2016 (3) TMI 350 - AT - Central Excise

Classification - Ayurvedic medicines like Neem, Boswellia, Serrata, Ashwagandha, Gymnema, etc. - Tariff Heading 3003.31 or 3003.39. - Held thatThere is no dispute that the impugned goods are manufactured in accordance with the formulae of the authoritative text and name as mentioned in the text are mentioned in the packing of the product. We have also perused copies of labels used for marketing these medicaments. The mention of the house name/ brand-name Shivananda / Om cannot lead to the conclusion that these products are not sold in the name specified in Ayurvedic text. In Zandu Pharmaceuticals (2004 (8) TMI 133 - CESTAT, MUMBAI ) the Tribunal held that the word Zandu appearing on the label of Ayurvedic medicines will not disentitle the assessee from claiming the exemption available to Ayurvedic medicaments. Reliance was placed on C.B.E.C. clarification dated 29.03.1994. The Board clarified that Chavanprash prepared as per Ayurvedic Text Books and sold as Chavanaprash but the manufacturer s name or mark, logo, symbol etc. is also prominently displayed, in such situation also full exemption as available to Ayurvedic medicines is to be extended. We also notice that the Hon ble Supreme Court in Astra Pharmaceuticals Pvt. Ltd. (1994 (12) TMI 77 - SUPREME COURT OF INDIA ) held that there is distinction between house mark and product mark. A monograph which only identifies the manufacturer would not make the medicine patent or proprietary. Considering the above analysis, we find that the appellant / assessee are right in classifying these products under Tariff Heading 3003.31 and claimed exemption available to Ayurvedic medicaments. - Decided in favour of assessee

Summary

Issues:
Classification of Ayurvedic medicines under tariff headings 3003.31 and 3003.39, fulfillment of conditions for classification, dispute regarding the name under which medicines are sold, applicability of specific and non-specific tariff headings, interpretation of trade names and proprietary medicines.

Analysis:
The judgment addressed three appeals dealing with the classification of Ayurvedic medicines under tariff headings 3003.31 and 3003.39. The appellant/assessee manufactured various Ayurvedic medicines like Neem, Boswellia, Serrata, Ashwagandha, Gymnema, etc., claiming full exemption under heading 3003.31. Revenue argued for classification under heading 3003.39 as "Patent or Proprietary Medicament" due to trade names "Sivananda" and "Om" associated with the products.

In the initial proceedings, the original authority classified the products under heading 3003.39, imposing duty liability and penalties. The Commissioner (Appeals) upheld this decision, leading to the appellant's appeal. Additionally, two other proceedings regarding Chawanprash and other Ayurvedic medicines under heading 3003.31 were also discussed, with the Revenue filing appeals against the Commissioner's decisions.

The appellant's counsel argued that all medicines were manufactured as per Ayurvedic texts, meeting conditions for classification under heading 3003.31. They contended that the Commissioner did not consider relevant submissions and cited precedents supporting their classification. The Revenue highlighted trade names on product labels, suggesting proprietary medicines based on the company's branding.

After hearing both sides and examining the records, the Tribunal focused on whether the medicines were sold under the specified names in authoritative Ayurvedic texts. It noted the absence of a specific heading for exclusively Ayurvedic patent or proprietary medicaments, leading to classification under the residual heading 3003.39 only when specific headings are inapplicable. The Tribunal emphasized that the products met the conditions for heading 3003.31, despite being sold with brand names like "Sivananda" and "Om."

Citing precedents and CBEC clarifications, the Tribunal emphasized that the presence of house names or brand logos does not disqualify products from Ayurvedic classification. It differentiated between house marks and product marks, concluding that mere identification of the manufacturer does not make the medicine proprietary. Consequently, the Tribunal allowed the appellant's appeal for classification under heading 3003.31 and dismissed the Revenue's appeals based on the same reasoning.

In the final pronouncement, the Tribunal upheld the classification of Ayurvedic medicines under heading 3003.31, granting the exemption available to such medicaments, and dismissed the Revenue's appeals accordingly.