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TMI Blog2019 (6) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... rt to seek permission/license to manufacture the cosmetic product. Admissions are relevant unless and until rebutted. The ingredients lose their individual existence and the outcome product of those ingredients has to be considered in respect of its complete or precise description and in terms of the essential character being given by the components. Thus, irrespective menthol and camphor are Ayurvedic medicament products but their combination is giving rise to a product admittedly known as talcum power. The mere fact that the talcum powder is providing the refreshing and the cool feeling, the mere application thereof does not make it a pharmaceutics product/ medicament. In general, parlance, it is a talcum power. Apparently and admittedly, the same can be applied without any medical prescription. Also the same is not the cure for any of the specific medical condition. Thus the product is manufactured not under drug license but under cosmetic license. The cosmetic license was obtained when assessee was already engaged in manufacture of pharmaceutical products. Had this talc been a pharmaceutical product only, there was no need for the assessee to have a cosmetic license for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER The common order is passed for disposing of three appeals, two filed by M/s. Badriwas Biotech Pvt. Ltd. and the other filed by the Department arising out of common order of Commissioner (Appeals) bearing No. 65-67/2018 dated 26.03.2018. 2. Relevant facts for these Appeals are: Consequent upon the intelligence gathered by the Preventive Branch of Customs, Central Excise Division, Dehradun, that the Superintendant of the division visited the factory premises of the appellant at Kasra No.10 11 Makhanpur, Bhagwanpur, Roorkee, District Haridwar on 5th August, 2014. It was observed that the appellant has been manufacturing the cosmetic products i.e. talcum powder under the brand name of Himgange Cool Talc w.e.f. month of March, 2014. 3. After making necessary investigation, the Department observed that the appellant in three of these Appeals has evaded Central Excise Duty amounting to ₹ 22,72,480/- during the period March, 2014 to 04.08.2014 by wrongful availment of exemption under Notification No.49/2003-CE dated 10th June, 2003 vide a declaration dated 10.11.2008. It was observed that for availing the said exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate duty on the said product, which renders them liable for the penal action under Section 11AC of Central Excise Tariff Act (CETA) read with Rule 25 of Central Excise Rules, 2002. Hence, the order to the extent of dropping the penalties is prayed to be set aside. 6. While rebutting these arguments, it is submitted by the assessee that the assessee had manufactured the talcum powder, Himgange Cool Talc in terms of an agreement dated 29.01.2014 entered between them and the brand-name owner M/s. G.K. Burman Sons of the said product. M/s. G.K. Burman Sons are engaged in manufacture and marketing of Ayurvedic Medicare products. Hence the assessee was bonafide believing the said talcum powder to be a product having therapeutic value and as such is covered under pharmaceutical products under chapter 30 of CETA. The authority has rightly observed no malafide intention on part of the appellant by classifying the product under Chapter 30 while availing the benefit of the Notification No.49/2003. 7. While impressing upon their own two appeals, ld. Counsel for the assessee has submitted that the adjudicating authority has wrongly classified the impugned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, admittedly engaged themselves in the manufacture of talcum powder under the brand-name Himgange Cool Talc w.e.f. March, 2014 for which they got another license bearing No.3/C/UA/2014 dated 21.02.2014 which was granted to them in form 32 under Rule 140 of Drugs and Cosmetic Rules, 1940 (D C Act in short). From the perusal of the provision of D C Act, it is observed that the license under Rule 140 of the Act is granted on an application in Form 31 praying for license to manufacture cosmetics. Thus, it becomes, clear that irrespective appellants were initially involved in manufacture of pharmaceutical products classifiable under Chapter 30 of Central Excise Tariff Act, 1985, but they subsequently started manufacturing the talcum powder not as a pharmaceutical product of Chapter 30 but as cosmetic product classifiable under Chapter 33. Their application in form 31 under Rule 138 of D C Act is opined to be an admission on their part to seek permission/license to manufacture the cosmetic product. Admissions are relevant unless and until rebutted. 11. Though to rebut the said presumption, the assessee has submitted that the talcum power is not cosmetic becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied without any medical prescription. Also the same is not the cure for any of the specific medical condition. 13. Further, before jumping into Rule 3 of the principles of classification, Rule 1 in itself has to be looked into foremost, which reads as follows:- The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions. 14. Chapter 30 from its note reveals that it is with respect to pharmaceutical products or medicaments having therapeutic or prophylactic uses whether or not in the measured dozes. No doubt, it includes the Ayurvedic medicines/ medicaments. 15. The Tribunal in the case Gajra Beval Gears Ltd. Vs. Govt. of India reported in 1995 (80) ELT 505 has held that for the purpose of assessment of products claim to be Ayurvedic medicaments under Chapter 30, the following facts may be kept in view: (1) The perception of the product in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in manufacture of pharmaceutical products. Had there been no knowledge to either of them for the impugned talcum powder to not to be the pharmaceutical product, there was no need for them to agree for taking a license for manufacturing cosmetic. Irrespective of the classification, which otherwise has been held for the talcum powder to be a cosmetic rather than to be a pharmaceutical product, the assessee was bound by his own act and conduct and was in fact, estopped from claiming the said talcum powder as a pharmaceutical product. These observations are sufficient for us to hold that despite the conscious knowledge of the impugned products to be a mere talcum powder a mere cosmetic, the benefit of Notification No.49/2003 was availed. Though the said benefit, the assessee would have been claiming with respect to his pharmaceutical product in manufacture whereof he was already involved but for taking the same benefit for a cosmetic product despite the above said conscious knowledge, we are of the opinion that the mis-declaration has been done with a malafide intention to take wrong benefit of the impugned Notification with the sole intention of evading duty. The mis-declaration de ..... 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