2004 (8) TMI 163 - AT - Central Excise

Summary

Issues: Classification of products as Ayurvedic medicaments, Use of synthetic ingredients, Extended period of limitation for demanding Central Excise duty

Classification of products as Ayurvedic medicaments:
The appeal involved the classification of products, namely 'Panjon Cough Drops', 'Panjon Balm', and 'Panjon Rub', manufactured by M/s. Panama Chemical Works, as Ayurvedic medicaments. The appellant argued that the ingredients used in their products were approved by the Food and Drugs Authorities of the State of Madhya Pradesh as Ayurvedic Medicines. They contended that the products were prepared in accordance with the Ayurvedic system. The appellant also cited a previous decision by the Madhya Pradesh High Court to support their claim. However, the Department argued that the use of synthetic ingredients in the products disqualified them from being classified as Ayurvedic medicaments. The Department highlighted that synthetic materials could not be equated with the ingredients mentioned in authoritative Ayurvedic texts. The tribunal found that the use of synthetic ingredients, such as synthetic Methyl Salicylate and Menthol, in the products did not align with the requirements for classification as Ayurvedic medicaments. The tribunal held that the products did not meet the criteria set by the Supreme Court and the Larger Bench of the Tribunal for Ayurvedic classification.

Use of synthetic ingredients:
The Department contended that the appellant used synthetic ingredients, such as synthetic Methyl Salicylate and Menthol, in the manufacture of the products, which contradicted the classification as Ayurvedic medicaments. The appellant's argument that the show cause notice did not mention Menthol was dismissed by the tribunal, as the notice specifically alleged the use of synthetic/allopathic ingredients in the products. The tribunal emphasized that the use of synthetic ingredients deviated from the requirements of authoritative Ayurvedic texts. The tribunal referenced a Supreme Court decision to establish the distinction between synthetic and natural materials used in Ayurvedic medicines. It was concluded that the presence of synthetic ingredients rendered the products ineligible for classification as Ayurvedic medicaments.

Extended period of limitation for demanding Central Excise duty:
Regarding the invocability of the extended period of limitation for demanding Central Excise duty, the tribunal noted that the appellant had not disclosed the use of synthetic ingredients to the Department. This non-disclosure was considered a positive act of concealment within the knowledge of the appellants, justifying the application of the extended period of limitation. The tribunal upheld the demand for Central Excise duty and the confiscation of seized goods due to non-entry in statutory records. The redemption fine and penalty imposed were deemed reasonable and upheld by the tribunal. Ultimately, the tribunal rejected the appeal, affirming the decision against the appellants.