UNION OF INDIA Vs. VICCO LABORATORIES

JUDGEMENT

(1.) This is an Appeal preferred by the Union of India and the Assistant Collector of Central Excise against the judgment and decree passed on 6th May, 1982 by the Civil Judge, Senior Division, Thane, in Special Civil Suit No. 143 of 1978. The suit was filed by the Respondents to the Appeal who are a firm and a private limited company respectively. The respondents will be hereinafter referred to as "the Plaintiffs" for the sake of clarity.

(2.) The Plaintiffs' suit was one seeking certain declarations, one of which was in respect of an order dated 4th June, 1977, passed by the Union of India. An alternative declaration was also sought in respect of another order dated 14th June, 1976 passed by the Assistant Collector of Central Excise at Kalyan. In the suit the Plaintiffs also sought to recover the sum of Rs. 95,22,728.21 with interest on the principal amount of Rs. 79,16,897.43. This amount was claimed as illegally recovered from them as alleged excise duty in respect of two products manufactured by the Plaintiffs, viz., Vicco Vajradanti Tooth Paste and Vicco Turmeric Vanishing Cream. A perpetual injunction was also sought from implementing the said orders or from recovering excise duty on the said products on the basis thereof.

(3.) Plaintiff No. 1 were a registered partnership firm having their factory at MIDC area, Dombivali, District Thane. Plaintiff No. 2 was subsequently formed to take over the assets and liabilities of the said firm. The Plaintiffs manufacture and deal in proprietary Ayurvedic medicines and hold an Ayurvedic licence bearing No. A/237 issued under the provisions of the Indian Drugs and Cosmetics Act, 1940. The Plaintiffs claim that Vajradanti Tooth Paste and Turmeric Vanishing Cream manufactured by them are Ayurvedic medicinal preparations. The Plaintiffs claim to be manufacturing the same since about 1959 and 1965 respectively. We shall refer to these products as "V. Vajradanti" and "V. Turmeric" respectively for the sake of brevity. The Plaintiffs have also obtained a licence under the Drugs Act, which licence has been renewed from time to time. In support of their contention the Plaintiffs rely upon certificates dated 6-1-1976 and 17-8-1976 issued by the Commissioner, Food and Drug Administration of the State of Maharashtra. According to the Plaint, V. Vajradanti is a proprietary Ayurvedic medicinal preparation made from extracts of 18 natural herbs and barks which are indicated in the authoritative text books on Ayurveda as specified in the First Schedule to the Drugs Act. The list of these 18 herbs and barks is found annexed to the Plaint as Exhibit 'D'. Each of these ingredients, according to the Plaintiffs, has therapeutic value as indicated in Ayurvedic literature and is useful for treatment of dental diseases and V. Vajradanti is useful both as preventive as well as curative medicine. The Plaintiffs manufacture V. Vajradanti in two forms, viz., as a powder and as a tooth paste. According to the Plaintiffs, this product is useful for treatment of disorders of the gums, tooth decay, pyorrhea, swollen gums, bleeding gums and for diseases and ailments pertaining to teeth and gums. According to the Plaintiffs further, the product is sold by chemists and drug-gists. It has been pointed out in the Plaint that no licence is required for the sale of Ayurvedic medicinal preparations unlike allopathic medicinal preparations. In the Plaint the Plaintiffs have further indicated the standard medicinal agents or ingredients for the diseases and ailments of the mouth. The Plaintiffs, therefore, contend that V. Vajradanti would fall within excise Heading 33.06. In support of their contention it is urged that ordinary tooth pastes and creams are manufactured under a licence for manufacturing cosmetics issued under the Drugs Act, whereas V. Vajradanti is manufactured under an Ayurvedic drugs licence issued under the very same Act. The Plaintiffs also rely on the fact that sales-tax authorities in the State of Maharashtra have also accepted V. Vajradanti as a medicinal preparation and do not consider it to be a tooth paste. Copies of the orders of the sales-tax authorities in this behalf were annexed to the Plaint.