2005 (4) TMI 57 - SC - Central Excise

Classification of items manufactured by the Appellants i.e. Lal Tail and Janam Ghunti Held that - There is no infirmity in the Order of the Tribunal insofar as it remits the matter back to the original authority for a fresh decision on classification of the product Janam Ghunti . The Tribunal has, correctly held that if Janam Ghunti is an aqueous distillates or aqueous solutions of essential oils it would fall under Chapter 33 even though it may have therapeutic or prophylactic properties. The Appellants have claimed that their product Janam Ghunti is neither a distillate nor a solution but is an extraction. However, this is a matter which requires inquiry into. We approve the finding of the Tribunal that this would require looking into the process of manufacture, the composition of the product and that classification of this product cannot be decided upon without chemical test of the product. As regards Lal Tail in classifying a product the scientific and technical meaning is not to be resorted to. The product must be classifiable according to the popular meaning attached to it by those using the product. As stated above, in this case the Appellants have shown that all the ingredients in the product are those which are mentioned in Ayurvedic Text Books. This by itself may not be sufficient but the Appellants have shown that they have a Drug Controller s Licence for the product and they have also produced evidence by way of prescriptions of Ayurvedic Doctors, who have prescribed these for treatment of rickets. As against this, the Revenue has not made any effort and not produced any evidence that in common parlance the product is not understood as a medicament.Thus the decision of the Tribunal on this aspect cannot be sustained and is accordingly set aside. It is held that the product would be a medicament and classifiable as such under Chapter 30. Appeal partly allowed.

Summary

Issues:
Classification of 'Lal Tail' and 'Janam Ghunti' under relevant tariff headings.

Analysis:
1. Classification of 'Janam Ghunti': The Tribunal remitted the matter back to the original authority for a fresh decision on the classification of 'Janam Ghunti'. The Supreme Court upheld this decision based on Chapter Note 1(c) of Chapter 30, stating that if 'Janam Ghunti' is an aqueous distillate or solution of essential oils, it would fall under Chapter 33, even if it has therapeutic properties. The Court emphasized that the classification requires an inquiry into the manufacturing process, product composition, and chemical testing to determine the appropriate classification.

2. Classification of 'Lal Tail': The Appellants argued that 'Lal Tail' should be classified as a medicament under Chapter 30 due to its ingredients, Ayurvedic properties, and usage supported by prescriptions from Ayurvedic doctors. The Respondents failed to provide evidence to counter this claim. The Tribunal relied on a previous judgment regarding the classification of a similar product and concluded that 'Lal Tail' did not meet the criteria of a medicament as it was not prescribed by medical practitioners for specific ailments and was used regularly without a limited duration. The Supreme Court cited various precedents to establish that the popular understanding of a product as a medicament is crucial for classification, emphasizing that the burden of proof lies with the Revenue to show how consumers perceive the product. As the Revenue failed to demonstrate that 'Lal Tail' was not considered a medicament in common parlance, the Court overturned the Tribunal's decision and classified 'Lal Tail' as a medicament under Chapter 30.

3. Precedents Considered: The judgment referenced several previous cases to establish principles for classifying products as medicaments. These cases emphasized that the scientific and technical meanings should not dictate classification; instead, products should be classified based on how they are understood by consumers. The burden of proof lies with the Revenue to demonstrate the common understanding of the product. The Court reiterated that products with Ayurvedic properties, supported by relevant licenses and prescriptions, can be classified as medicaments based on popular perception.

4. Conclusion: The Appeals were partly successful, with 'Janam Ghunti' classified under Chapter 33 and 'Lal Tail' classified as a medicament under Chapter 30. The Court emphasized the importance of popular understanding in classifying products and highlighted the Revenue's burden to prove the common perception of a product. No costs were awarded in the disposition of the Appeals.