2003 (4) TMI 102 - SC - Central Excise

CLASSIFICATION BANPHOOL OIL WHETHER AYURVEDIC MEDICAMENT OR PERFUMED HAIR OIL CLASSIFIABLE UNDER SUB-HEADING 3003.30 AS AYURVEDIC MEDICAMENT AND NOT UNDER SUB-HEADING 3305.10 AS PERFUMED HAIR OIL

Summary

Issues Involved:
1. Classification of Banphool Oil as a "perfumed hair oil" or an "Ayurvedic Medicament".
2. Interpretation of relevant Tariff Items and Chapter Notes.
3. Burden of proof regarding the classification of the product.
4. Admissibility and relevance of expert opinions and circulars.

Issue-wise Analysis:

1. Classification of Banphool Oil:
The primary issue in these appeals is whether Banphool Oil should be classified as a "perfumed hair oil" under Tariff Item 3305.10 or as an "Ayurvedic Medicament" under Tariff Item 3003.30. The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) had a split decision, with the majority classifying it as an Ayurvedic Medicament. The Supreme Court agreed with the majority opinion, noting that the product is used for treating various ailments and is registered with the Drug Controller, manufactured under a drug license.

2. Interpretation of Relevant Tariff Items and Chapter Notes:
The Additional Solicitor General argued that Banphool Oil should be classified under Chapter 33, which deals with perfumed hair oils. He cited Chapter Note 1(d) of Chapter 30, which states that preparations under Chapter 33, even with therapeutic properties, remain as toilet preparations. The respondent countered that Chapter 30 covers all types of medicines, and the ingredients of Banphool Oil are listed in Ayurvedic texts. The Supreme Court emphasized that the primary criterion for classification is the product's use by consumers, which in this case, is for medicinal purposes.

3. Burden of Proof:
The Court reiterated that the burden of proof to show that a product falls within a particular Tariff Item is on the revenue. The revenue failed to provide evidence that Banphool Oil is understood by consumers as a hair oil rather than a medicament. The Court noted that the product's label indicates its medicinal uses and dosages, supporting its classification as an Ayurvedic Medicament.

4. Admissibility and Relevance of Expert Opinions and Circulars:
The respondent highlighted a Board Circular dated 5th December 1991, which directs that in case of doubt regarding the classification of a product as an Ayurvedic Medicament, the matter should be referred to the State Drug Licensing Authority. The Drug Controller had opined that Banphool Oil is an Ayurvedic preparation. The Court held that the revenue should have followed this circular and referred the matter to the Adviser, Ayurveda, if doubts persisted.

Conclusion:
The Supreme Court upheld the majority opinion of the Tribunal, classifying Banphool Oil as an Ayurvedic Medicament under Tariff Item 3003.30. The appeals were dismissed, with no order as to costs. The Court emphasized the importance of consumer perception and expert opinions in determining the classification of products under the Excise Act.