2002 (8) TMI 151 - AT - Central Excise

Summary

Issues:
Classification of products 'Nenmeni Snana Choornam' and 'Ousadha Thali' as Ayurvedic medicines under Chapter heading 3003.30 or under Chapter headings 3307.30 and 3305.90.

Analysis:
The appeal was directed against an order passed by the Commissioner of Central Excise regarding the classification of products 'Nenmeni Snana Choornam' and 'Ousadha Thali' as Ayurvedic medicines. The dispute revolved around whether these products should be classified under Chapter heading 3003.30, exempt from duty, or under different headings as per the Department's claim. The party argued that both items are Ayurvedic medicaments and should be classified under 3003.30 based on specific criteria outlined in a circular issued by the Revenue in 1991. The circular stated that for a product to be considered an Ayurvedic medicine, it should be known as such in common parlance and have all its ingredients mentioned in authoritative books on Ayurvedic medicines. The Commissioner accepted that the ingredients were indicated in Ayurvedic books but classified the products differently, stating they were not manufactured as per the prescribed formula. However, the party contended that even if not manufactured exclusively according to the formula, the products could still be classified as Ayurvedic medicines under 3003.30, citing a previous Tribunal decision.

The party presented evidence including a Drug license and prescriptions to support their claim that the products were Ayurvedic. The Department argued for classification under different headings, emphasizing that the products were not prescribed by medical practitioners for daily use. They referred to a Supreme Court decision outlining guidelines for classifying goods as medicines, focusing on popular perception and usage. The Department contended that the products did not conform to these guidelines as they were perceived as consumer products rather than medicines.

The Tribunal analyzed the arguments and evidence presented by both sides. They noted that the Commissioner's classification based on labels and pamphlets was no longer valid following a Tribunal decision that Ayurvedic medicaments could still be classified under 3003.30 even if not manufactured exclusively as per the formula. The Tribunal also highlighted the importance of expert opinions, citing a High Court decision that emphasized the validity of expert opinions in classification disputes.

The Tribunal rejected the Department's argument that the products should be considered Ayurvedic products rather than medicines, stating that there was no distinction in classification. They emphasized that once a product had ingredients of Ayurvedic preparation, it could be classified as an Ayurvedic medicament under 3003.30. The Tribunal disregarded the significance of advertisements and labels in determining classification, citing a High Court decision. Ultimately, the Tribunal ruled in favor of the appellants, classifying the items under Chapter 3003.30 as Ayurvedic medicines, granting them relief.