2010 (6) TMI 393 - AT - Central Excise

Patent or Proprietary medicaments - Vitcofol Syrup, which contains ferrous fumarate as the main ingredient along with two vitamins in small quantities, we have found enough evidence of prophylactic or therapeutic property of the main ingredient depending on the dose. Indian Pharmacopoeia says that ferrous fumarate in a dose of 200 mg daily has prophylactic property and in a dose of 400 to 600 mg daily has therapeutic property - Vitcofol Syrup answers the description of goods given under SH 3003.10 of the Tariff Schedule. We classify the item accordingly

Issues Involved:
1. Classification of "Vitcofol Syrup with Iron" and "Vitcofol Drops" under the Central Excise Tariff Act.
2. Determination of whether these products should be classified under Heading 29.36 or Heading 30.03.

Issue-wise Detailed Analysis:

1. Classification of "Vitcofol Syrup with Iron":

The first appeal by the assessee pertains to the classification of "Vitcofol Syrup with Iron" for the period April 1997 to March 1998. The lower authorities classified the syrup under Heading 29.36 (SH 2936.00) of the Central Excise Tariff Act. The assessee contended that it should be classified under Heading 30.03 (SH 3003.10) as a medicament.

The composition of "Vitcofol Syrup with Iron" includes Ferrous Fumarate I.P. (100 mg), Folic Acid I.P. (0.5 mg), and Cyanocobalamin I.P. (5 mcg). The assessee argued that the syrup was manufactured under a license issued under the Drugs and Cosmetics Act, 1940, and contained active ingredients with therapeutic properties. The consultant referred to literature and standards under the Drugs and Cosmetics Rules, 1945, to support the claim that the syrup had therapeutic value and should be classified as a medicament.

The Tribunal considered the definition of medicaments under Note 2 to Chapter 30 and the standards for patent or proprietary medicines under the Drugs and Cosmetics Rules. It was found that Ferrous Fumarate, the main ingredient, had prophylactic and therapeutic properties depending on the dose. The Tribunal concluded that "Vitcofol Syrup with Iron" met the criteria for classification under SH 3003.10 as a medicament.

2. Classification of "Vitcofol Drops":

The second appeal by the department concerns the classification of "Vitcofol Drops" for the period April 1998 to February 1999. The lower appellate authority had allowed the assessee's claim for classification under SH 3003.10, which the Revenue contested.

The composition of "Vitcofol Drops" includes Folic Acid I.P. (200 mcg), Cyanocobalamin I.P. (5 mcg), and Nicotinamide I.P. (20 mg). The Tribunal noted that the standards for patent or proprietary medicines under the Drugs and Cosmetics Rules indicated that the active ingredients of a patent or proprietary medicine could not be vitamins. The product label suggested that "Vitcofol Drops" were intended to be mixed with food or beverages, which is inconsistent with the administration of medicaments.

The Tribunal referred to the HSN Explanatory Notes under Heading 29.36, which describe vitamins as exogenous biocatalysts without attributing prophylactic or therapeutic properties to them. It was concluded that "Vitcofol Drops" fit the description under Heading 29.36 and should be classified accordingly.

3. Case Law and Precedents:

The Tribunal considered various case laws, including the Supreme Court's decision in Commissioner v. Capsulation Services Ltd. and the Tribunal's decision in Manish Pharmaceuticals Pvt. Ltd. These cases supported the classification of mixtures of vitamins with therapeutic properties as medicaments under SH 3003.10. However, the Tribunal found that the factors considered in these cases were not present for "Vitcofol Drops."

Conclusion:

The Tribunal partly allowed the appeal filed by the assessee, classifying "Vitcofol Syrup with Iron" under SH 3003.10 and "Vitcofol Drops" under SH 2936.00. Consequently, the Revenue's appeal was also partly allowed. The original authority was directed to re-quantify the duty demand based on the revised classification. Considering the nature of the dispute, the Tribunal decided not to impose any penalty on the assessee.

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