2018 (9) TMI 813 - AT - Central Excise

Classification of goods - Smyle Thanda Tel - Whether classified as pharmaceutical preparation to be classified under 30.04 of CETH or to be classified as Hair Oil under 30.04 of CETH? - Held that - There is no doubt that the ingredients of the product in question are mentioned in authentic ayurvedic texts. As far as the users are concerned, there is nothing on the packet to show that the product is meant for daily use. It shows that it gives relief from headaches fatigue and stress. In an identical case, in the case of Nuzen Herbal Pvt. Ltd., 2018 (5) TMI 210 - CESTAT HYDERABAD , it was held the product should be classified as ayurvedic medicine. The product in question is rightly classifiable as ayurvedic medicine - appeal allowed - decided in favor of appellant.

Issues: Classification of product as hair oil or Ayurvedic preparation; Application of Central Excise Tariff; Compliance with authentic Ayurvedic texts; Perception of product by users.

Classification of product as hair oil or Ayurvedic preparation:
The appellant, a manufacturer of Smyle Thanda Tel, appealed against the classification of their product under Central Excise Tariff, arguing it should be classified as an Ayurvedic medicament due to its ingredients, intended use, and marketing. The appellant contended that the product was not meant for daily use, was manufactured with a drug license, contained ingredients specified in Ayurvedic texts, and had substantial therapeutic value. The appellant cited the law laid down by the Supreme Court regarding the classification of goods as cosmetics or medicines. The Departmental Representative argued that the product should be classified as hair oil, not a medicine, as it was advertised for hair use and perceived as a toiletry by the public. The Tribunal considered the ingredients, intended use, and perception of the product by users. Referring to a similar case, the Tribunal concluded that the product should be classified as an Ayurvedic medicine, setting aside the demand, interest, and penalties imposed.

Application of Central Excise Tariff:
The Lower Authority and the First Appellate Authority relied on Board Circulars regarding the classification of products based on popular perception. The appellant argued that the classification should follow the Central Excise Tariff and be considered an Ayurvedic medicament. The Tribunal considered the circulars and the Central Excise Tariff in light of the product's ingredients, intended use, and therapeutic value. The Tribunal referenced the Supreme Court's criteria for classification and concluded that the product fell under the category of Ayurvedic medicine, not a cosmetic item.

Compliance with authentic Ayurvedic texts:
The appellant emphasized that the product's ingredients were indicated in authentic Ayurvedic texts, supporting its classification as an Ayurvedic medicament. The Tribunal considered this argument along with the perception of the product by users. The Tribunal found that the ingredients were indeed mentioned in Ayurvedic texts, supporting the classification of the product as an Ayurvedic medicine.

Perception of product by users:
The Tribunal evaluated whether the product was known as an Ayurvedic medicine by the people who used it. Considering the lack of indication on the product packaging for daily use and its intended purpose of relieving headaches, fatigue, and stress, the Tribunal concluded that the product was rightly classifiable as an Ayurvedic medicine. The Tribunal referenced a previous case to support this classification decision.

In conclusion, the Tribunal allowed the appeal, setting aside the Order-in-Appeal and ruling in favor of classifying the product as an Ayurvedic medicine, thereby rejecting the demand, interest, and penalties imposed on the appellant.

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