2004 (7) TMI 398 - AT - Central Excise

Summary

Issues Involved:
1. Classification of ayurvedic products as medicaments or cosmetics/toilet preparations.
2. Applicability of Central Excise Tariff Headings for the products.
3. Consideration of drug licenses and ayurvedic ingredients in product classification.
4. Examination of product labels and marketing for classification purposes.
5. Reliance on previous judgments and guidelines for classification.

Detailed Analysis:

1. Classification of Ayurvedic Products:
The appellants, manufacturers of ayurvedic products, contested the classification of their products under Customs Tariff Headings 3304 and 3305.99 as cosmetics/toilet preparations. They claimed the products should be classified under Chapter Heading 3303.30 as ayurvedic medicaments. The Commissioner (Appeals) upheld the classification as cosmetics/toilet preparations, citing the Supreme Court judgment in the case of Sri Baidyanath Ayurved Bhawan Ltd. and subsequent Ministry circulars and Tribunal decisions.

2. Applicability of Central Excise Tariff Headings:
The products in question-Kesini, Lavanya, Baby Oil, and Firm Up-were examined for their classification under the Central Excise Tariff Act, 1985. The Commissioner (Appeals) determined that these products did not meet the criteria for classification as medicaments under Chapter 30. Instead, they were classified under Chapter 33 based on their usage, marketing, and labeling, which indicated they were perceived as cosmetics/toilet preparations.

3. Consideration of Drug Licenses and Ayurvedic Ingredients:
The appellants argued that the products were manufactured under a Drug Licence No. 33/25D/76 for ayurvedic drugs and contained only natural herbal ingredients mentioned in basic ayurvedic texts. However, the Commissioner (Appeals) noted that the drug license and ingredients alone were not sufficient to classify the products as medicaments. The products needed to have substantial therapeutic claims and be prescribed for specific conditions, which was not the case.

4. Examination of Product Labels and Marketing:
The labels and marketing of the products were scrutinized to determine their classification. For instance, Kesini was marketed as a hair wash powder with claims of making hair "bouncing and lustrous," and Lavanya was labeled as a "herbal facial mix" for skin texture and glow. Baby Oil and Firm Up were also found to be marketed for cosmetic purposes rather than therapeutic uses. The absence of specific disease or ailment indications on the labels further supported their classification as cosmetics.

5. Reliance on Previous Judgments and Guidelines:
The Commissioner (Appeals) relied on various judgments and guidelines, including the Supreme Court and Tribunal decisions, to classify the products. The appellants cited several judgments in their favor, arguing that products with ayurvedic ingredients and drug licenses should be classified as medicaments. However, the Commissioner (Appeals) distinguished these cases, noting that the products in question did not have substantial therapeutic claims or were not marketed as medicaments.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision, confirming the classification of the products as cosmetics/toilet preparations under Chapter 33. The Tribunal emphasized that the products were marketed and perceived as cosmetics, lacked substantial therapeutic claims, and did not require prescriptions for specific ailments. The appeals were rejected, and the classification under Central Excise Tariff Headings 3304.00 and 3305.99 was deemed appropriate.