Classification of Products under the Central Excise Tariff Act, 1985, which are claimed by the manufacturers as Ayurvedic medicines. - regarding. - Central Excise - 333/49/97-CX

Circular No. 333/49/97-CX dated 10/9/97 F.No. 102/6/97-CX.3 Government of India Ministry of Finance Department of Revenue Central Board of Excise Customs, New Delhi Subject: Classification of Products under the Central Excise Tariff Act, 1985, which are claimed by the manufacturers as Ayurvedic medicines. - regarding.- There have been disputes arising in the classification of products under the Central Excise Tariff Act, 1985, which are being claimed by the manufacturers as Ayurvedic medicines, and as per the contention of the department the same were cosmetics/ toilet requisites falling under Chapter 33 of the Central Excise Tariff Act, 1985. 2. There are number of judgements on the issue which have laid down certain criteria for the classification of a product as an ayurvedic medicine or as a cosmetic/ toilet requisite. 3. The Hon'ble Supreme Court of India in its judgement in the case of Shri Baidyanath Ayurved Bhavan Limited Vs. CCE, Nagpur [1996 983) ELT 492(SC)] has stated that "The Tribunal rightly points out that in interpreting statutes like the Excise Act the primary object of which is to raise revenue and for which purpose various products are differently classified, resort should not be had to the scientific and technical meaning of the terms and expressions used but to their popular meaning, that is to say, the meaning attached to them by those using the product. It is for this reason that the Tribunal came to the conclusion that scientific and technical meanings would not advance the case of the appellants if the same runs counter to how the product is understood in popular parlance. That is why the Tribunal observed in Paragraph 86 of the judgement as under: So certificates and affidavits given by the Vaidyas do not advance the cases of Shri Baid yanath Ayurved Bhavan Limited in the absence of any evidence on record to show and prove that the common man who uses this Dant Manjan daily to clean his teeth considers this Dant Manjan as a medicine and not a toilet requisite". It is this line of reasoning with which we are in agreement. The Tribunal rejected the claim of the appellant holding that ordinarily a medicine is prescribed by a Medical Practitioner and its is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes. We are, therefore, of the opinion that the Tribunal applied the correct principles in concluding that the product in question was not a medicinal preparation ('Ayurvedic') and, there fore, the appellant was not entitled to the benefit of the exemption notification." 4. The Hon'ble Tribunal in the case of M/s. Alpine Industries Vs. CCE, Delhi [1997(92) ELT 53 (Trib)] have stated that "that fact of manufacture of an item under licence under the Drugs Cosmetics Act is no guarantee that it is a medicament". 5. The Hon'ble Tribunal in the case of CCE, Mumbai Vs. M/s. Muller Phipps Ltd. have stated, while holding that Johnson Prickly Heat Powder was a cosmetic classifiable under Chapter 33, that, "Product is available in the market, does not required any prescription of a Doctor and the people generally use it to prevent prickly heat and therefore in the circumstances the curative and prophylactic uses are subsidiary." 6.Even in the case of M/s. Richardson Hindustan Limited, the Hon'ble CEGAT vide judgement date 10.02.1988 [1988 (35) ELT 424 (Trib)] has stated while classifying Vicks Vaporub as an ayurvedic medicine; "that there is no definition of ayurvedic medicaments in the Central Excise and Salt Act or in the Central Excise Tariff and although ayurvedic medicines have been defined in Section 3(a0 of the Drugs and Cosmetics Act the same cannot be applied for the purpose of classification of a product for central excise duty under the Central Excise Salt Act and the Central Excise Tariff Act, in view of judicial pronouncements indicated earlier. It is now a settled principle of law that when there is no definition of any word in the in the relevant statute, the word must be construed in the popular sense i.e., the meaning as understood by the people conversant therewith. 7. Chapter Note 2 to 33 states that "headings 33.03 to 33.07 apply inter alia , to products, whether or not mixed, suitable for use as goods of these headings and put up in packing with labels, literature and other indication that they are for use as cosmetics or other toilet preparations or put up in a from clearly specialised for such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents or are held out as having subsidiary curative or prophylactic value". 8. Many of the disputes appear to be arising because the manufacturers of the products have a drug licence issued to them by the Drug Control Authorities base upon the presence of certain constituents and certain subsidiary curative and prophylactic properties. In view of the Chapter Note 2 to Chapter 33, there clearly will exist a category of products which may be granted a drug licence based on certain subsidiary pharmaceutical or antiseptic constituents or having subsidiary curative or prophylactic value which would, however, be classifiable under Chapter 33 despite the drug licence, in view of the Chapter Note mentioned above. 9. I am directed to state that in view of the judgements and facts discussed above it has been decided that all assessments of products claimed to be ayurvedic medicaments under Chapter 30 should be re-examined by the Commissioners of Central Excise whether manufactured under a drug licence or not so as to redetermine their classification under the Central Excise Tariff Act, 1985. For the purpose the following facts may be kept in view: a. The perception of the product in popular parlance, whether as medicaments or cosmetics/ toilet requisite. the advertising, marketing and the manner in which the product is put up may also be taken into consideration. b. It may be ascertained that the products claimed to be medicaments, should have substantial therapeutic claims which are not subsidiary in nature and the mode of prescription and use should be similar to that of a medicine/ drug. It may be noted that medicaments are normally prescribed in doses, for a limited time, and for specific conditions/ ailments. c. The drug licence may be used as a guide for the classification of a product but not as the determining factor. The classification of a product under Chapter 30 or Chapter 33 may be done as per the Rules of interpretation of the Central Excise Tariff Act, 1985 read with Chapter Note 1 (d) to Chapter 30 and Chapter Note 2 to Chapter 33 and various judgments mentioned above. 10. This Circular supersedes all previous circulars/ instructions issued by the Board regarding classification of any product claimed as Ayurvedic Medicine except in cases where there are specific orders regarding classification of certain products from Courts/ Tribunal which are in force. A list of all products claimed as ayurvedic medicines in your commissionerates may be prepared and the classification of these products may be reviewed in the light of the above instructions. 11. You are also requested to send a report on the action taken to the Board by 15th October, 1997 positively. Sd/- (Srinivas Tata) Under Secretary to the Govt. of India