2003 (1) TMI 152 - AT - Central Excise

Issues Involved:
1. Classification of 'Wipro Shikakai Herbal Powder' under Central Excise Tariff.
2. Entitlement to the benefit of Notification No. 9/93.
3. Consideration of product as Ayurvedic medicine versus cosmetic.
4. Applicability of Chapter notes 2 and 6 of Chapter 33 of Central Excise Tariff Act.
5. Relevance of previous judgments and decisions by the Tribunal and Supreme Court.

Issue-Wise Detailed Analysis:

1. Classification of 'Wipro Shikakai Herbal Powder' under Central Excise Tariff:
The primary issue in this case was whether 'Wipro Shikakai Herbal Powder' should be classified under Chapter sub-heading 3003.30 as claimed by the respondent, or under Chapter sub-heading 3305.90 as proposed by the Department. The Assistant Commissioner had initially classified the product under 3305.90, which was contested by the respondent. The Commissioner (Appeals) later classified it under 3003.30, considering it an Ayurvedic product. However, the Tribunal upheld the Assistant Commissioner's classification under 3305.90, emphasizing that the product is used for hair and makes it beautiful, aligning with the description under Chapter 33.

2. Entitlement to the benefit of Notification No. 9/93:
The classification under Chapter sub-heading 3003.30 would have entitled the respondent to the benefit of Notification No. 9/93. However, since the Tribunal upheld the classification under 3305.90, the benefit of the notification was not applicable. The Tribunal concluded that the product did not meet the criteria for classification under 3003.30 and thus was not entitled to the benefits under Notification No. 9/93.

3. Consideration of product as Ayurvedic medicine versus cosmetic:
The respondent argued that the product was considered an Ayurvedic product by the Food and Drug Administration, Maharashtra State, and thus should be classified accordingly. They emphasized that the product was a combination of natural ingredients and not merely a cosmetic. However, the Tribunal noted that the product's primary use was for hair beautification and cleansing, which aligned more with cosmetic products under Chapter 33. The Tribunal also referenced the absence of specific medical properties or curative claims in the product's literature and packaging.

4. Applicability of Chapter notes 2 and 6 of Chapter 33 of Central Excise Tariff Act:
Chapter Note 2 of Chapter 33 states that products suitable for use as cosmetics or toilet preparations, even if they contain subsidiary pharmaceutical or antiseptic constituents, should be classified under headings 33.03 to 33.07. Chapter Note 6 specifies that conversion of powder into tablets, labeling, repacking, etc., should be construed as 'manufacture.' The Tribunal applied these notes to conclude that the herbal Shikakai powder, sold in unit packings with labels indicating use for hair beautification, fell under Heading 33.05.

5. Relevance of previous judgments and decisions by the Tribunal and Supreme Court:
The Tribunal referred to several previous judgments, including B.P.L. Pharmaceuticals Pvt. Ltd. v. CCE and Henna Exports Corporation v. CCE. Although the Supreme Court had reversed the Tribunal's decision in the B.P.L. Pharmaceuticals case, the Tribunal distinguished the present case based on factual differences. The Tribunal found the judgment in the case of Vasu Pharmaceuticals v. CCE more applicable, where similar products were classified under Chapter 33. The Tribunal emphasized the product's market presentation and usage, aligning it with cosmetic products rather than Ayurvedic medicines.

Conclusion:
The Tribunal upheld the classification of 'Wipro Shikakai Herbal Powder' under Chapter sub-heading 3305.90, reversing the Commissioner (Appeals)'s decision. Consequently, the product was not entitled to the benefit of Notification No. 9/93. The Tribunal's decision was based on the product's primary use for hair beautification, the applicability of Chapter notes 2 and 6 of Chapter 33, and relevant precedents. The appeal by the Department was allowed.

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