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TMI Blog1985 (6) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... able to duty by virtue of the express exclusion in the description of the Tariff Item itself in favour of medicines which are exclusively Ayurvedic, Unani Sidha or Homoeopathic. 3. Immediately after March 1, 1975, when a residuary item being Item No. 68 came to be introduced into the Central Excise Tariff Schedule for All other goods, not elsewhere specified... the Excise Department took the view that Ayurvedic Medicines even though they were specified under Tariff Item 14E (Albeit for the purpose only of exclusion) were now classifiable under Tariff Item 68. Pursuant to this view the appellant submitted a classification list in respect of Ayurvedic medicines manufactured by it (including Dant Manjan Lal) and started paying duty leviable thereon under Tariff Item 68, C.E.T. in accordance with the prescribed procedure. 4. On 1st March, 1978, the Government of India issued an exemption Notification, being Notification No. 62/78 whereby the total duty exemption hitherto provided under Tariff Item 68 on goods specified in the Schedule appended to Notification 55/75-C.E., dated 1-3-1975 was extended to all drugs, medicines, pharmaceuticals and drug intermediates, not elsewhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be classified under Tariff Item 14-E because they contain allopathic ingredients and thus not being purely Ayurvedic in character be charged to duty at the Tariff rate under Tariff Item 14-E CET? 9. In response to the show cause notice Shree Baidyanath Ayurved Bhawan Limited submitted their written reply on 15-3-1980 as under : ,- (i) Dant Manjan Lal , Dant Manjan Black and Dant Manjan White are all Ayurvedic medicines containing Ayurvedic ingredients and manufactured under their Ayurvedic licence No. 31/76. (ii) That Ayurvedic drugs and medicines are completely exempted from the purview of Tariff Item 68. (iii) That Menthol is included in many Ayurvedic medicines and so its inclusion does not change the Ayurvedic character of the medicine like Himalaya Surma, Moti Surma, Netra Mrita Surma, and Agnimukh Churan. All these products are also manufactured under Ayurvedic Licence No. 31/77 and that menthol is commonly known in Ayurved as pepperment which is an Ayurvedic ingredient. (iv) That Atualshaktidata contains faulad burada (steel) which is finally processed and added. This product is also manufactured under Ayurvedic Licence No. 31/77. (v) Citric aci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature cannot take away the medicines from Ayurvedic group so long as the products are by large Ayurvedic in nature. Since all the products of the appellant in dispute are medicinal preparations, they are correctly classifiable under Item 14-E CET. However, this tariff itself specifically excludes Ayurvedic and other types of medicines from the levy of excise duty. 15. As the show cause notice was with regard to 14 items only and that Assistant Collector classified 150 items, the Appellate Collector held that only 14 items were to be classified and classification done in respect to those products not mentioned in the show cause notice were held invalid on the principles of natural justice. 16. During the course of the proceedings before the Appellate Collector of Central Excise, Calcutta, regarding the classification of Baidyanath Dant Manjan and Surmas etc. the Preventive Staff of the Central Excise Department visited the premises of Shree Baidyanath Ayurved Bhawan Limited on 3-4-1981 and found that the factory had discontinued payment of duty on Dant Manjan Lal since March, 1978 on the plea that this product is an Ayurvedic Medicine which does not attract duty and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Lal manufactured and cleared by them under Rule 9(2) of the Central Excise Rules read with Section 11-A of the Central Excises and Salt Act, 1944. He also imposed upon Shree Baidyanath Ayurved Bhawan Ltd. a penalty of ₹ 10,000/-under Rule 173-Q of the Central Excise Rules. 19. Aggrieved by the said order passed by the Collector of Central Excise, Patna, on 26-8-1982, Shree Baidyanath Ayurved Bhawan Ltd. filed an appeal before this Tribunal which was registered as Appeal No. E-248/82-C. 20. The Collector of Central Excise, Patna, challenged the order passed by the Appellate Collector of Central Excise, Calcutta, being No. 372/BR/82, dated 13-10-1982, who had classified these Dant Manjansunder Tariff Item 68, CET and exempted under Notification No. 55/75, dated 1-3-1975 as amended by Notification No. 62/78, dated 1-3-1978. The classification regarding the Surma Group of medicines under 14-E (CET) but excluded being exclusively Ayurvedic Drug was also challenged in the appeal. That appeal was registered as Appeal No. ED (SB) 106/83-C. 21. As both these appeals i.e. ED (SB) 248/82-C titled Shree Baidyanath Ayurved Bhawan Limited v. Collector of Central Excise. Patna, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ayurvedic Medicines. She pointed out that this symbol is a registered trade mark of Shree Baidyanath Ayurved Bhawan Ltd. According to her, it may be a drug or medicine but not exclusively an Ayurvedic Medicine as defined in Section 3(a) of the Drugs and Cosmetics Act, 1940. The definition of Ayurvedic drug as given in Section 3(a) ibid cannot be ignored by the fact that these Manjans, are being manufactured under a drug licence issued under the Drugs and Cosmetics Rules and that the Vaids and Hakims describe them as Ayurvedic Drugs, They may be drugs but not particularly Ayurvedic drug as per this definition and hence cannot be excluded from Tariff Item 14-E, (CET). 27. She also drew our attention towards the definition of Patent or Proprietary Medicines as given in Section 3(h) of the Drugs and Cosmetics Act, 1940 (as amended) which, according to her, is in pari materia with the definition given in Explanation I appended to Tariff Item 14-E, CET. As per this definition Patent or Proprietary Medicine means a drug which is remedy or prescription presented in a form ready for internal or external administration of human beings or animals and which is not included in the edition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the First Schedule of the Drugs and Cosmetics Act, 1940 does not make the Manjan i.e. the tooth powder as an Ayurvedic medicine. These Dant Manjans are not available in a medicine shop and no prescription is needed from a doctor for its use. They are available even in a grocery shop. How these Manjans can be treated as Ayurvedic medicine in common parlance is not understandable, argued Mrs. Zutshi. Dant Manjan is an article of every day use meant for rubbing and cleaning teeth as an indispensable daily hygiene intended to protect the teeth and preserve them in good condition. She cited a judgment of the Supreme Court in the case of M/s. Sarin Chemicals Laboratory v. Commissioner of Sales Tax (AIR 1971 SC 65) in which it has been held that tooth powder in common parlance is considered as a toilet article. She further argued that Shree Baidyanath Ayurved Bhawan Limited stopped paying duty on the product from March, 1978 unilaterally. They should have filed a declaration while seeking exemption under the notification, which they did not do intentionally just to evade payment of duty. Besides this, they did not declare an important ingredient in the manufacture of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department now cannot .change its stand from Tariff Item 68 to 14-E (CET) as it has neither filed cross objections nor filed any appeal pleading that the proper classification of the product is under Tariff Item 14-E (CET) as patent and proprietary medicine . The only challenge made by the department was that Baidyanath Dant Manjans were not entitled to the benefit of exemption Notification No. 62/78 as they were not Ayurvedic drug or medicine. 34. He cited a decision of the Supreme Court, namely State of Kerala v. M/s. Vijay Stores [1979 (1) SCR-538] in support of his contention that where a party has neither preferred his own appeal nor filed cross objections in the appeal preferred by the appellant, he must be deemed to be satisfied with the decision of the lower authority. Two more decisions, one of Gujarat High Court in the case of F.Y. Khambhaty v. Commissioner of Income Tax, Gujarat (61 ITR 30) and the other of Bombay High Court in the case of Motor Union Insurance Co. v. C.I.T. (131 ITR 272) were cited by Shri Engineer in support of his contention. 35. According to Shri Engineer, a revenue authority can change his earlier stand on cogent reasons namely : - (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the appellant company and the Government of India, Ministry of Health Family Welfare to show that it is under the active consideration of the Government of India to include the book titled Ayurveda Sar Sangraha in the First Schedule to the Drugs and Cosmetics Act, 1940. 40. Shri Engineer argued that if Dant Manjans manufactured by the appellant do not fall within the definition of Ayurvedic drug as mentioned in Section 3(a) of the Drugs and Cosmetics Act, 1940 they definitely come within the purview of Section 3(b) of the Drugs and Cosmetics Act, 1940, which defines drug . It is a medicine which is intended to be used for mitigation or prevention of disease in the teeth of human beings and is covered under exemption Notification 55/75 as amended by 62/78, dated 1-3-1978. 41. Shri Engineer argued that it is an admission on the part of the Senior Departmental Representative that this product Baidyanath Dant Manjan is a patent or proprietary medicine falling under Tariff Item 14-E. When the department has admitted the fact that it is a medicine or drug how can it be said alternatively that it is not a drug or. medicine and as such it if not entitled to the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... highly qualified and eminent Hakims and Vaidyas in the country but they were not considered by the Collector of Central Excise, Patna while passing the Order-in-original No. 49/MP/82, dated 26-8-1982. Since the subject goods are claimed to be medicines it is the evidence only of Hakims and Vaidyas or of authorities technically qualified to express an opinion on what precisely are medicines which is relevant for the purpose of their classification and not the opinion expressed by layman or by the public at large. He cited a decision of the Supreme Court reported in AIR 1963 SC 665 in which it was held that the definition of drug in the Drugs Act, 1940 is comprehensive enough to take in not only medicines but also substances intended to be used in the treatment of diseases of human beings or animals. The said preparations are compounded with ingredients which are exclusively ayurvedic being mentioned in authoritative books of Ayurveda listed in the First Schedule to the Drugs and Cosmetics Act, 1940. 43. He drew our attention towards two decisions given by Shri S.K. Bhatnagar, Appellate Collector, Central Excise, New Delhi (as he then was), one reported in 1981 ECR 596 D in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1979 (44) STC 270] was also cited before us wherein His Lordship observed as under :- The word medicine has not been statutorily defined and, as such, the meaning given in common parlance has to be attributed to it. A medicine is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. It need not be used in the very form in which it naturally occurs. It will retain its character as a medicine even though some processing is required before it becomes fit for use by human beings or other living creatures. Jari bootis are medicinal herbs, which are found in forests. They possess medicinal properties. The fact that they cannot be used straightway as a medicine, but required being reduced to powder or changed into some other form, or combined with other drugs to make them more effective does not alter their medicinal quality. These herbs are valued and sold primarily for their medicinal qualities as recognised in the ayurvedic system of medicine. 46. According to Shri Engineer each of the ingredients of these Dant Manjans is an Ayurvedic medicine described in the authoritative books me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngineer also challenged the decision of the Collector of Central Excise with regard to invoking rule 173-Q for the purpose of imposing penalty on the appellants. According to Shri Engineer, Rule 9 by itself is a complete code and when the authorities have made use of this rule invoking the provisions of rule 173-Q, imposing penalty is illegal and more particularly when there is nothing on record to show and prove that the appellant had intentionally or deliberately avoided payment of excise duty. He relied upon the decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa (1978 E.L.T. J 159) in support of his contention that no penalty should be imposed for technical or venial breach of legal provisions or where the breach flows from the bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Shri Engineer pointed out that on 1-3-1978 when Notification No. 55/75 was amended by Notification 62/78 and the duty exemption provided thereunder was extended to All drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified there was and could be no doubt that the products manufactured by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession not elsewhere specified which the Parliament has used in item 68 means total omission or failure to specify either for the purpose of taxability or for the purpose of exemption from taxability. Once an article or goods are found specified in any of the proceeding entries irrespective of the purpose for which they are specified item 68 does not come into play and does not render such goods taxable. 52. As per the contention of Shree Baidyanath in view of the fact that Ayurvedic medicines are mentioned in item 14-E, they got excluded from the purview of item 68 in view of the judgment in Darshan Hosiery s case. It was only on 18-6-1980, the Parliament introduced an explanation and the effect of this amendment is that with effect from 18-6-1980 Ayurvedic medicines which are mentioned in Item 14-E only for the purposes of their exclusion from its purview, fall under the residuary item 68 CET. The duty of excise under Tariff Item 68 for the period prior to 18-6-1980 cannot be claimed on this product Dant Manjan Lal which is an Ayurvedic drug. We have considered the submissions made by both the parties and our findings are as under : 53. Regarding the question whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Official Gazette, or which is a brand name, that is, a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958) or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person. 57. In view of this Explanation, in order to bring a product under this tariff item several factual things have to be proved and this cannot be done unless and until an opportunity is granted to the assessee by issuing a show cause notice to meet the case against him. No doubt in the case of Commissioner of Income Tax v. Mahalakshmi Textile Mills Ltd. (68 ITR 710), the Supreme Court held that the Income Tax Tribunal had jurisdiction to permit the assessee to raise a new contention which was not raised before the departmental authorities but in that case Tribunal had the evidence before it to give the decision on that new ground. 58. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em of medicines specified in the First Schedule to the said Act, but all other ingredients find mentioned in the authoritative books of Ayurvedic system of medicines specified in the First Schedule and as such Dant Manjans which are compound of these Ayurvedic medicines should also be treated as Ayurvedic medicines. 63. It is also contended that apart from medicine as such the term drug as defined in Section 3(b) of the Drugs and Cosmetics Act, 1940 includes all substances intended to be used for mitigation or prevention of disease in human beings and all such drugs are exempted under Notification No. 62/78-CE. 64. We are unable to accept the contention of Shri Engineer as far as the present case is concerned. 65. The word medicine or drug has not been statutorily defined in the Central Excise Tariff and as such the meaning given in common parlance has to be attributed to it as has been laid down by Allahabad High Court in the case of Commissioner of Sales Tax v. Gramudyog Karyalaya [1979 (44) STC 270]. The definitions of the terms used in one enactment cannot be imported while interpreting the terms and expressions in another enactment. The definitions are always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in Drugs and Cosmetics Act cannot be resorted to. In a case of Bombay High Court, Cadbury Fry v. Union of India (Misc. Petition No. 202/71, dated 1-9.1977) decided by Mr. Justrae Kawa, the court set aside an order of the customs authority which had interpreted the word food occurring in item 21(2) of the Schedule to the Indian Tariff Act, 1934 in the light of the definition of the word food in the Food Adulteration Act, 1954. 69. The question, therefore, is whether Dant Manjans manufactured by Shree Baidyanath are considered in common parlance as Ayurvedic medicine or drug as claimed by them ? 70. Allahabad High Court in the case of Commissioner of Sales Tax v. Gramudyog Karyalaya (Supra) observed that in common parlance, a medicine is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. It need not be used in the very form in which it naturally occurs. It will retain its character as a medicine even though some processing is required before it becomes fit for use by human beings or other living creatures. 71. In order to show that Baidyanath Dant Manjans are known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans are also Ayurvedic medicines. 74. We do not agree with this-contention of Shree Baidyanath. 75. The end product should not be known by its ingredients. Hon ble Supreme Court in the case of Delhi Cloth Mills v. State of Rajasthan (1980 E.L.T. 383) held that a commodity should be considered as a whole and should-not be classified only from the point of view of one of the elements that go in the marking of it, however, important that element may be. 76. In the case before us, the end product is Dant Manjan in a powder form. Allahabad High Court in the case of Commissioner of Sales Tax, U.P. v. Sarin Chemicals (24 STC 406) held that tooth powder used for cleaning the teeth is an article of cosmetics or toilet requisites. In that case the manufacturer had claimed medicinal properties for their products and this is what the Judges observed on the point :- ......Some of them do possess some prophylactic and remedial properties but whether they do or do not possess the medicinal properties, claimed by their manufacturers, the fact remains that they are used for dental cleanliness which is an essential act of toilet. Cleaning teeth being an act of daily toilet, dentif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne or drug. 79. Now, coming to the ingredients namely Peepal, Kali Mirch, Sonth, Tambakuh, Peppermint, Kapur (camphor) Clove Oil (Long Tel) and Geru, used in the manufacture of Dant Manjan Lal though they have therapeutic properties in the pharmacopial books but their compound i.e. Dant Manjan cannot be said to be a medicine having a curative power so as to make it effective for treatment of ailments Peepal, Kali Mirch, Sonth and Peppermint are daily used in our houses as spices for cooked vegetables. Can cooked vegetable be termed as a medicine is a question which can never be answered in affirmative. Tobacco is used by common man for chewing or in smoking hookah. It is also used in the manufacture of biris . Hookahs or biris cannot be said to be medicines. Kapur (camphor) is used in Hawan Samagri. Can we call it to be medicine ? Menthol i.e. Peppermint and Long Tel are used in almost every tooth paste but in excise tariff or in common parlance tooth paste is not considered to be medicine or drug. They have got a separate tariff entry in excise tariff distinct from medicine or drug. Can we call all these ingredients as Medicines in the common parlance ? The answer is No . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been stated above a medicine is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. In view of this definition of medicine none of the ingredients of Dant Manjans manufactured by Shree Baidyanath Ayurved Bhawan can be termed as medicine in common parlance. Calling a Dant Manjan i.e. tooth powder as a medicine will be beyond the understanding of a common man who, uses it daily to clean his teeth. 85. The certificates issued by the Director of Health Services, Bihar, and by the recognised Vaidyas and Principal of Ayurvedic Colleges and affidavits of these persons produced by Shree Baidyanath Ayurved Bhawan Ltd. are to the effect that the preparation of Dant Manjans manufactured by Shree Baidyanath are ayurvedic medicines and are dispensed as medicines. The Director of Health Services, Bihar in a certificate dated 20th January, 1982 has certified that Shree Baidyanath Ayurved Bhawan Ltd. has manufactured Dant Manjan Lal under manufacturing licence No. 31/77 and it is an ayurvedic medicine with ayurvedic ingredients which is used to be prescribed for dental diseases. Six certificates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g these ingredients as medicine in common parlance. It is not the case of Shree Baidyanath Ayurved Bhawan that Dant Manjan as such is mentioned in recognised Ayurvedic Books as mentioned in the First Schedule. It is only the various ingredients that find place in the treatises. These ingredients cannot be called medicines in common parlance. So certificates and affidavits given by the Vaidyas do not advance the case of Shree Baidyanath Ayurved Bhawan 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. The affidavits of the actual users have not been produced on record to show and prove that Baidyanatb Dant Manjan is a medicine and they are using it as such. No shopkeeper selling these Manjans has come forward to depose that he is selling these Manjans as medicine and the public is purchasing them as medicines. Baidyanath Ayurved Bhawan has sought exemption under Notification No. 62/78-C.E., dated 1-3-1978, and therefore, it was incumbent upon Shree Baidyanath Ayurved Bhawan Limited to prove that Dant Manjans manufactured by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No reliance can be placed on this private enquiry alleged to have been made by Shri H. Yumkhawthng, Appellate Collector of Central Excise, Calcutta, as he has not made available the material gathered during the enquiry. 89. Regarding the alleged admission made by the S.D.R. Mrs. Zutshi, during the course of arguments that this product i.e. Dant Manjan is a patent or proprietary medicine we find it difficult to agree with Shri Engineer, the learned counsel for Shree Baidyanath Ayurved Bhawan Limited that on the basis of this admission, the case be decided in favour of Shree Baidyanath Ayurved Bhawan Limited. 90. An admission is a statement which suggests any inference as to the existence of a fact in issue or relevant fact. There are two types of admissions i.e. admission of facts and admission of law. In this case, first we have to see whether the stand taken by the party in the course of argument can, at all, be termed as admission, or if so whether it can be taken as an admission as a whole, even though it is based on a point of law. 91. We find that the S.D.R. Mrs. Zutshi argued the case on behalf of the department from two angles. Her first stand was that Dant Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is also a separate enactment. The main object of the Drugs and Cosmetics Act, 1940 is to prevent manufacture of the products covered by the Act in a sub-standard manner. Ayurvedic drugs have been brought under the Drugs and Cosmetics Act, 1940 in the year 1969. So, the mere issue of licence of manufacturing this product under the Drugs and Cosmetics Act, 1940 and regulating the procedure of the sale of the products manufactured under this Act, does not mean that the product so manufactured becomes a drug or a medicine by itself. As Baidyanath Ayurved Bhawan failed to show and prove that their product i.e. Dant Manjans is called a medicine in common parlance, so the issue of manufacturing licence under the Drugs and Cosmetics Act, 1940 does not make it a medicine. 95. The last submission of Shree Baidyanath Ayurved Bhawan Limited that its product is sold as medicine and it is advertised as a medicine and, therefore, it should be treated as a medicine in common parlance is also not sufficient to establish that it is a medicine in common parlance. 96. In the memorandum of appeal No. E-248/82-C sub-paragraph (E), Shree Baidyanath has given description of the label as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish that these Dant Manjans are treated as medicine in common parlance. 99. If, for argument s sake, we resort to the definitions of drugs as given in Section 3(a) and 3(b) of the Drugs and Cosmetics Act, 1940, even then the product manufactured by Shree Baidyanath i.e. Dant Manjans cannot be said to be a drug or medicine. Section 3(a) of the Drugs and Cosmetics Act, 1940 provides that :- Ayurvedic or Unani drug includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings, mentioned in and processed and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic systems of medicine, specified in the First Schedule. Admittedly, the Dant Manjans manufactured by Shree Baidyanath do not find mention in any of the authoritative books of Ayurvedic systems of medicine specified in the First Schedule. These Dant Manjans have not been manufactured in accordance with the formulae described in any of the authoritative books and, therefore, these Dant Manjans are not covered by the definition of Ayurvedic medicine as given in Section 3(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Supra). Some other judgments cited by Shree Baidyanath holding Boroline and water meant to be dissolved for administering injection in human being as drug also do not help Shree Baidyanath in the present case. Dant Manjan was not the product in dispute in those cases. As has been laid down by the Allahabad, Bombay and Madras High Courts in the cases referred to above and confirmed by the Hon ble Supreme Court in the case of Sarin Chemical Laboratories (Supra) a tooth powder though medicated in a toilet requisite. 104. Under these circumstances, we set aside the order passed by the Appellate Collector, Central Excise, Calcutta and confirm the findings of the Assistant Collector, Central Excise that Dant Manjan Lal , Dant Manjan Black and Dant Manjan White manufactured by Shree Baidyanath Ayurved Bhawan Limited are classifiable under Tariff Item 68-CET and not entitled to exemption under Notification No. 62/78-C.E., dated 1-3-1978. 105. Besides these three Dant Manjans manufactured by Shree Baidyanath Ayurved Bhawan, the classification issue of some other products manufactured by Shree Baidyanath Ayurved Bhawan and mentioned in the show cause notice dated 10-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person. 108. In the case before us, there is no dispute that these products manufactured by Shree Baidyanath are sold in the market as medicines bearing the name of Baidyanath and the symbol of SHIVLING . During the course of arguments, the learned counsel of Shree Baidyanath admitted that the symbol of SHIVLING is a registered mark of Shree Baidyanath. From this symbol of SHIVLING the connection between the medicines and Shree Baidyanath Ayurved Bhawan Limited is fully established. The trade mark SHIVLING on the medicines manufactured by Shree Baidyanath indicates the connection between the products and Shree Baidyanath Ayurved Bhawan Limited, who has a proprietary interest in these medicines. 109. The crucial point for decision is whether these products are exclusively Ayurvedic medicines and excluded from Tariff Item 14-E, CET. Item 14-E refers to patent or proprietary medicines other than those which are exclusively Ayurvedic, Unani, Siddha or Homeopathic. 110. The argument of the learned Senior Departmental Representative is two fold on this point. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated or referred to in the Central Excises and Salt Act, 1944 or Central Excise Tariff which is also a separate enactment. 117. Regarding her second contention, no doubt it is true that Menthol, citric acid, camphor, iron, Alum, Borax, Potassium nitrate. Ammonium chloride are pharmacopeal items but their use in Ayurvedic preparations does not render such preparations non-ayurvedic provided the use of these ingredients is recognised in authentic treatises on Ayurveda. 118. Mrs. Zutshi, S.D.R. fairly conceded to this proposition in view of the circulars of the Central Board of Customs and Excise issued in this behalf from time to time. Board s circular letter No. 8 (Medicines) 62 conveyed vide letter F. No. 7/26/61-CX. VI dated 23-6-1961 allowed the use of Iron, Sulphur, Mercury Camphor in Ayurvedic preparations, though they are of B.P. grade. The departmental representative has not disputed this fact that these pharmacopeal items have been used in a very small quantity and that they find mention in the authoritative treatises on Ayurveda and are also established as such by uses and traditions. 119. Under these circumstances, we confirm the findings of the Appellate Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 122. The Hon ble Supreme Court in the case of N.B. Sanjana v. Elphinston Spinning Weaving Mills Limited (1978 E.L.T. J 339) held that it is only when goods have escaped payment of duty due to clandestine removal, that Rule 9(2) can be made applicable. In this case the department has not been able to show and prove that these goods have been removed clandestinely by the assessee. The mere fact that the assessee did not mention about one of the ingredients, i.e. geru of this product to the department earlier does not mean that they are guilty of misstatement. The letter shows that they had mentioned some of the important ingredients of that product. It was for the department to verify and ascertain the true facts. This letter cannot be said to be a misstatement on the part of the assessee and particularly when the department accepting this product as a drug or medicine gave benefit of the Exemption Notification No. 62/78 while ordering refund of excise duty with effect from 1st March, 1978. The demand can be restricted only upto six months prior to the issue of the show cause notice dated 16-7-1981 under Section 11-A of the Central Excises and Salt Act, 1944 and not for a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellants Account current with the department in respect of Ayurvedic medicines manufactured and cleared by it on payment of duty under Tariff Item 68, the application for refund was considered by the department and the amount claimed was duly refunded by the Assistant Collector on 9-10-1978. 128. Baidyanath has filed classification lists from time to time and nothing was suppressed from the department. Stopping payment of duty on Dant Manjan Lal with effect from 1st March, 1978 was on account of bona fide belief that it is exempted under Notification No. 62/78, dated 1-3-1978 and hence no case for imposing penalty under Rule 173-Q of Central Excise Rules is made out. 129. We quash the findings of the Collector Central Excise imposing penalty of ₹ 10,000/- on Shree Baidyanath Ayurved Bhawan Limited, Patna. 130. In view of our findings above, we order that M/s. Shree Baidyanath Ayurved Bhawan Limited, Patna shall only pay the duty on clearances on the product Dant Manjan Lal effected by them during the period of six months prior to the issue of the show cause notice dated 16th July, 1981 under Section 11-A of the Central Excises and Salt Act, 1944. The penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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