ZANDU PHARMACEUTICAL WORKS LTD. Vs. CCE, SURAT-II

JUDGEMENT

(1.) The issue involved in this Appeal, filed by M/s. Zandu Pharmaceutical Works Ltd., is whether "Alma Lio" manufactured by them is classifiable as an Ayurvedic Medicament under Heading No. 30.03 of the Schedule to the Central Excise Tariff Act or as perfumed hair oil classifiable under Heading 33.05 of the Tariff as confirmed by the Commissioner (Appeals) in the impugned Order. Shri B.L. Narasimhan, learned Advocate, submitted that the impugned product is an Ayurvedic medicine since the ingredients used have medicinal properties and it is used to prevent dandruff; that the impugned product is manufactured under a drug licence; that their claim is also supported by the Certificates produced by the Appellants from the medical practitioners, end -users and the traders; that thus in popular parlance also, the product is considered as an ayurvedic medicament. He relied upon the decision in the case of CCE, Calcutta v/s. Sharma Chemical Works, 2003 (154) ELT 328 (SC) :, 2003 (108) ECR 481 (SC) wherein the Supreme Court classified Banphool oil under Heading 3003.30 and not under 3305.10 by holding that "the main criteria for determining classification is normally the use it is put to by the customers who use it ............ the oil can be used for treatment of headache, eye problem, night blindness, reeling head, weak memory ... etc. The dosages required are also set out in the label. The product is registered with drug controller and is being manufactured under a drug licence." The learned Advocate, also relied upon the decision in the case of Naturence Research Lab, P. Ltd. v/s. CCE, Delhi,, 2003 (54) RLT 864 (Cegat) :, 2003 (108) ECR 658 (T) wherein the products containing ingredients mentioned in authoritative text book on Ayurvedic have been classified as Ayurvedic medicines under Heading 30.03 and Final order No. 16/03 -B dated 14.1.2003 :, 2003 (108) ECR 552 (T) in the case of M/s. Burman Laboratories Ltd. v/s. CCE, Indore 'Keshraj Oil' has been classified by the Tribunal under Heading No. 3003.30 of the Tariff as the ingredients are those which have been specifically mentioned in the authoritative text books on Ayurveda.

(2.) The learned Advocate also mentioned that the Order -in -Appeal has relied upon the fact that "Alma lio" is sold over the counter and not under doctors prescription to come to the conclusion that the same is not medicament; that this is incorrect in view of the decision in Sharma Chemical Works, supra, wherein the Supreme Court has specifically held that the mere fact that the product is sold over the counter and not under doctors prescription would not lead to the conclusion that the product is not medicament. Alternatively he contended that Alma Lio is classifiable under sub -Heading 3305.10 and not under 3305.99 of the Tariff as Sugandhi Dravya (perfume) is deliberately added to the impugned product; that thus the impugned oil is a perfumed hair oil correctly classifiable under sub -Heading 3305.10 of the Tariff. Finally, he submitted that no penalty is imposable on the Appellants since the dispute relates to the classification of the product in respect of which necessary classification declaration claiming classification under sub -Heading 3003.39 had been filed by them and thus none of the provisions of Rule 173Q of the Central Excise Rules, 1994 are attracted.

(3.) Countering the arguments, Shri V. Valte, learned Senior Departmental Representative, submitted that the impugned product is nothing but a preparations for use on the hair; that Note 1(d) to Chapter 30 of the Tariff specifically excludes "Preparations of Chapter 33 even if they have therapeutic or prophylactic properties"; that moreover Note 2 to Chapter 33 also provides that Heading nos. 33.07 to 33.07 apply to products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value; that the label of the impugned product clearly mentions that 'Alma lio" is hair tonic for a crown of strong, healthy and beautiful hair; that thus the product is clearly covered by Heading 33.05 of the Tariff, that as per Note 6 to Chapter 33, Heading No. 33.05 applies, inter alia, to the following products: brilliantine's, perfumed hair oils, hair lotions, pomades and creams, hair dyes, shampoos,' that as the impugned product is a hair tonic for a strong and healthy and beautiful hair as declared on the label/packing, it is nothing but a "Preparations for use on the hair" rightly classifiable under Heading No. 33.05. He relied upon the decision in CCB, Nagpur v/s. Puma Ayurvedic Herbal Pvt. Ltd.,, 2003 (155) ELT 561 (T) :, 2003 (109) ECR 427 (T) wherein it has been held by the Tribunal that "Mere fact that some ingredients are mentioned in the authoritative books on Ayurveda Would not make the product a "medicament" and that for being classified as medicament under Heading 3003, therapeutic or prophylactic uses must be the main uses of the product." Reliance has also been placed on the decision in Vasu Pharmaceuticals Pvt. Ltd. v/s. CCE, Vadodara,, 1999 (111) ELT 625 (T) :, 1999 (85) ECR 195 (T) wherein "Trichup oil" containing some Ayurvedic ingredients and advertised and marketed for application to, and nourishment of hair only, has been classified under sub -Heading 3305.99 of the Tariff and not as a medicament under Chapter 30. He also mentioned that even in Naturence Research Lab case, relied upon by the learned Advocate, products namely "La Faire" and "Forest N' Flower" were held to be not medicaments as they had no main therapeutic or prophylactic use; that as per Tribunal "Forest Flower" was mainly to "give nourishment to the scalp and hair roots" as per matter mentioned on the packing and was held to be a "preparation for use on the hair". Finally the learned Senior Departmental Representative mentioned that as perfume is not used by the Appellants, the impugned product is not a perfumed hair oil and hair tonic is different from hair oil; that hair tonic is meant to provide extra nutrition for more strength or health to the hair; that as the impugned product is a hair tonic, it is classifiable under sub -Heading 3305.99 of the Tariff.