2010 (8) TMI 331 - AT - Central Excise

Ayurvedic medicaments Ginsec powder in gelatine capsules - Tribunal in the case of Mehta Unani Pharmacy & Co. v. CCE, Rajkot had taken a view that just because the ayurvedic preparations were contained in the vehicle in the form of sugar, honey or such palatable substances, the product processed does not cease to be ayurvedic medicament - just because Ginsec powder is filled in capsule made of gelatine, the medicament cannot be said to have lost the quality of ayurvedic medicament - precedent Tribunal decisions have not been considered by the Commissioner (Appeals) and the eligibility of the exemption notification has also not been considered - order set aside and the matter is remanded to the Commissioner (Appeals) for fresh decision - appellant given an opportunity to present their case before final decision is taken

Summary

Issues: Classification of medicament as ayurvedic or not, time bar on demand, consideration of Tribunal decisions, eligibility for concessional rate of duty, remand to Commissioner (Appeals).

In this judgment by the Appellate Tribunal CESTAT, Ahmedabad, the appellant, engaged in the manufacture of P&P medicines, had paid duty on their product Jensheng/Ginsec at Nil rate of duty until February 1994 and then at 10%. A show cause notice was issued in April 1997, alleging that the goods were leviable to duty at 15% from April 1992 to March 1995, resulting in a duty demand of Rs. 33,60,628 against the appellant, along with a penalty under Rule 173Q of Central Excise Rules, 1944. The appellant contended that the product was manufactured under an Ayurvedic medicines license and that Ginsec was an Ayurvedic drug, disputing the department's claim that putting Ginsec in gelatine capsules changed its classification. The appellant also argued that the demand was time-barred.

The Tribunal considered the arguments presented by both sides and referred to previous decisions to support its findings. It cited the case of Mehta Unani Pharmacy & Co. v. CCE, Rajkot, where it was held that the essential character of a medicine is derived from its active ingredients, and the form in which they are presented does not change its classification. The Tribunal also mentioned the decision in Naturalle Health Products (P) Ltd. v. CCE, Hyderabad, emphasizing that the primary function of a medicine is crucial in determining its classification. Additionally, the Tribunal referred to the case of Procter & Gamble India Ltd. v. CCE, Noida, to support its stance. As these precedents were not considered by the Commissioner (Appeals) and the eligibility of the appellant for a concessional rate of duty post-1994 was not assessed, the Tribunal decided to remand the matter back for a fresh decision by the Commissioner (Appeals), allowing the appellant an opportunity to present their case.

The judgment highlighted the importance of considering Tribunal decisions and eligibility for duty exemptions in such cases. By setting aside the impugned order and remanding the matter for reevaluation, the Tribunal ensured that the appellant's arguments were duly considered before a final decision was made by the Commissioner (Appeals).