1995 (10) TMI 129 - AT - Central Excise

Summary

Issues Involved
1. Classification of medicated cough drops and throat drops as Ayurvedic medicaments or patent/proprietary medicaments.
2. Applicability and interpretation of the Drugs and Cosmetics Act, 1940, and its rules.
3. Relevance of previous judgments and legal precedents.
4. Examination of the ingredients and manufacturing process.
5. Interpretation of the Central Excise Tariff and its sub-headings.

Detailed Analysis

1. Classification of Medicated Cough Drops and Throat Drops
The primary issue was whether the medicated cough drops and throat drops manufactured by the appellants and marketed under the brand "Vicks" should be classified under sub-heading 3003.10 as patent or proprietary medicaments or under sub-heading 3003.30 as Ayurvedic medicaments. The Collector of Central Excise (Appeals), Hyderabad, confirmed the decision of the Assistant Collector that the goods should be classified under sub-heading 3003.10.

2. Applicability and Interpretation of the Drugs and Cosmetics Act, 1940
The appellants argued that their products were manufactured under a license issued under the Drugs and Cosmetics Act, 1940, for patent or proprietary Ayurvedic medicine. They contended that this license, granted after due consultation with Ayurvedic experts, should be conclusive for classification purposes. However, the Department argued that Ayurvedic medicine must contain ingredients prescribed in recognized Ayurvedic texts and be manufactured according to those formulas. The presence of synthetic ingredients in the products disqualified them from being considered Ayurvedic medicines.

3. Relevance of Previous Judgments and Legal Precedents
The appellants cited several judgments, including those from the Bombay High Court and Madhya Pradesh High Court, to support their claim that the products should be classified as Ayurvedic medicines. They argued that the absence of a statutory definition in the Central Excise Tariff should lead to the application of commercial parlance and the provisions of the Drugs Act. The Department countered with judgments from the Tribunal and the Supreme Court, emphasizing that the presence of synthetic ingredients and deviation from Ayurvedic formulas should lead to classification under sub-heading 3003.10.

4. Examination of the Ingredients and Manufacturing Process
The Tribunal examined the ingredients and manufacturing process of the products. It was established that while some ingredients were known to Ayurveda, the products were not manufactured according to traditional Ayurvedic methods. The Supreme Court's judgment in the Amrutanjan case was considered, which held that the use of certain ingredients known to Ayurveda did not automatically classify a product as non-Ayurvedic. However, the Tribunal noted that the products in question were marketed and manufactured using Western scientific methods, which disqualified them from being considered exclusively Ayurvedic.

5. Interpretation of the Central Excise Tariff and its Sub-headings
The Tribunal analyzed the relevant sub-headings of the Central Excise Tariff. It was concluded that the products could not be classified as Ayurvedic medicaments under sub-heading 3003.30 due to the presence of synthetic ingredients and the manufacturing process. The products were deemed patent or proprietary medicaments under sub-heading 3003.10, as they bore a brand name and did not exclusively adhere to Ayurvedic formulas.

Separate Judgments
- Member (T): Concluded that the products should be classified under Heading 3003.10, emphasizing the presence of synthetic ingredients and deviation from Ayurvedic formulas.
- Vice President: Agreed with the classification under Heading 3003.10, highlighting the lack of evidence for exclusive Ayurvedic preparation and the use of Western methods.
- Member (J): Concurred with both opinions, noting that the products were not manufactured according to Ayurvedic principles and were marketed as allopathic medicines globally.

Final Order
In view of the majority opinion, the products were held to be classified under Tariff Heading 3003.10 as patent and proprietary medicaments, not exclusively Ayurvedic preparations. The appeal was dismissed accordingly.