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TMI Blog2003 (2) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... ddha and Homeopathic. Since the claim of the assessees was not accepted by the Central Excise Department, the assessees filed a Civil Suit before the Court of Civil Judge, Senior Division, Thane. On 6-5-82, the ld. Civil Judge rejected the suit holding that the products are Ayurvedic medicinal preparations. The Union of India challenged the judgment before the Hon ble Bombay High Court, which by its judgment dated 27-4-88 [2000 (123) E.L.T. 431 (Bom.)], held that the products in question are Ayurvedic medicines falling under Tariff Entry 14E. However, the High Court declined to hold that the products are entitled to total exemption from payment of excise duty under the exclusion clause in Entry 14E and held that the claim of their being manufacturers of exclusive Ayurvedic medicines cannot be upheld. The Court also held that this point may be specifically agitated and could thereafter be decided either in some other matter or for some other year or for the period subsequent to 1-3-1986. The High Court vacated the injunction granted by the Trial Court against the department restraining it from recovering excise duty from the assessees in respect of these products. Both the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised provisional assessment for the period 1-7-97 to 31-3-2000 and demanded duty of Rs. 16,65,20,401/-, confirmed the demands raised under the 3 show cause notices, imposed penalty of Rs. 1,35,00,000/- under Rule 173Q of CER and directed the assessees to keep the Bank Guarantees alive till the amounts of duty so assessed provisionally were paid and also directed the assessees to submit relevant information for the period from 1-4-2000 to 31-3-2001 for completion of finalisation of the provisional assessment. 4. Aggrieved by the above mentioned order, the assessees filed an appeal before the lower Appellate Authority who set aside the order of the Dy. Commissioner holding inter alia that the Dy. Commissioner s order was against the judgment of the Hon ble Bombay High Court holding that the products in question were Ayurvedic medicine and also holding that the products in dispute fell for classification under CET sub-heading 3003.31, after noting that the claim of the assessees that the products were manufactured exclusively in accordance with the formulae described in the authoritative text books on Ayurveda was not controverted by any evidence to the contrary produced by the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actitioner for treatment of specific diseases or condition. 7. We find that this case has a chequered history. In August, 1974, show cause notice alleging short levy of duty on Vicco Vajradanti during the period 1-3-1974 to 30-6-74 on account of alleged misdeclaration of price was issued and the notice was adjudicated by the order dated 24-3-1975 holding that no deduction was permissible for transport charges, sales tax etc. The assessees appeal against this order was partly allowed by holding that sales tax, if included in the price, should be excluded for the purpose of assessing the price. The Revision Petition filed by the assessees was disposed of by order dated 14-6-1976 wherein, it was held that the transaction between the manufacturer and its sole selling agent was not at arms length. In the meanwhile, in or about September, 1975, the assessees started contending that no excise duty was payable in respect of Vicco Vajradanti as it did not fall under Tariff Item 14FF of the Schedule to the erstwhile Central Excise Tariff (duty had been paid under this Tariff Item). The Revenue recovered excise duty under Tariff Item 14FF from October, 1975 onwards. In July, 1976, the ases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are medicines and further that they are Ayurvedic medicines. In this respect even the first two witnesses who were examined on behalf of the Defendants were ultimately forced, much against their inclination, to concede that these products were prescribed by doctors and sold by them under doctor s prescriptions. The third witness examined on behalf of the Defendants has not carried the matter any further and her evidence is almost totally useless as far as these proceedings are concerned. In addition to this, we have the classifications made by various Governmental Authorities including the Sales-Tax Commissioner accepting the status of the two products as Ayurvedic medicines. Last but not the least we have unshaken testimony of P.W.11 Dr. Antarkar, admittedly an expert on Ayurvedic medicine. There is over-whelming evidence, therefore, on the record which is almost one sided to establish that the two products under consideration must be regarded as Ayurvedic medicines although they may also be used as tooth- paste and are used as cosmetic cream. 9. The Court held that there was overwhelming fresh evidence to enable to conclude definitely that these are products which are rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The stand of the Revenue is that Ayurvedic medicines are excluded from tariff item No. 14E and are classifiable under tariff item 68 of the erstwhile Central Excise Tariff and entitled to full exemption under serial No. 21 of Notification No. 234/82-C.E., dated 1st November, 1982, a position which the appellants accept. 4. The question of the refund of the amounts paid would depend on whether the amounts were passed on to the purchasers or not. The consequential relief, if any, shall therefore, be subject to the provisions of Section 11B of the Central Excises and Salt Act, 1944 as amended by Act 40 of 1991. 5. In terms of the compromise, we affirm the judgment of the Bombay High Court dated 27th April, 1988, subject to the modifications indicated above. The Union of India had also filed Special Leave Petition No. 1918/89 against the Bombay High Court judgment insofar as it was against them and the SLP was dismissed as time barred [2001 (127) E.L.T. A105 (S.C.)]. In 1999, UOI filed an inter-locutary application before the Supreme Court for clarification that its order dated 19-4-93 would not affect the classification of the products in dispute in terms of the CETA, 1985 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Court also laid down clear guidelines on classification of such products, holding that while classifying various products, resort should not be had to be 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. In this context this Hon ble Court held : 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 it 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, therefore, the appellant was not entitled to the benefit of the exemption notification. Having heard the learned Counsel at length and having perused the line of reasoning, adopted by the Tribunal with which we are in general agreement, we see no reason to interfere with the conclusion reached by the Tribunal and, therefore, we dismiss t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the order dated 19-4-1993 was passed on the basis of a consent memo without this Hon ble Court going into the merits of the rival contentions of the parties. Earlier when Show Cause Notices were issued to the Appellants, the Appellants, had filed contempt petition before this Hon ble Court. This Hon ble Court had dismissed the contempt petition by an order dated 16-9-1996 on the ground that no order contrary to the judgment of this Hon ble Court dated 19-4-1993 has been passed. It is in these circumstances that the Applicant most humbly and respectfully crave leave for the following prayers and direction :- P R A Y E R : It is therefore most humbly and respectfully prayed that this Hon ble Court may be pleased to - (i) Clarify the order of this Hon ble Court dated 19-4-1993 will not affect the classification of the subject goods in terms of Central Excise Tariff Act, 1985; (ii) Direct the Adjudication of the Show Cause Notices issued to the Appellants relating to classification of the subject goods in accordance with law; and (iii) Direct the classification of the subject in question in accordance with the laid down by this Hon ble Court in 1996 (8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the ingredients added have no therapeutic values. This aspect has not been controverted. Therefore, it only remains for us to see whether the addition of inert ingredients other than those prescribed in the Authoritative Text Books, will lake the products out of the coverage of CET sub-heading 3003.31. The respondents have shown that the ingredients of Vicco Vajradanti paste and powder are as - Babul, Bakul, Jamhbul, Lavang, Manjistha, Bor, Acrod, Akkal Kadha, Jesthamadh, Ajwan, Dalchini, Khair, Patang, Harada, Vajradanti, Anant Mool, Amala, Behada, Kavab-Chini and Maifal. They have stated that Vicco is the house mark, whereas Vajradanti is the generic name found in the Authoritative Text Books as one of the ingredients. Similarly, they have stated that Vicco Turmeric cream is manufactured from turmeric and sandalwood oil. Since turmeric is the basic ingredient or the therapeutic ingredient, they have used the generic name Turmeric for this product. 12. Regarding addition of other substance, it has been clarified by CBEC Circular No. 196/30/96-CX., dated 3-4-96 that - the benefit of exemption under Sl. No. 3 of Notification No. 75/94-C.E. should not be denied to ayurved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Heading 3003.10, which alternate classification, according to Revenue, can be considered in the light of the Apex Court s decisions in the case of Voltas Ltd. v. CC, Bombay [1997 (91) E.L.T. 261 (S.C.)] and National Thermal Power Co. Ltd. v. Commissioner of Income-Tax [1998 (99) E.L.T. 200 (S.C.)]. 16. In the result, we uphold the impugned order of the Commissioner (Appeals) and reject the appeal of the Revenue. 17. Cross-objection is also disposed of in the above terms. 18. [Assent per : J.H. Joglekar, Member (T)]. - While agreeing with the orders of the Member (Judicial), I would only deal with the plea made by Shri Mondal that the products be classified under Heading 3003.10. He cites two judgments referred to in Para 15 of the order of the Member (Judicial). It is his submission that Tribunals are empowered and required to pronounce upon classification, which was initially not claimed by either side. 19. We have seen the judgment in the case of Voltas Ltd. (supra). The Tribunal having arrived at the conclusion that Heading 84.18(1) was more appropriate; still upheld the Revenue s classification of the same goods under Heading 84.18(2). The Hon ble Supreme Court in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the Revenue on these counts, the appropriate order for the Tribunal to have passed was to have set aside the demand and left it open to the Revenue to proceed against the appellants, as permissible under the law. The appellants would then have had the opportunity of meeting the precise case made out by the Revenue. In the result, the appeals are allowed and the judgments and orders of the Tribunal are set aside. It shall be open to the Revenue to proceed against the appellants, as permitted by the law, upon the basis set down in the judgment and order of the Tribunal. No order as to costs. 24. In the case of Warner Hindustan Ltd. v. CCE, Hyderabad [1999 (113) E.L.T. 24] the context was of classification of Halls Ice Mint tablets . The assessee s classification under Heading 3003.30 was challenged vide show cause notice alleging classification under Heading 3003.19. The Revenue before the Tribunal for the first time took the stand that the correct classification for the tablet was under Heading 17.04. The Tribunal accepted this classification. The Supreme Court set aside the judgment of the Tribunal holding that it was impermissible for the Tribunal to consider a case tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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