2009 (5) TMI 194 - AT - Central Excise

Dispute pertaining to the classification of the products namely Brahmi Amla Oil and Ayur natural hair wash cosmetics vs. medicaments - it is the contention of the Department that the products are cosmetics, the assessee insists the same to be ayurvedic medicines. - the assessee was called upon as to why the duty should not be confirmed by classifying the products to be cosmetics, and therefore classifiable under tariff entry No. 3305.10 and not under tariff entry No. 3003.31 as claimed by the assessee. - It is settled law that in such cases the twin test approved by the Apex Court in the recent decision in CCE, Nagpur v. Shree Baidyanath Ayurved Bhawan Ltd., reported in 2009 - TMI - 33000 - SUPREME COURT has to be applied and followed. - authorities have not applied their mind to the twin test as approved by the Apex Court matter remanded to the adjudicating authority to decide the issue of classification afresh by applying the twin test - the burden regarding the proof pertaining to the classification of the product can be discharged by the Department not only by producing evidence by the Department itself but also by relying upon the evidence produced by the assessee

Summary

Issues:
Classification of products Brahmi Amla Oil and Ayur natural hair wash - Whether cosmetics or Ayurvedic medicines.

Analysis:
The judgment involves the classification of products Brahmi Amla Oil and Ayur natural hair wash as either cosmetics or Ayurvedic medicines. The appeals arose from a common order passed by the Commissioner (Appeals) regarding the classification of the products. The Department issued show cause notices to the assessee questioning the classification of the products under tariff entries. The appeals were filed by the assessee against the orders passed by the adjudicating authority, which classified the products as cosmetics. The Department contended that the products should be classified as cosmetics under tariff entry No. 3305.10, while the assessee argued that the products were Ayurvedic medicines. The key issue revolved around the interpretation of the tariff entries and the evidence presented by both parties regarding the nature of the products.

The Tribunal referred to various legal precedents and emphasized the twin test approved by the Apex Court to determine the classification of products as either medicaments or cosmetics. The first part of the test involves the common parlance test, where the consumer perception of the product as a medicament is crucial. The second part requires examining whether the ingredients are mentioned in authoritative textbooks on Ayurveda. The Tribunal highlighted the significance of consumer perception in classifying products and the need to apply the twin test as established by legal precedents.

The Tribunal criticized the lower authorities for not applying the twin test while classifying the products and failing to consider the consumer perception aspect. It noted that the evidence presented by the assessee, including the certificates under the Drugs and Cosmetics Act, supported the claim that the products were Ayurvedic medicines. The Tribunal stressed the importance of applying the legal principles laid down by the Apex Court in similar cases to determine the classification of the products accurately.

In conclusion, the Tribunal set aside the orders of the lower authorities and remanded the matter to the adjudicating authority for a fresh decision. It directed the authority to apply the twin test and consider all evidence presented by both parties before making a classification decision. The Tribunal clarified the concept of burden of proof in classification matters, stating that the Department could rely on evidence produced by the assessee to discharge its burden. The Tribunal emphasized the need for a thorough analysis of all evidence to arrive at a correct classification decision within a specified timeframe.