2016 (10) TMI 228 - AT - Central Excise

Classification of goods - P&P Ayurvedic Medicine or Cosmetics under Chapter 33? - t these products are used for scalp irritation and loss of hair due to dandruff; for infection for lice and nits in hair; for arresting Hair loss; for washing dry and oily hair, for facial spots and blemishes, for glowing face, for improving dark skin complexion etc. - Held that - the labels annexed to the appeal memorandum indicates that the items manufactured by the appellant are indicated as ayurvedic medicine as per manufacturing licence issued by the Food and Drug Authorities. The content and ingredients of the product also indicate that they contained ayurvedic substances which are recorded in authentic ayurvedic books and instruction and indication for which the items are to be used also indicate that they are for a specific period of use. A plain reading of the said label would indicate that these are to be used as medicine in ayurveda. The issue decided in the case of CCE vs. Ishaan Research Lab (P) Ltd 2008 (9) TMI 4 - SUPREME COURT where it was held that the product is Ayurvedic medicines. The decision in the case of CCE vs. Ciens Laboratories 2013 (8) TMI 467 - SUPREME COURT also followed where it was held that the primary function of these items is care and not cure. Reliance also placed in the decision in the case of CCE vs. Shree Baidyanath Ayurved Bhawan Ltd. 2009 (4) TMI 6 - SUPREME COURT for the proposition that common parlance test continues to be determinative test for classification. Product classified as Ayurvedic medicine - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Classification of product as Ayurvedic Medicine or Cosmetics

Analysis:
- The issue in this case revolves around the classification of the product manufactured by the appellant. The appellant classified the goods as P&P Ayurvedic Medicine, while the Revenue argued that they should be classified as Cosmetics under Chapter 33. Lower authorities deemed the products as Cosmetics due to their usage for various cosmetic purposes like scalp irritation, hair loss, lice treatment, hair washing, facial spots, and skin complexion improvement. The labels on the products did not provide clear usage instructions, leading to the classification as cosmetics by the lower authorities.

- Upon reviewing the labels attached to the appeal memorandum, it was found that the products were labeled as ayurvedic medicine as per the manufacturing license issued by the Food and Drug Authorities. The ingredients and content of the products contained ayurvedic substances mentioned in authentic ayurvedic books, with specific instructions for usage indicating their medicinal nature. The labels clearly indicated that the products were intended for medicinal use in ayurveda.

- The Tribunal noted that the issue at hand was similar to a decision by the apex court in CCE vs. Ishaan Research Lab (P) Ltd. 2008, which favored the appellant's classification as ayurvedic medicine. The Revenue attempted to rely on the decision in CCE vs. Ciens Laboratories 2013 and CCE vs. Shree Baidyanath Ayurved Bhawan Ltd. 2009, arguing that the primary function of the items was care rather than cure and that the common parlance test should determine classification. However, the Tribunal found that the products were indeed ayurvedic medicine based on the labels and the absence of contrary evidence from the Revenue.

- Consequently, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeal in favor of the appellant. The decision was based on the clear indication on the labels, the nature of the products as ayurvedic medicine, and the lack of evidence contradicting the appellant's classification.

- The judgment highlights the importance of proper labeling, ingredients, and usage instructions in determining the classification of products as either Ayurvedic Medicine or Cosmetics, emphasizing the need for clarity and authenticity in such cases.