2018 (3) TMI 17 - AT - Central Excise

Classification of goods - Rovan Poshak Tail - Rooh-e-Gulab Sharbat - respondent classified both items under Tariff Item 3004 9011, as medicaments and availed the benefit of area based exemption under N/N. 49/2003-CE dated 10/06/2003 - SCN were issued alleging that the sharbat is rightly classifiable under CETH 21069011 as food preparations and tail , under 3305 9019 as preparations for use on the hair - Held that - Both the products under dispute have medicinal properties as well as other common place properties. The classification of such items is required to be made in the light of the pronouncement of Hon ble Supreme Court in the case of Naturalle Health Products (P) Ltd. 2003 (11) TMI 69 - SUPREME COURT OF INDIA as well as Puma Ayurvedic Herbal (P) Ltd. 2006 (3) TMI 141 - SUPREME COURT OF INDIA . In respect of the sharbat he has recorded that it contains various ingredients such as Gulab Ark, SITA (sugar) & Jal (water) which are mentioned in various Ayurvedic Authoritative Texts as having therapeutic use. It is also mentioned in the containers of sharbat that it is to be had as per the dozes of 50ml in a glass of 250 ml of water or as directed by the physician - in the container for tail there is a clear disclaim to the effect that it is not a cosmetic and toiletry preparation but is an Ayurvedic Medicine for curative and preventive therapy. It is also on record that both the products have approval granted by State Drug Licensing Authority and also the Directorate of Ayurvedic and Unani Services, certifying the products to be Ayurvedic Proprietary Medicine. Appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of products under Central Excise Tariff - Chapter 30 vs. Chapter 21 and Chapter 33

Analysis:
The appeal before the Appellate Tribunal CESTAT New Delhi concerned the classification of two products, "Rovan Poshak Tail" and "Rooh-e-Gulab Sharbat," manufactured by the respondent under the Central Excise Tariff. The respondent classified both items under Tariff Item 3004 9011, claiming the benefit of an area-based exemption under Notification No. 49/2003-CE. However, the Revenue contended that the products were wrongly classified as medicaments under Chapter 30 and should be classified under Chapter 21 and Chapter 33, resulting in the denial of the exemption and the imposition of Central Excise duty, interest, and penalties.

The Revenue argued that the products should be classified based on the Sections and Chapters of the Central Excise Tariff, highlighting Chapter Note 1 (e) of Chapter 30, which specifies that certain preparations, even with therapeutic properties, should be classified in Chapter 33. On the other hand, the respondent justified the classification under Chapter 30 as Ayurvedic Medicines, citing ingredients from authoritative Ayurvedic Texts and therapeutic properties. The respondent also relied on case laws and the "twin test" established by the Supreme Court in previous judgments.

The Tribunal considered the arguments from both sides and examined the properties of the disputed products in light of the "twin test" criteria laid down by the Supreme Court. Regarding the "Rooh-e-Gulab Sharbat," the Tribunal agreed with the Commissioner (Appeals) that it contained therapeutic ingredients mentioned in Ayurvedic Texts, thus classifying it under Chapter 3003 as a medicament. Similarly, for the "Rovan Poshak Tail," the Tribunal noted the presence of Ayurvedic ingredients, disclaimers on the container, and approvals from regulatory authorities, leading to the conclusion that it was an Ayurvedic Medicine for curative and preventive therapy.

In conclusion, the Tribunal upheld the impugned order of the Commissioner (Appeals), dismissing the appeal filed by the Revenue and affirming the classification of the products under Chapter 3003 as Ayurvedic Medicines. The judgment emphasized the importance of satisfying the "twin test" criteria and considering ingredients from authoritative texts for classifying products as Ayurvedic medicaments under the Central Excise Tariff.