Judgment:
1. This appeal arises from Order-in-Appeal No. 4/2005 CE dated 11.1.2005. The question that arises for consideration is as to whether the four items manufactured by appellant for use on pet animals are to be classified as cleaning agents or to be considered as having curative value prepared for therapeutic or for prophylactic uses. The items are The appellants claim these products as 'Veterinary Medicaments' falling Under Chapter No. 3003.10, while department has treated them as 'animal toilet preparations' falling Under Chapter No. 3307.90.
2. The appellants contention is that the items are not 'animal toilet preparations' as they are using drugs in its preparation which are required for preventing fleas, ticks, lice, parasites and other bacterial and fungal infections. They are not toilet preparations for mere cleaning the animals like soap and shampoo. They are all 'Veterinary Medicaments'. The same has been manufactured under Drug licence issued by Drug Controller. However, the Commissioner (A) has rejected the plea and has held the items to be 'animal toilet preparations' falling Under Chapter Sub Heading 3307.90 and has demanded duty. The demands for larger period has been dropped and the appellants are challenging confirmation of differential duty Under chapter heading 3307.90 and contend that all the four items manufactured by them are 'Veterinary Medicaments' using all drug agents under the Drug Licence. They are not mere 'animal toilet preparations' like soap and shampoo for the purpose of cleaning the hairs of the animals. They are used for killing the parasites, ticks, fleas, lice and other parasites and to prevent bacterial and fungal infections and Seborrhic Dermatitis. To establish their case, they have produced technical evidence and a certificate from expert veterinarian. However the Commissioner (A) has rejected the expert opinion of the veterinarian as well as the Drug Licence and has straightaway held the items to be 'animal toilet preparations'. There is no evidence from the trade or from the market or from the technical experts to consider the items to be 'animal toilet preparations'. The appellants contend that the Commissioner (A) was not justified in rejecting the expert's opinion which clearly stated that the items are drugs for use against rhipicehalus ticks without any side effects. It is also submitted that the items are produced under Drug Licence issued by Drug Controller and hence, they are not 'animal toilet preparations'. The appellants have also produced the trade literature to show that the items are marketed as 'Veterinary Medicaments'.
3. The learned Counsel submits that once Drug Licence has been issued by Drug Control, then the item has to be treated as manufactured under Drugs Act. He relies on the ratio of the following rulings of the Apex Court and Tribunal.Naturalle Health Products Pvt. v. CCE, Hyderabad (vi) CCE (A), Hyderabad v. Apple Laboratories 2006 (198) ELT 437 (Tri.-Bang.) He submits that the evidence produced has also not been considered and hence, the order is not sustainable.
4. The learned JDR contended that the items are also used in cleaning the hairs of the pet animals and the classification adopted by the revenue is justified.
5. On a careful consideration and perusal of the records, we notice that the appellants have produced Drug Licence for manufacture of the item and are having drugs name mentioned on the product label manufactured by them. Drug controller has clearly stated that the ingredients in the manufacture of Veterinary Medicaments are of veterinarian drug and veterinarians has issued certificate stating that these drugs are issued on issue of prescription for specific use.
Appellants have also produced trade literature to show that the purpose for which these four items are used. It does not show from the trade literature that they are 'animal toilet preparations' but in fact it supports the appellant's plea that they are veterinarian medicaments with specific use for killing the ticks, fleas, lice and parasites and for curing skin ailments caused by bacterial and fungi like Seborrhic Dermatitis, pyoderma, allergic dermatitis, mange, hormonal imbalances, etc.
5.1 We have perused the judgments cited supra. It is well laid down in all these citations that once a product is manufactured under a Drug Licence, then the same cannot be considered as 'toilet preparations'.
In view of the cited judgments which supports the appellant's case and also in the light of the evidence both the technical and trade literature produced by the assessee, the items manufactured by them are required to be treated as 'Veterinarian Medicaments' falling under chapter heading 3003.10 of CET 1985. They are not 'animal toilet preparations' as contended by the department. There is no evidence to support the revenue's plea. The impugned order is not legal and correct. The appeal is allowed with consequential relief, if any.