2003 (11) TMI 403 - AT - Central Excise

Summary

Issues:
Classification of 'Saini herbal oil' under Chapter Heading No. 3003.20 or 3305.99.

Analysis:
1. The dispute revolves around the classification of 'Saini herbal oil.' The Assistant Commissioner classified it under Chapter Heading No. 3003.20, while the Revenue argued for classification under Heading No. 3305.99 before the Commissioner of Customs and Central Excise (Appeals). The Commissioner upheld the initial classification, emphasizing the Ayurvedic nature of the product.

2. The product, 'Saini herbal oil,' is labeled as an Ayurvedic medicine effective for various conditions like hair fall, dandruff, and baldness. The ingredients are herbal extracts as per Ayurvedic texts. The product is explicitly for external use only, manufactured by a specific company. The dosage and indications clearly suggest medicinal properties.

3. The key issue is whether the product falls under pharmaceutical products (Chapter 30) or perfumery cosmetics/toilet preparations (Chapter 33). Lower authorities deemed it an Ayurvedic medicament due to its therapeutic use and manufacturing process aligned with Ayurvedic texts. The labeling and literature indicated medicinal use, not cosmetic purposes, as required by Chapter Note 2 of Chapter 33.

4. The Revenue argued that the product primarily maintains hair rather than medicating, citing common parlance understanding. They disputed the authenticity of the medical college's opinion supporting the product's Ayurvedic classification. However, the Tribunal found no reason to overturn the lower authorities' findings, emphasizing the product's Ayurvedic nature based on labeling, ingredients, and manufacturing process.

5. The Tribunal rejected the Revenue's appeal, noting that the product's labeling, packaging, and composition clearly position it as an Ayurvedic medicine, not a cosmetic or toiletry item. The licensing, manufacturing process, and active herbal ingredients support the medicinal classification. The Tribunal highlighted that common parlance understanding should align with the product's actual nature, not just the sales channel.

6. Case laws were cited to support the classification approach based on the product's characteristics. Notable cases like B.P.L Pharmaceuticals Ltd. and Sharma Chemical Works emphasized the importance of labeling, literature, and expert opinions in determining classification. The Tribunal found the evidence and regulatory guidance supported the lower authorities' classification of 'Saini herbal oil' as an Ayurvedic medicine.

7. Ultimately, the Tribunal found no merit in the Revenue's appeal, upholding the classification of 'Saini herbal oil' as a pharmaceutical product under Chapter Heading No. 3003.20. The appeal was rejected based on the product's Ayurvedic nature and compliance with regulatory requirements.