1991 (9) TMI 199 - AT - Central Excise

Issues Involved:
1. Classification of Ayur Shakti and Santalin-D under Central Excise Tariff.
2. Use of synthetic ingredients in Ayurvedic preparations.
3. Applicability of extended period for demand under Section 11A of the Central Excise Act.
4. Validity of certificates from Ayurvedic practitioners.
5. Burden of proof regarding the classification of products.

Detailed Analysis:

1. Classification of Ayur Shakti and Santalin-D under Central Excise Tariff:
The primary issue was whether Ayur Shakti and Santalin-D should be classified under TI 14E of the First Schedule of Central Excise Tariff as Patent or Proprietary (P. or P.) medicines, rather than Ayurvedic medicines. The learned Collector concluded that these products were not exclusively Ayurvedic due to the presence of synthetic ingredients. The Tribunal upheld this classification, noting that the products did not meet the criteria for Ayurvedic drugs as defined in Section 3(a) of the Drugs and Cosmetics Act, 1940, which requires that Ayurvedic drugs be processed and manufactured exclusively according to formulae described in authoritative Ayurvedic texts.

2. Use of Synthetic Ingredients in Ayurvedic Preparations:
The Tribunal examined whether the use of synthetic ingredients like paraffin wax, petroleum jelly, and various other synthetic substances in Ayur Shakti and Santalin-D disqualified them from being classified as Ayurvedic medicines. The Tribunal referenced previous rulings, including Amrutanjan Ltd. v. CCE, which stated that the presence of synthetic ingredients not recognized in Ayurvedic texts would render the product non-Ayurvedic. The Tribunal emphasized that the burden of proof was on the manufacturer to demonstrate that the synthetic ingredients used were recognized in Ayurvedic treatises and established by usage and tradition, which the appellants failed to do.

3. Applicability of Extended Period for Demand under Section 11A of the Central Excise Act:
The Tribunal noted that the learned Collector found no suppression of facts by the assessee and thus, the extended period of five years under the proviso to Section 11A of the Act was not applicable. Consequently, no penalty was imposable under Rule 173Q of the Central Excise Rules, 1944.

4. Validity of Certificates from Ayurvedic Practitioners:
The Tribunal reviewed the certificates provided by several Ayurvedic practitioners, which claimed that Ayur Shakti and Santalin-D were purely Ayurvedic medicines. However, the Tribunal found that these certificates did not refer to any authoritative Ayurvedic texts listed in Schedule I to Section 3(a) of the Drugs and Cosmetics Act, 1940. As such, the certificates were not considered reliable evidence for classifying the products as Ayurvedic.

5. Burden of Proof Regarding the Classification of Products:
The Tribunal reiterated that the initial burden of proof regarding the classification of the products lay with the department, which had been discharged by pointing out the synthetic ingredients. The burden then shifted to the manufacturer to prove that the products were exclusively Ayurvedic, which they failed to do. The Tribunal emphasized that the manufacturer did not provide sufficient evidence to demonstrate that the synthetic ingredients were recognized as Ayurvedic by authoritative texts or established by usage and tradition.

Conclusion:
The Tribunal upheld the classification of Ayur Shakti and Santalin-D under TI 14E as P. or P. medicines, confirming that the products were not exclusively Ayurvedic due to the presence of synthetic ingredients. The appeal was rejected, and the Tribunal found no merit in the arguments presented by the appellants.

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