2009 (4) TMI 259 - AT - Central Excise

Classification of product Shahicool herbal sharbat - labels of product claim the product Shahicool Herbal Sharbat as an Ayurvedic Proprietary Medicine and not as a beverage - product Shahicool herbal sharbat was considered by the licensing authority i.e., Government of Andhra Pradesh, Indian Medicines and Homoeopathy Department, as Ayurvedic Proprietary Medicine - all the ingredients find mention in Bhavprakash a book of Ayuvedic Medicine. held that product is an Ayurvedic P & P Medicament and classifiable under Chapter 3003.39 of CET

Summary

Issues Involved:
1. Classification of the product "Shahicool herbal sharbat" as Ayurvedic Proprietary Medicine under Chapter Sub-heading No. 3003.39 or as a non-ayurvedic product under Chapter Sub-heading Nos. 2108.20 and 2106.9011.

Issue-wise Detailed Analysis:

1. Classification of "Shahicool herbal sharbat":

Background and Arguments:
The primary issue in these appeals is the classification of "Shahicool herbal sharbat" manufactured by the assessees on loan license basis for M/s. Himalaya Drug Co. Pvt. Ltd. The assessees classified the product under Chapter Sub-heading No. 3003.39 as Ayurvedic Proprietary Medicine and paid Central Excise duty at the rate of 16%. However, the Revenue contended that the product should be classified under Chapter Sub-heading Nos. 2108.20 and 2106.9011, arguing that it is not an ayurvedic medicament.

The learned Chartered Accountant for the appellants argued that the product's ingredients are mentioned in authoritative Ayurvedic books and should thus be considered Ayurvedic medicaments. He cited several case laws, including decisions from the Hon'ble Supreme Court, to support this claim. The ingredients listed include Sariva, Sunthi, Ushira, Shtapushpa, Rakta Chandana, and Satapatri, all of which are recognized in Ayurvedic texts.

The learned JCDR, representing the Revenue, argued that the product is essentially a sharbat or beverage and not an Ayurvedic medicament. She referred to detailed findings by the Adjudicating Authority and cited various decisions from the Hon'ble Supreme Court and Tribunals to support the Revenue's stance.

Tribunal's Findings:
The Tribunal considered the submissions and reviewed the records. It noted that the licensing authority, i.e., Director of Indian Systems of Medicine and Homeopathy, Bangalore, had issued a license for the product based on its Ayurvedic formula. The Tribunal also examined the product label, which claimed "Shahicool Herbal Sharbat" as an "Ayurvedic Proprietary Medicine" and not as a beverage. The ingredients listed on the label matched those mentioned in the authoritative Ayurvedic book 'Bhavprakash'.

Supreme Court Precedent:
The Tribunal referred to the recent decision of the Hon'ble Supreme Court in the case of Ishaan Research Lab (P) Ltd., which dealt with a similar issue of classifying products with Ayurvedic ingredients. The Supreme Court had held that products containing Ayurvedic ingredients and produced under a drugs license should be classified as Ayurvedic medicines, even if they could also be used cosmetically.

Conclusion:
Based on the Supreme Court's judgment and the evidence presented, the Tribunal concluded that "Shahicool herbal sharbat" should be classified as an Ayurvedic Proprietary Medicine under Chapter Sub-heading No. 3003.39. The Tribunal found that the issue was squarely covered in favor of the assessee by the Supreme Court's decision.

Final Decision:
The appeals filed by the assessees were allowed, and the appeals filed by the Revenue were rejected. The Tribunal pronounced this decision in open court on 1-4-2009.