2005 (3) TMI 607 - AT - Central Excise

Summary

Issues:
Classification of "SAFEZ" syrup under medicament or food substitute; Interpretation of HSN Notes and relevant Tariff Schedule entries; Consideration of product label declaration; Comparison with similar cases; Application of Supreme Court guidelines.

Analysis:
The dispute centered around the classification of "SAFEZ" syrup as a medicament or food substitute for duty payment purposes. The original authority classified the product under SH. 3003.10 as a medicament, while the first appellate authority classified it under Heading 21.07 as a food substitute, granting SSI exemption. The Revenue appealed against the Commissioner (Appeals) decision.

The Revenue argued that the product composition and intended use met the definition of "medicaments" as per Chapter 30 of the CETA Schedule. They relied on HSN Notes under Heading 21.06, emphasizing the exclusion of products intended for disease prevention or treatment from food substitutes. The Supreme Court's judgment in O.K. Play (India) Ltd. v. CCE was cited to support the reliance on HSN explanatory notes for classification.

The respondents' counsel contended that the product's classification should not solely rely on the label declaration but on the opinion of the Drug Control authority. They referenced a Tribunal case where a similar product was classified as a food supplement. The respondents argued that the product was de-recognized as a drug by the Drug Control authority, supporting its classification under Heading 21.07.

Upon careful consideration, the Tribunal found that the product label's therapeutic purpose declaration, pharmaceutical-grade ingredients, and dosage instructions indicated its classification as a medicament. The Tribunal noted that the product was manufactured under a drug license and marketed for therapeutic use, aligning with the definition of "medicament" under Heading 30.03. The Tribunal rejected the argument that the product could be a food substitute or protein concentrate based on the HSN Notes and the product's composition.

Applying the guidelines from the Supreme Court case, the Tribunal concluded that the product was a medicament under Heading 30.03, as claimed by the Revenue, and not a food substitute under Heading 21.07 as argued by the respondents. The impugned order was set aside, and the Revenue's appeal was allowed.

In summary, the judgment resolved the classification issue of "SAFEZ" syrup by emphasizing the product's composition, intended use, label declaration, and adherence to relevant HSN Notes and Tariff Schedule entries. The decision highlighted the importance of considering all factors, including regulatory approvals and industry standards, in determining the correct classification for duty payment purposes.