug' also continued in the Drugs Act. Para-23(Para 24 of 25 ECC 7): From the Explanation I of the Schedule of the Act as substituted by Act 5 of 1964 also it is clear that patent or proprietary medicine means any medicinal preparations....
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....ification has to be upheld. It is an admitted fact that the appellants are manufacturing "P & P" medicines having been registered under a Trade name of Amrutanjan and the products have been identified by the name of the manufacturer and also identified by the trade mark and colour scheme adopted by them. Further, it has to be observed that, 'The Ayurvedic Formulary of India' has given detailed formulations of drugs with specific mention of all the ingredients in each drug formulation. The methods and manner of preparation of drug are also given with the quantum of ingredients by weight and measures are also shown. Taking these factors into consideration and in the absence of any material evidence from the appellants to show that the impugned products have been prepared as per the manner, and method laid down in "The Ayurvedic Formulary of India" or any other authoritative texts, the Revenue's contention regarding classification has to be upheld. 36. As regards the evidence produced by the appellants in support of their claim, the arguments addressed by Shri L.C. Chakraborty has great force and are quite acceptable. The licence issued by the Director of Indian Medicin....
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....a laid down in authentic books of Ayurvedic medicines specified in the First Schedule to the Drugs and Cosmetics Act, 1940. We have already observed that the definition laid down in Section 3(a) of the Drugs and Cosmetics Act cannot be followed for classification of goods for central excise duty. Similar argument was advanced on behalf of the Revenue in the case of Shri Baidyanath Ayurved Bhawan Limited in the respect of their products Himalaya Surma, Moti Surma, Netramrita Surma, Angimukh Churan, Atul Shaktidata, Gasol Pachak, Kasbati, Namak sulemani, Pachakbati and Sodhi Harre. It was argued for the Department in that case that these products had not been manufactured as per formula laid down in any of the specified books on Ayurveda mentioned in the First Schedule to the Drugs and Cosmetics Act, 1940 and that all these products contained some Allopathic ingredients and as such, they could not be called exclusively Ayurvedic medicines. In the said case, 'Menthol' and 'citric acid' were used in Gasol Pachak, Namak Sulemani and Agnimukh Churan, 'Borax' was used in Kashbati, Pachakbati and Sodhi Harre. Citric acid was used in Pachakbati and Sodhi Harre. Steel....
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....ts. 44. These certificates, we observe, are based on the labels on the medicines put out for sale indicating the Indian names of constituents or ingredients used in the medicine. Information on labels is apparently for public consumption, but actually, it is brought out on record that the appellants have not only used certain pharmacopoeial medicines of B.P. and LP. standards, which strictly speaking may not be impermissible if used in small quantities to destruct from the medicine being Ayurvedic, but they have used the synthetic substitutes which can by no stretch of imagination be called Ayurvedic ingredients. Ayurvedic system permits drugs of plant, animal and mineral origin. It is to be noted that in Shree Baidyanath's or Richardson's cases, there was no controversy whether synthetic ingredients could be considered as Ayurvedic ingredients i.e. ingredients/materials used for. Ayurvedic medicine. The various certificates, based on such wrong informations supplied by the appellants would no doubt be wrong. Learned advocate for the appellants has urged that the two lower authorities have not questioned the veracity of the certificates and therefore, it is not permissib....
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....y to central excise cases. 47. Para 15 of the said Report holds "that considering the provisions of the Drugs and Cosmetics Act which minutely regulate the manufacture, sale and distribution of drugs and cosmetics, it appears to as that such provisions necessarily have an over-riding effect and therefore, prevail and thus, the definition of drug given in the said Act is most relevant for determining its meaning in the trade. We are thus of the view that Mr. Hidayatullah is entirely right when he contends true and real meaning which a drug is in the trade or in the commerce is the meaning given to it in the Drugs and Cosmetics Act. The provisions of Section 18 are unquestionably motivated by public interest to protect and defend the health and lives of people. We are thus of the view that the popular or the commercial meaning of a drug is synonymous to the one given in the Drugs and Cosmetics Act". (emphasis supplied). On this analogy, learned DR has stated that the definition of Ayurvedic drug in Clause 3(a) of the said Act should govern the meaning of Ayurvedic drug under Central Excise Tariff. Therein Ayurvedic, Siddha or Unani medicine includes a medicine intended for interna....