COMMISSIONER OF CENTRAL EXCISE Vs. PARAGON INDUSTRIES

JUDGEMENT

(1.) THIS appeal of the Revenue is against classification of certain products of the respondents (assessee) as ayurvedic medicaments under sub -heading 3003.10 of the Schedule to the Central Excise Tariff Act. The appellant wants them to be classified as cosmetic preparations under heading 33.04 (SH 3304.00) of the said Schedule, in the manner done by the original authority which had also demanded duty from the assessee for the period of dispute by denying them the benefit of Notification No. 140/83 -CE on the ground that the goods had been cleared under another person's brand name. The assessee succeeded in their appeal before the Commissioner (Appeals) on both the issues, one relating to classification and the other to exemption from payment of duty. Hence this appeal of the Revenue.

(2.) THE products in question are "Lexus -International", "Lexus -Red Roses" and "Rishiraj ayurvedic medicated powder". The assessee's submissions before the lower appellate authority were (a) that the products contained various active ayurvedic ingredients capable of curing skin diseases like ring worm as proved in clinical trials and certified by doctors; (b) that the goods were manufactured under Drug Licences issued by the Drug Controller; (c) that there was no evidence adduced in the show -cause notice or in the order -in -original to show that the powders were known in the market as cosmetic preparations; (d) that the Chemical Examiner's report had been relied on erroneously by the adjudicating authority; and (e) that there were judicial decisions in favour of some of the above points. On the brand name -related issue, it was submitted that they had been using the brand name ['LEXUS] since 1996 and had already applied to the Registrar of Trade Marks for its registration and therefore the benefit of Notification No. 140/83 -CE was not deniable. The Commissioner (Appeals) accepted all the above submissions of the assessee.

(3.) THE learned Counsel for the respondent argued in support of the appellate Commissioner's order. He submitted that the Revenue had not successfully discharged its burden of classification of the goods under heading 33.04. He produced a copy of the licence dated 21.5.1997 issued by the Food & Drug Administration (FDA) under the Drugs & Cosmetics Act, 1940 to the respondent to manufacture "Rishiraj ayurvedic medicated powder" as ayurvedic drug for a period upto 31.12.1998. Materials of clinical study on ring worm -affected patients treated with the two "Lexus" products were also produced. Write -up on each of the ingredients viz. jasat bhasma (zinc oxide), khas (khaskhas grass) and zandu (marigold) was also submitted, each write -up containing references to books as data sources. The write -up on 'jasat bhasma' claimed this item to be anti -bacterial and useful for skin diseases such as "Vicharckika Rog". The write -up on 'khas' claimed this item to be a cooling agent and useful for the skin disease "Visarp Rog". The write -up on 'marigold' described this item as anti -inflammatory, antiseptic etc. and also stated that it was useful for treating 'athlete's foot" and minor burns and cuts. Counsel pointed out that all these evidentiary materials were duly considered by the lower appellate authority for classifying the goods under sub -heading 3003.10. In support of the assessee's claim for exemption of the branded goods from payment of duty during October 1997, the counsel produced an affidavit dated 6.10.2008 of one Shri V.M. Bavishi claiming to be a partner of M/s. Solaris Herbal Research. The counsel relied on this affidavit to establish that the brand name "Lexus International" belonged to the assessee during the period of dispute.