Full Judgment
2. The respondent was holding Central Excise Registration and filed classification list for the year 1993 and 1994. They claimed classification of their product 'Wipro Shikakai Herbal Powder' under Chapter sub-heading 3003.30. The other product, as described in Assistant Commissioner's order in Para 2 thereof, it was declared as 'Siddha Medicine' used for cleansing, beautifying and keeping the hairs healthy. The Show Cause Notice dated 28- 12-1994 was issued by the Department proposing to classify the product under Chapter sub-heading 3305.90 attracting 70% rate of duty from 30-11-1993 to 28-2-1994 and 50% rate of duty from 1-3-1994. A reply was filed by the assessee respondent stating that the Food and Drug Administration, Maharashtra State have considered the same product as an Ayurvedic Product and granted a licence accordingly. They also stated that if the product would have been merely a 'Cosmetic' as defined in the Drugs and Cosmetic Act they would not have been granted a licence as an Ayurvedic drug. They re lied on interpretation given by the said authority for purpose of Central Excise Tariff Act.
3. It was specifically urged at the time of personal hearing before the Assistant Commissioner that the product was a combination of natural ingredients and thus not cosmetic but herbal and medical preparation.
Siddha was not an Ayurvedic but licences were common. They relied on Chapter notes 2 and 6 of Chapter 33 of Central Excise Tariff Act. The Assistant Commissioner on the basis of the evidence adduced before it and on the basis of the literature pasted on the Unit Pack held as under.
"It is natural foam softly cleans hair, makes them beautiful and prevents them from dandruff. The pouch which has the unit packing is depicted is coloured and depicting long, curly and soft hairs on the face of it." Assistant Commissioner further finds that the pouch was similar to other shampoo pouch available in the market.
5. After making reference to Chapter Note 2 of Chapter 33 of the Central Excise Tariff Act, the Assistant Commissioner held following decision of the Tribunal in the case of B.P.L, Pharmaceuticals Pvt.
Ltd. v. Collector of Central Excise, Baroda -1994 (69) E.L.T. 798 and the case of Henna Exports Corporation v. CCE -1993 (67) E.L.T. 907 that the products comes under Chapter sub-heading 3305.90. An appeal was filed by the assessee against the said decision of Assistant Commissioner. The Commissioner of Central Excise (Appeals) by the impugned order after describing the relevant ingredient and the name of the book which ingredient indicated as medicine in the Ayurvedic Text book and also referring to the Board Letter Circular 25/91-CX. 3 held in favour of the assessee. Hence the present appeal by the department.
6. In the grounds of appeal main argument of the department is that the ingredient of the product alongwith usage has been taken into consideration. It is further emphasised before us the ingredient had different properties, but, their actual and dominant properties for which they are used in the product have to be considered. The grounds of appeal describe the finding given by the Assistant Commissioner regarding the ingredient and its usage which has not been properly considered by the appellate authority. We have considered the submissions made by the department as the respondent is absent. We have gone through the department's case as reflected in the order-in-original. The Adjudicating authority has clearly described the nature of the product as well as to ingredient in Pages 2 and 3 of its order. In Page 4 of the order the Adjudicating authority describes the use of the dispersive agent viz. Sodium Lauryl Sulphate and accepted report of Dy. Chief Chemist who says that ingredient are effective in treatment of prevent of dandruff. In the case of Henna Export Corporation v. CCE - 1993 (67) E.L.T. 907 in Para 6 thereof the Tribunal held as follows : In respect of classification, the Department holds that product is classifiable under heading 33.05 which reads as "Preparation for use on the hair". Chapter Notes 2 and 4 have also been invoked which are as follows :- Chapter Note 2 - Heading Nos. 33.03 to 33.07 apply, inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings with labels, literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialised to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value.
Chapter Note 4 - In relation to products of Heading Nos. 33.03, 33.04 and 33.05, conversion of powder into tablets, labelling or relabelling of containers intended for consumers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the products marketable to the consumer, shall be construed as 'manufacture'.
The herbal Shikakai powder manufactured by the appellants are sold in unit packings with labels which clearly contained indication that they are for use for the hair and make the hair silky, black, smooth and shining. It is clear that such shikakai powder would fall for classification under Heading 33.05 CETA in view of Chapter Note 2 as also Chapter Note 4 of Chapter 33. In respect of this product the appellants have not seriously contested the classification so much as the question that no process of manufacture was involved in the making of it.
7. In the instant case also the product is used for hair and it cleans hair gently and makes them beautiful. The evidence described in the text does not state that the product was used as shampoo which prevents dandruff.B.P.L Pharmaceuticals Pvt. Ltd. v. CCE, Baroda - 1994 (69) E.L.T. 798 the tribunal has held in favour of the Department.
But the said order has been reversed by the Supreme Court in the case of B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise, Vadodara -1995 (77) E.L.T. Page 485.
9. No doubt, the Commissioner (Appeals) in Paragraphs 6 and 7 has highlighted the product and the case of the respondent as to why he comes to the conclusion that the product comes within Chapter Heading 10. Who find that this type of oil has come for consideration of the Tribunal in the case of Vasu Pharmaceuticals v. CCE, Vadodara - 1999 (111) E.L.T. Page 625, where, the entire gamut of Chapters 30 and 33 have been discussed and specifically in Paragraphs 11, 12 and 13 have discussed as to why a product of this nature should be treated as one coming under Chapter 33. The said paragraphs read as under : It is significant that in addition from the instruction, on the carton for message on hair, there are no indications whatsoever with regard to its duration or frequency of application. A medicament of whatever origin reasonably be expected to have an optimum frequency and duration of use. Consumption or application of a medicament more frequently or for longer periods than required would at the very least be wasteful and can quite often lead to undesirable side effects. The total absence of any indication of any such limits of this is a stronger pointer to the product not being a medicament.
There is in fact nothing to show that the product is a medicament.
It may be true, as is claimed, that its ingredients figure in the ayurvedic text books cited as ayurvedic medicament. However, there is absence of material to show that in the quantities in which these ingredients are present, they have any medicinal effect. The product is supposed to consist of 80% Til oil and 20% Tan-raj oil, "made Sidhhi" with various other ingredients. The meaning of the term "made Sidhhi" was not clearly explained. It however appears that these are ingredients that give the product its medical properties.
With the exception of dhatura (15%), other ingredients consist of 1% or 0.5%. There is no material to show that, in these proportions, each of the ingredients or all the ingredients, acting in combination, confer on the other oils any therapeutic or a prophylactic properties. There is therefore total absence of support for the claim that the product has any therapeutic or prophylactic properties.
It is not the case of the appellant that the product could be sold only by means of a prescription to be given by a registered medical practitioner. The ingredients of the product by way of totalling the same exceed 100%, namely as it will be indicating composition about 100% is concerned by sesamum oil and tanraj oil. If that were to be so, how the other ingredients are having any effect on the final product. In the BPL Pharmaceuticals Ltd. case at para 34 it has been held as follows :- "Another reason given by CEGAT is that Heading 33.05 uses the word "Preparation for use on the hair" and therefore the product in question can be brought under the said heading. The Tribunal forgets that the product in question is intended as a medicine for curing the disease Tinea Versicolor' and as such applied to the skin wherever necessary apart from curing dandruff by applying on the scalp." In this case the product cover shows application as gentle message on dry hair and does not speak anything of application on the scalp or on skin which is the case in B.P.L Pharmaceuticals Ltd. case.
Apart from that, in the said case it has been found in para 3 of the judgment that the literature is sent only to physicians for their recommendations to their patients and the product is not available in the departmental stores and only with chemists who have licence under the Drug and Cosmetics Act to sell the same. In our view this is not the case here. Nowhere our attention was brought as to the product being sold ONLY at chemists whereas it is the case of the appellants that medicament is generally prescribed by the physician and medical practitioner and is generally available with the chemists in medical stores. The assertion of the appellant cannot be accepted that the product is curative and protective because it is not applied to the body but ONLY on hair as is revealed in the wrapper of the cover. This is therefore distinguishable from the B.P.L. Pharmaceuticals Ltd. case decided by the Hon'ble Supreme Court.
In the Order-in-Original there is a reference to the case of Collector v. Pharmasia (P) Ltd.- 1990 (47) E.L.T. 658 case. That was a case of infestation of lice on the head in relation to product called MEDIKAR. Here nowhere the application of the medicine is recommended for application to the body but only to apply to the hair which is a very important distinguishing feature. The Assistant Commissioner at Pages 13 and 14 of his order has held as follows :- "The issue for my consideration is whether Trichup oil claimed as Ayurvedic Medicaments by the assessee, can be classified under Chapter 30, Heading 30.03 or under Chapter 33, Heading 33.05 and if so, whether it would appropriately fall under sub-heading 3305.99 of the Schedule of CET, 1985.
The product is manufactured by the assessee under the authority of the State Govt. It is, as printed on the label, held out to be ayurvedic ingredients as listed on the label. The assessee therefore vehemently claims this product to be an ayurvedic medicine. The product is ad vertised, held out and sold as Trichup oil which is said to have some pharmaceutical constituents. It is as printed on the label, held out to be ayurvedic ingredients as listed on the label. The assessee therefore vehemently claims this product to be an ayurvedic medi cine. The product is advertised, held out and sold as Trichup oil which is said to have some pharmaceutical constituents. It is note worthy that the assessee does not consider the same to be hair oil, much less the perfumed hair oil. When the product is claimed and offered to be providing nourishment to the hair, it cannot certainly be treated as merely made for routine type of perfumed hair oil but would fall in the category of products illustrated in Note 6 of Chapter 33 of the said Schedule.
Because Trichup oil is manufactured under the licence issued by the drug control authority of the State Govt. it cannot be straight way considered as ayurvedic medicaments. The licence under the Drugs and Cosmetics Act is not determining factor for classification under C. Ex. Act as held by the Tribunal in the case of M/s. Alpine Inds. v. C.C.E., Delhi - 1997 (92) E.L.T. 53 (T). The medical properties claimed are very minor and in common and trade parlance the product is neither known, recognised, bought and sold as medicine for prevention/cure of diseases but it is meant for cure of the hair.
From the evidence on record, I find that Trichup oil cannot be considered as ayurvedic medicament. It is admittedly a product meant for use on the hair. However, it is neither a perfumed hair oil nor hair fixture and therefore it appropriately gets covered in the category of "other" under sub-heading 3305.99 of the Schedule. The classification, proposed in the SCN is appropriate and therefore I hold that Trichup oil is classifiable under Chapter 33 Heading 33.05 and sub-heading 3305.99.1 therefore pass order accordingly." As found in the earlier portion of this judgment the product is advertised and sold out to be nourishment only to the hair and it is not advertised for application on the body only. Moreover the appellants have not proved by any positive evidence that medical practitioners have prescribed the products and some patients have used this product and got cured the diseases. Therefore, in our view it is rightly the lower authorities have held that the product TRICHUP OIL as hair oil falling under chapter 33." It is significant for us to state that in Paras 12 & 13 how the Tribunal has distinguished the case of B.P.L. Pharmaceuticals decided by Supreme Court. In our view Tribunal's order in the said case of Vasu Pharmaceuticals is applicable to the facts of this case. On the basis of the factual aspect of the case which has been emphasised by the Order-in-Original and which have not been fully discussed by the Order-in-Appeal, we therefore do not follow the judgment of the Supreme Court in B.P.L. case 1995 (77) E.L.T. 485 because of the factual aspects in the instant case is different. We follow the judgment of the Henna Export Corporation v. CCE -1993 (67) E.L.T. 907 as the facts that case is identical with the instant case. So on the basis of the evidence adduced before us and on the basis of the facts before us we uphold the order passed by the Adjudicating Authority reversing the findings given by the Commissioner (Appeals). Appeal of the department is allowed holding that the product in question is classified under the chapter sub-heading 3305.90 and not under 3003.30 as claimed by the respondent. Appeal stands allowed.