2015 (10) TMI 1568 - AT - Central Excise

Classification of goods - Ayurvedic formulations / medicaments - products viz., Neelibhringadi Thailam (Gingelly Oil base), Neelibhringadi Thailam (Coconut Oil base) and SugandhamThailam and Danta Dhavana Churnam - whether the impugned goods are classifiable under chapter 3305.99 according to the Revenue or classifiable under chapter 3303. 39 according to the respondents and whether Danda Dhavan Churam is classifiable under chapter 33.06.10 according to the Revenue or classifiable under chapter 3303.39 according to the respondents - Held that - Commissioner (Appeals) in his impugned order had observed that the assessees products as certified by various Doctors and Consumers to show that the impugned goods were prescribed and used as medicines and the assessee had been able to satisfy the common parlance test and held that the impugned products in question are ayurvedic medicaments, which will be classifiable under the heading 3003.30 of the CETA, 1985 and not under 3305.10. By following the Apex Court decision 2013 (8) TMI 467 - SUPREME COURT and the decision of the Tribunal 2007 (2) TMI 573 - CESTAT, AHMEDABAD , the impugned order is upheld - Decided against Revenue.

Summary

Issues Involved:
1. Classification of Neelibhringadi Thailam (Coconut Oil base and Gingelly Oil base) and Sugandham Thailam.
2. Classification of Danta Dhavana Churnam.
3. Whether the products are Ayurvedic medicaments or cosmetics.

Issue-wise Detailed Analysis:

1. Classification of Neelibhringadi Thailam (Coconut Oil base and Gingelly Oil base) and Sugandham Thailam:
The primary issue was whether these products should be classified under sub-heading No. 3305.99 (cosmetics) as argued by the Revenue or under sub-heading No. 3003.39 (Ayurvedic medicaments) as claimed by the respondent. The Commissioner (Appeals) accepted the respondent's classification as Ayurvedic medicaments, leading to the Revenue's appeal. The Revenue contended that the products, being oil-based and used on the scalp/hair, were cosmetics. They argued that the products were sold in retail packaging, did not require a doctor's prescription, and were generally available to customers, indicating subsidiary therapeutic uses. The respondent countered that the products were manufactured as per Ayurvedic pharmacopeia, had therapeutic properties, and were recognized as Ayurvedic medicaments by doctors and users. The Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing that the products were manufactured according to Ayurvedic texts, had medicinal properties, and were recognized as such in the market.

2. Classification of Danta Dhavana Churnam:
The issue was whether Danta Dhavana Churnam should be classified under sub-heading No. 33.06.10 (cosmetics) as argued by the Revenue or under sub-heading No. 3003.39 (Ayurvedic medicaments) as claimed by the respondent. The Revenue's arguments were similar to those for the Thailams, emphasizing the product's retail availability and lack of prescription requirement. The respondent maintained that the product was manufactured according to Ayurvedic texts and had therapeutic properties. The Tribunal, following the same reasoning as for the Thailams, upheld the Commissioner (Appeals)'s decision to classify the product as an Ayurvedic medicament.

3. Whether the products are Ayurvedic medicaments or cosmetics:
The Tribunal considered various judicial pronouncements, including the Supreme Court's decisions in Puma Ayurvedic Herbal (P) Ltd. vs. CCE, Nagpur and CCE, Calcutta vs. Sharma Chemical Works. These cases established that the primary use of a product determines its classification. A product used for treating a medical condition, even if it improves appearance, is a medicament. The Tribunal noted that the products in question were manufactured according to Ayurvedic texts, had therapeutic properties, and were recognized as such by doctors and users. The Tribunal also considered the common parlance test, which supported the classification of the products as Ayurvedic medicaments. The Tribunal rejected the Revenue's appeals, upholding the Commissioner (Appeals)'s decision to classify the products under sub-heading No. 3003.39 as Ayurvedic medicaments.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision, classifying Neelibhringadi Thailam (Coconut Oil base and Gingelly Oil base), Sugandham Thailam, and Danta Dhavana Churnam as Ayurvedic medicaments under sub-heading No. 3003.39. The Tribunal rejected the Revenue's contention that the products were cosmetics, emphasizing their therapeutic properties, manufacturing process according to Ayurvedic texts, and recognition as medicaments by doctors and users.