2010 (8) TMI 1090 - HC - Central Excise

Summary

Issues Involved:
1. Classification of "Trichup Oil" under the appropriate tariff sub-heading.
2. Determination of whether "Trichup Oil" is an Ayurvedic medicament or a cosmetic product.
3. Consideration of the therapeutic and prophylactic properties of the product.
4. Examination of the procedural correctness of the orders passed by the Tribunal and lower authorities.
5. Evaluation of the alternative remedy and maintainability of the writ petition.

Issue-Wise Detailed Analysis:

1. Classification of "Trichup Oil" under the appropriate tariff sub-heading:
The petitioners challenged the classification of "Trichup Oil" under tariff sub-heading 3305.99 (cosmetic) instead of 3003.39 (medicament). The product was initially cleared under tariff sub-heading 3003.30 and later 3003.39, approved by the department. A show cause notice was issued, proposing reclassification under 3305.99, which was upheld by the adjudicating authority, Commissioner (Appeals), and the Tribunal.

2. Determination of whether "Trichup Oil" is an Ayurvedic medicament or a cosmetic product:
The petitioners argued that "Trichup Oil" is recognized as a medicament by Ayurvedic practitioners, the Drug Controller, and the trade. It is used to treat specific scalp ailments and is generally sold at chemists' shops. The product contains Ayurvedic ingredients like Neem leaves, Bhringraj, Amla, and others, recognized in standard Ayurvedic books. The Supreme Court's decision in Commissioner of Central Excise, Calcutta v. Sharma Chemical Works was cited, where a similar product was classified as an Ayurvedic medicament.

3. Consideration of the therapeutic and prophylactic properties of the product:
The adjudicating authority held that the therapeutic and prophylactic properties of "Trichup Oil" were minor and classified it as a hair tonic for nutrition. The Tribunal noted inconsistencies in the product's packaging and literature and questioned the medicinal effect of the ingredients in the given proportions. The Supreme Court in Puma Ayurvedic Herbal (P) Ltd. v. Commissioner of C. Ex., Nagpur emphasized that the primary use of the product determines its classification, and minimal medicinal ingredients do not detract from it being a medicament.

4. Examination of the procedural correctness of the orders passed by the Tribunal and lower authorities:
The Tribunal's findings were based on the product's packaging and the absence of dosage instructions. However, the Supreme Court has held that the mere fact that a product is sold across the counter and not under a doctor's prescription does not mean it is not a medicament. The Tribunal did not provide evidence to prove that the product was understood by customers as a cosmetic. The product's certification as an Ayurvedic medicament by the Drug Controller was not adequately considered.

5. Evaluation of the alternative remedy and maintainability of the writ petition:
The respondent argued that the petition should not be entertained due to the availability of an alternative remedy of appeal to the Supreme Court under Section 35L of the Act. However, considering the elapsed time since the petition was filed and the substantive issues involved, the court decided to address the merits of the case.

Conclusion:
The court held that "Trichup Oil" falls for classification under tariff sub-heading 3003.39 as an Ayurvedic medicament. The impugned orders of the Tribunal were quashed and set aside. The petition was allowed, and the rule was made absolute with no order as to costs.