1994 (1) TMI 94 - HC - Central Excise

Summary

Issues Involved:
1. Classification of "Kafbin" as an Ayurvedic medicine.
2. Applicability of exemption notification to "Kafbin."
3. Presence of allopathic ingredients in Ayurvedic medicine.
4. Jurisdiction and intervention of the Writ Court.

Detailed Analysis:

1. Classification of "Kafbin" as an Ayurvedic Medicine:
The petitioner challenged the order of the Assistant Collector, Central Excise, which disallowed their claim for exemption for the cough syrup "Kafbin" under the premise that it is not an Ayurvedic medicine. The court examined the definitions provided under the Drugs & Cosmetics Act, 1940, and the Tariff Act of 1985. The court noted that "Kafbin" contained twelve Ayurvedic ingredients and three allopathic preservatives. The Assistant Collector's rationale was that the presence of any allopathic ingredient would classify "Kafbin" as a patent or proprietary medicament, thus not eligible for exemption. However, the court concluded that the addition of non-therapeutic and non-prophylactic preservatives does not change the nature of the Ayurvedic medicament, thereby classifying "Kafbin" as an Ayurvedic medicine.

2. Applicability of Exemption Notification to "Kafbin":
Under Tariff Item 3003.10, medicaments exclusively Ayurvedic are exempt from duty. The court referred to Notification No. 32/89-C.E., which prescribes a nil rate of duty for sub-heading No. 3003.30, including Ayurvedic medicaments. The court held that "Kafbin," being composed of Ayurvedic ingredients, falls under this exemption despite the presence of non-medicinal preservatives. Therefore, the petitioner is entitled to the exemption from excise duty.

3. Presence of Allopathic Ingredients in Ayurvedic Medicine:
The Assistant Collector argued that the presence of allopathic preservatives disqualified "Kafbin" from being classified as an Ayurvedic medicine. The court, however, emphasized that these preservatives were added for non-therapeutic and non-prophylactic purposes. Citing the decision in Panama Chemical Works v. Union of India, the court noted that inactive ingredients do not alter the fundamental nature of an Ayurvedic medicine. Therefore, the presence of preservatives does not disqualify "Kafbin" from being considered an Ayurvedic medicament.

4. Jurisdiction and Intervention of the Writ Court:
The court addressed the argument regarding the availability of alternative remedies. The petitioner argued that pursuing departmental appeals was not an efficacious remedy. The court agreed, noting that the issue at hand was a legal one concerning the interpretation of statutory provisions. The court cited precedents indicating that the presence of an alternative remedy does not bar the Writ Court's jurisdiction, especially when the issue involves a question of law. Consequently, the court decided to intervene and quash the order of the Assistant Collector.

Conclusion:
The writ petition was successful. The court declared that "Kafbin," prepared with the specified ingredients, is an Ayurvedic medicament and is entitled to absolute exemption from excise duty under Notification No. 32/89-C.E. The Assistant Collector's order was quashed, and a writ of certiorari was issued. The respondents were directed to permit the petitioner to clear consignments of "Kafbin" without any imposition of excise duty, provided the constituents remain unchanged.