| Headnote |
Central Excise Tariff Act, 1985:Classification - Dant Manjan Lal - Held: Is tooth powder c and specifically covered by Chapter SH 3306 and not under Chapter SH 3003.31 as medicament- It is used routinely for dental hygiene - By virtue of note 1(d) of Chapter 30, even if the product has some therapeutic or medicinal properties, it stands excluded from Chapter 30 - Common parlance test 0 continues to be determinative test for classification of product either medicament or cosmetic - Drugs and Cosmetics Act, 1940 - s.3(a) - Interpretative Rules - Rule 3(a). Change in classification - Criteria for - Held: There has to be change in nature or use of the product - Mere difference in tariff entries would not change character of the product. Classification of product - Determining factor - Held: User's understanding is relevant factor- It is important to see how user/consumer looks at a product and what is his perception in respect of such product - Common parlance test' continues to be determinative test of classification of product - Heading which provides most specific description is to be' preferred to headings providing a more general description. Interpretation of statutes: Definition of one statute having different object, purpose and scheme cannot be applied mechanically to another statute - Section 3(a) of Drugs and Cosmetic Act, 1940 defines 'Ayurvedic, Sidha or Unani Drugs but that definition is not necessary to be imported in Central Excise Tariff Act. Maxims: Maxim 'Nemo debet bis vexari pro una et eadem causa' and maxim 'interest republicae sit finis litium' - These maxims cannot be applied as rule of thumb in taxation matters.The assessee is manufacturing a product named Dant Manjan Lal (DML). The product is a powder compounded with Geru, Peepall, Sonth, Kali Mirch, Tambakuh, Clove Oil, Camphor, Pepperment, Babul Chhal, Tumber Beej. Assessee claimed that DML is manufactured in accordance with the formulae given in Ayurved Sar Sangraha (an authoritative text on the Ayurved system of medicine) by using the ingredients mentioned therein. Ayurved Sar Sangraha is notified under the First Schedule of the Drugs and Cosmetics Act, 1940. It is also the case of the assessee that DML was sold in the name which is specified in Ayurved Sar Sangraha. Prior to 1975, the product DML was considered to be classifiable under Tariff Item 14 of the First Schedule of the Central Excise and Salt Act, 1944 which item covered medicines. Accordingly, it was not subjected to levy of excise duty and exempted therefrom. On March 1, 1975, Residuary Item 68 was incorporated in the Act, 1944 wherein all items not elsewhere specified in the tariff were liable to be classified. Assessee filed a fresh classification list and commenced paying excise duty as was leviable under Residuary Item 68 of the Act, 1944. On March 1, 1978, the Central Government issued an Exemption Notification No. 62178-CE whereby exemption was extended to " ..... all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere H specified." Assessee claimed the benefit extended underthe said Notification and stopped paying duty on the product while filing fresh classification list. In March, 1980, Department issued notices to the assessee asking them to show cause as to why the product should not be subjected to tariff rate without treating it as an Ayurvedic Medicine and without extending the benefit available under the Notification No.62/78-CE. The matter came up before the Tribunal. It held that in common trade parlance, DML is neither treated nor understood as an Ayurvedic Medicine and hence could not be classified as such, and hence was not eligible to exemption under Notification No.62/78-CE. This order was challenged before this Court. It was held in *Baidyanath that the product DML is to be classified on the basis of the common trade parlance test and applying· that test, the tribunal was correct in its finding that DML was not known as an Ayurvedic Medicine. The finding of the tribunal that DML was toilet requisite was upheld. During the pendency of the appeals before this Court, Central Excise Tariff Act, 1985 was enacted which replaced the Schedule to the Act, 1944. Chapter 30 of the New tariff Act dealt with pharmaceutical products. Chapter Sub-heading 3003.30 provided for no excise duty leviable on medicaments, including those used in ~ Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic System. In October 1991, Board advised its field formations to classify the product as toilet requisite. The assessee approached the Board by way of representation putting forth the plea that after the introduction of New Tariff Act and the amendments made in 1996, there is a specific ~ definition of Ayurvedic Medicine and hence classification , of its product DML should be done on the basis of that definition alone and not the common trade parlance test. The Board relied on Baidyanath and directed classification as toilet requisite. Department issued notice to assessee to show cause as to why DML be not classified as a toiletry under Chapter 33 of New Tariff Act. In view of conflicting opinions of different benches, matter was referred to larger bench of Tribunal which held that the product DML was classifiable under Chapter Heading 33.06 of the New Tariff Act. The Department and assessee filed appeals before this Court. |
