2008 (3) TMI 63 - AT - Central Excise

Zest Powder - appellant claimed the same to be a medicament falling u/ch 3003.10, Revenue claim that it is classifiable as a food product u/ch 2108.99 - product doesn t pass common parlance test - Merely because materials of pharmacopoeia have been used to enhance the quality of the product and resultant marketability will not be a factor to hold the product to be a medicine- nothing to show that the product is useful in a particular disease hence it merit classification under CH 21

Issues Involved:
1. Classification of "Zest Powder" under the Central Excise Tariff Act.
2. Determination of whether "Zest Powder" is a medicament or a food product.
3. Applicability of duty and penalties based on the classification.
4. Consideration of manufacturing under a drug license as a factor for classification.
5. Evaluation of product labeling and marketing strategies.
6. Examination of evidence including doctor certificates and physician samples.

Detailed Analysis:

1. Classification of "Zest Powder" under the Central Excise Tariff Act:
The primary issue was whether "Zest Powder" should be classified under Chapter 3003.10 as a medicament or under Chapter 2108.99 as a food product. The appellant claimed it as a medicament, while the Revenue classified it as a food product.

2. Determination of whether "Zest Powder" is a medicament or a food product:
The Tribunal examined the ingredients, manufacturing process, and labeling of "Zest Powder." The product contained ingredients like Soya Protein Hydrolysate, vitamins, and minerals, mixed to create a nutritional formula. The label described it as a "protein-rich nutritional formula" to be dissolved in milk or water, emphasizing its nutritive value and delicious taste rather than any specific medicinal properties.

The Tribunal noted that the product did not indicate any specific disease it was meant to treat or prevent, which is a key characteristic of a medicament. The product was marketed as a versatile nourishment, similar to other health drinks like Bournvita or Horlicks, and was not prescribed for any specific ailment.

3. Applicability of duty and penalties based on the classification:
Based on the classification under Chapter 2108.99 as a food product, a duty of Rs. 5,36,387/- was confirmed along with a personal penalty of Rs. 30,000/- on the appellant.

4. Consideration of manufacturing under a drug license as a factor for classification:
The appellant argued that the product was manufactured under a drug license, which should classify it as a medicament. However, the Tribunal held that merely having a drug license does not automatically classify a product as a medicament. The classification should be based on the actual use and characteristics of the product.

5. Evaluation of product labeling and marketing strategies:
The Tribunal found that the product's labeling and marketing strategies emphasized its nutritional value and versatility as a health drink rather than its medicinal properties. The label did not mention any specific disease or ailment it was meant to treat, and the product was described as a delicious drink with high nutritive value.

6. Examination of evidence including doctor certificates and physician samples:
The appellant presented certificates from doctors stating that "Zest Powder" was prescribed during pregnancy, post-operation, and for general health improvement. However, these certificates were general in nature and did not indicate that the product was meant for the treatment or prevention of specific diseases. The Tribunal also noted that the distribution of physician samples did not necessarily establish the product as a medicament.

Conclusion:
The Tribunal concluded that "Zest Powder" could not be classified as a medicament under Chapter 3003.10 but should be classified as a food product under Chapter 2108.99. The appeal was rejected, and the duty and penalties imposed by the Revenue were upheld. The Tribunal emphasized that the classification should be based on the product's characteristics, labeling, and common parlance, rather than the fact that it was manufactured under a drug license.

← Previous Next →