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CASE NO.: Appeal (civil)  7907 of 2002

PETITIONER: M/s Dabur India Limited

RESPONDENT: Commissioner of Central Excise, Jamshedpur

DATE OF JUDGMENT: 01/04/2005

BENCH: S. N. Variava,Dr. AR. Lakshmanan & S. H. Kapadia

JUDGMENT: J U D G M E N T

[With C. A. No.6755/2003, 6867/2003 and 1591/2005]

        All these Appeals can be disposed of by this common Judgment  as the point involved is the same.  The dispute is regarding  classification of two items manufactured by the Appellants, namely,  (1) Lal Tail; and (2) Janam Ghunti.  The Tribunal has held that the  product Lal Tail is classifiable under Chapter heading 33.04.  As  regards ‘Janam Ghunti’, the matter has been remitted back to the  original authority for a fresh decision.         We have heard the parties.  In our view, there is no infirmity in  the Order of the Tribunal insofar as it remits the matter back to the  original authority for a fresh decision on classification of the product  ‘Janam Ghunti’.  Chapter Note 1.(c) of Chapter 30 states that Chapter  30 does not apply to aqueous distillates or aqueous solutions of  essential oils even though they are suitable for medicinal uses.   Further, under Chapter Note 1.(d) of Chapter 30 preparations of  Chapter 33 would not fall under Chapter 30 even if they have  therapeutic or prophylactic properties..  The Tribunal has, therefore,  correctly held that if ‘Janam Ghunti’ is an aqueous distillates or  aqueous solutions of essential oils it would fall under Chapter 33 even  though it may have therapeutic or prophylactic properties.  The  Appellants have claimed that their product ‘Janam Ghunti’ is neither a  distillate nor a solution but is an extraction.  However, this is a matter  which requires inquiry into.  We approve the finding of the Tribunal  that this would require looking into the process of manufacture, the  composition of the product and that classification of this product  cannot be decided upon without chemical test of the product.  We,  therefore, see no infirmity in the Order of the Tribunal to this extent  and the same is upheld.          As regards ‘Lal Tail’, Mr. Lakshmikumaran has pointed out that  this product has all the ingredients mentioned in Ayurvedic Text  Books.  The product also has a Drug Controller’s Licence. The  Appellants have also filed evidence by way of prescriptions of  Ayurvedic Doctors to show that their product has therapeutic or  prophylactic properties and is used as a drug.  As against this the  Respondents have admittedly led no evidence or produced any  material to show that in the market this product is not considered to  be a drug.         The Tribunal has held against the Appellants mainly on the basis  of the decision of this Court in Shree Baidyanath Ayurved Bhavan  Ltd. vs. Collr. of C. Ex., Nagpur reported in 1996 (83) ELT 492  (S.C.).  In this case the question was whether ‘Dunt Manjan Lal’  (Tooth powder) could be considered to be a medicament and as such  eligible for exemption under Notification No. 62/78-C.E.  This Court  held that a medicine is ordinarily prescribed by a medical practitioner

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and is used for a limited time and not for every day use unless it is so  prescribed to deal with a specific disease like diabetes.  This Court has  held that in interpreting taxing statute the scientific and technical  meaning of the terms and expressions used in the tax laws is not to be  resorted to and that goods are to be classifiable according to the  popular meaning attached to them by those using the product.  The  Tribunal has held that from the Appellants literature it can be seen  that ‘Lal Tail’ is used for nourishing the babies skin and that the  product is not used under any prescription by a medical practitioner  and is not used for a limited period.  The Tribunal has held that this  product is used regularly but not in connection with a special ailment.   On this basis, it is held that this product fails the test for a  medicament.            Whether a product can be considered to be a medicament or not  has also been considered by this Court in a number of other decisions,  some of which may usefully be referred to herein.           In the case of Commissioner of C. Ex., Calcutta-IV vs.  Pandit D.P. Sharma reported in 2003 (154) ELT 324 (SC), the  question was whether ‘Himtaj Oil‘ is a Ayurvedic medicament or not  classifiable under sub-heading 3003.30 or a ‘perfumed hair oil’  classifiable under sub-heading 3305.10.  Even though reliance had  been placed upon the authority of this Court in Shree Baidyanath  Ayurved Bhavan’ case (supra), this Court negatived an argument that  the product would not be considered to be a drug because it was not  prescribed by a medical practitioner and was one which could be used  for a long period of time.  It was held that the test was to see what  persons using the product understand it to be. On the basis of  evidence produced by the manufacturer that the common man  understood the product as a medicine it was held that the product was  a medicament.                     In the case of Commissioner of C. Ex., Calcutta vs. Sharma  Chemical Works reported in 2003 (154) ELT 328 (SC) the question  was whether ‘Banphool oil‘ was a Ayurvedic medicament or a  perfumed hair oil.  This Court, after considering Shree Baidyanath  Ayurved Bhavan’ case (supra), held that the onus or burden to show  that a product falls within a particular Tariff Item is always on the  Revenue.  It has been held that merely because a product is sold  across the counters and not under a Doctor’s prescription does not by  itself lead to the conclusion that it is not a medicament.    It was also  held that in the product the percentage of medicament may be small  but that by itself did not ipso facto mean that the product is not a  medicament.  It was held that generally the percentage or dosage of  the medicament will be such as can be absorbed by the human body  and that the medicament would necessarily be covered by  fillers/vehicles in order to make the product usable.  It was noted that  all the ingredients used in Banphool Oil were those which were set out  in the Ayurveda Text Books.  It was held that the Revenue had not  discharged the burden to show as to how the customers who used this  product understood it and on the contrary there was evidence to show  that the product was being used for treatment of headache, eye  problem, night blindness, reeling, head weak memory, hysteria,  ammenesia, blood pressure, insomnia etc. the product was a  medicament.          In the case of Commissioner of Central Excise, Nagpur vs.  Vicco Laboratories reported in 2005 (179) ELT 17 (SC), this Court  whilst considering whether turmeric skin cream and vajradanti  toothpaste and tooth powder were to be classifiable under Chapter 30  or Chapter 33, noted Shree Baidyanath Ayurved Bhavan’s case and  held as follows:- "2....................  The basis of the show  cause notices was the decision of this Court  in Shree Baidyanath Ayurved Bhavan Ltd.  vs. Collector of Central Excise, Indore  reported in 1996 (9) SCC 402 and the tests  allegedly laid down in that decision for

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determining whether a product should be  classified under Chapter 33 or Chapter 30.   

3. The two tests according to the show  cause notice for determining whether a  product was classifiable as a pharmaceutical  product under Chapter 30 of the Central  Excise Tariff were (1) Whether the products  are being used daily and are sold without  prescription by a medical practitioner; and  (2) whether the products are available in  General Store Department / Grocery shops.   The department’s case in the show cause  notice is that as these two tests were not  fulfilled the product failed to come within  the prescription of pharmaceutical products  in Chapter 30.

4.      The mere decision of a court of law  without more cannot be justification enough  for changing the classification without a  change in the nature of a product or a  change in the use of the product, or a fresh  interpretation of the tariff heading by such  decision.  It is not the appellant’s case that  any of these circumstances were present in  this case, besides the decision in Shree  Baidyanath’s case (supra) does not lay  down, the test of classification as concluded  by the Department at all.  In that case the  Tribunal had considered the evidence  produced before it with regard to the sale  and purchase of the product in question.  It  was found as a matter of fact that in  common parlance the product was not  described as a medicinal preparation but  was described as a toilet preparation.  This  Court affirmed the tests laid down by the  Tribunal, namely, that since the primary  object of the Excise Act was to raise  revenue, resort should not be had, for the  purppose of classification, to the scientific  and technical meaning of the terms and  expressions used therein but to their  popular meaning, that is to say, the  meaning attached to that by those using the  product.

5.      The Court also noted that the Tribunal  had rejected the assessee’s claim in that  case 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."  It may be  noted that the court affirmed this line of  reasoning of the Tribunal on the ground that  it was "in general agreement with it".  The  court did not itself affirmatively hold that  what was laid down by the Tribunal as a  test to be "ordinarily" followed was  invariably to be the sole test for  determining whether a product is to be  proved as a medicine or as a cosmetic.   Indeed this Court in BPL Pharmaceuticals

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Ltd. vs. CCE reported in 1995(Suppl.) 3 SCC  1 has upheld the classification of ‘Selsun’  medicated shampoo as a medicine and not  as a cosmetic and held that in order to  attract Note 2 to Chapter 33 the product  was first proved to be a cosmetic and

"that the product should be suitable  for use as goods under Heading Nos.  33.03 to 33.08 and they must be put  in packing as labels, literature and  other indications showing that they  are for use as cosmetic or toilet  preparation."

6.      These observations however were not  made in connection with Chapter Note 1(d)  of Chapter 30 the impact and purport of  which may have to be considered in an  appropriate case.

7.      This Court in Commissioner of Central  Excise, Calcutta v. Sharma Chemical Works  reported in 2003 (5) SCC 60 has also  disapproved the approach of the  Department in holding that the product was  a cosmetic only because it was not sold by  chemists or under doctors prescription.   This, according to the decision, does not by  itself lead to the conclusion that it is not a  medicament.  The Court reaffirmed the test  as categorically laid down in Shree  Baidyanath, namely, that the burden of  proof that a product is classifiable under a  particular tariff head is on the revenue and  must be discharged by proving that it is so  understood by consumers of the product or  in common parlance.  [See also Meghdoot  v. Commisisoner of Central Excise : 2004  (174) ELT 14 (S.C.)]."                   From the above mentioned authorities, it is clear that in  classifying a product the scientific and technical meaning is not to be  resorted to.  The product must be classifiable according to the popular  meaning attached to it by those using the product.  As stated above,  in this case the Appellants have shown that all the ingredients in the  product are those which are mentioned in Ayurvedic Text Books.  This  by itself may not be sufficient but the Appellants have shown that they  have a Drug Controller’s Licence for the product and they have also  produced evidence by way of prescriptions of Ayurvedic Doctors, who  have prescribed these for treatment of rickets.   As against this, the  Revenue has not made any effort and not produced any evidence that  in common parlance the product is not understood as a medicament.           In view of the above, the decision of the Tribunal on this aspect  cannot be sustained and is accordingly set aside.  It is held that the  product would be a medicament and classifiable as such under Chapter  30.           Therefore, the Appeals partly succeed and stand disposed of as  such.    There will be no order as to costs.