1. Appeal No. E/67/89-C has been filed by the appellant Shree Baidyanath Ayurved Bhawan Pvt. Ltd., Naini, Allahabad and Appeal No.E/188/89-C is by the Collector of Central Excise, Allahabad. Both these appeals are against the same order dated 26-9-1988 passed by the Collector of Central Excise (Appeals), New Delhi. The facts in brief are that M/s. Baidyanath Ayurved Bhawan (B.A.B.) are engaged in the manufacture of a product called 'Dant Manjan Lal'. Prior to 1-3-1975, the Central Excise department was of the view that the product Dant Manjan Lal was not chargeable to duty because of the express language of Tariff Item 14-E of Central Excise Tariff which was for patent or proprietary medicines other than those medicines which are exclusively Ayurvedic, Unani Sidha or Homeopathic. From 1-3-1975, residuary Item No. 68 "all other goods not elsewhere specified" was inserted in the Central Excise Tariff. Medicines other than those classified under Item 14-E, i.e. Ayurvedic medicines etc. were classified under Tariff Item 68 CET from 1-3-1975. The appellants applied for and obtained Central Excise licence for the product Dant Manjan Lal and cleared it on payment of duty under Item 68. By a Notification 62/78 dated 1-3-1978, all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified were included among the list of goods exempted and falling under Item 68 from the whole of duty of excise. After the issue of the Notification 62/78 dated 1-3-1978 as above, M/s. B.A.B. stopped payment of duty on Dant Manjan Lal. The Superintendent of Central Excise, Naini, Allahabad issued a Notice on 9-7-1981 to M/s. B.A.B.asking them to apply for Central Excise Licence for their product Dant Manjan Lal and to pay duty on clearances during the period 1975 to 1981. The manufacturers M/s. B.A.B. contended that Dant Manjan Lal was an ayurvedic medicine and manufactured under Drug Licence and not dutiable, since the drugs and medicines falling under Item 68 were exempt under Notification 62/78. The Assistant Collector of Central Excise, Allahabad, by his order dated 25-8-1981, held that Dant Manjan Lal was being used as tooth powder and it was not a drug or medicine and hence not eligible for exemption. M/s. B.A.B. preferred an appeal against the Asstt. Collector's order before the Collector (Appeals), who observed that the assessee had not produced any documentary evidence to establish that the product is manufactured exclusively in accordance with any formula described in the authoritative books of ayurvedic system of medicine specified in the Schedule to the Drugs and Cosmetics Act, 1940. The Collector (Appeals) further observed that this point can be decided only by reference to the particular book of ayurvedic system of medicine in which the ingredients used by the appellants in the manufacture of Dant Manjan Lal and the process employed for the production of this preparation have been described or alternatively by obtaining the expert opinion of the Drug Controller.
He remanded the case with these directions to the Assistant Collector.
In pursuance of this order of the Collector (Appeals), the Assistant Collector again decided the issue and passed an order dated 4-7-1986 holding Dant Manjan Lal as excisable under Item 68 of Central Excise Tariff. On an appeal against this order, the Collector (Appeals) in the present impugned order dated 26-9-1988 held that Dant Manjan Lal was an ayurvedic medicinal preparation which was made as per the formula prescribed therein "Ayurvedic Sar Sangrah" and that with the inclusion of Ayurvedic Sar Sangrah in the first Schedule of the Drugs & Cosmetics Act, 1940 vide Gazette Notification No. 441 dated 28-8-1987, the book had acquired the status of an authentitative treatise and that consequently the preparation Dant Manjan Lal had also acquired the status of an ayurvedic drug w.e.f. 28-8-1987 and disposed of the appeal accordingly.
2. Presenting the case for M/s. B.A.B., Shri Lachman Dev, the learned consultant submitted that the appellants were manufacturing Dant Manjan Lal under an Ayurvedic Drug Licence containing 100% ayurvedic ingredients and the Drug Licence had been issued under the provisions of Drugs and Cosmetics Act, 1940 which has been specially enacted to regulate manufacture and sale of ayurvedic medicines. The product is also used as an ayurvedic medicine. It is prescribed, bought and sold as Ayurvedic drugs for prevention ad treatment of mouth and teeth diseases like Pyorrhoea, Alveerine, Toothache, Gum Boils etc. and because of its recognised therapeutic and medicinal values, is prescribed as an Ayurvedic medicine by Vaidyas, Ayurvedic Doctors. The Central Government has specified Ayurved Sar Sangrah in the First Schedule to the Drugs and Cosmetics Act, 1940 at Serial No. 54-B under Heading 'Ayurved and Sidha Systems' under Notification dated 28-8-1987 and by virtue of this inclusion, all the medicines with their formula and ingredients mentioned therein are now phar-macopoeial medicines, according to the definition of Section 3 of Drugs and Cosmetics Act, 1940. Shri Lachman Dev then cited and relied upon the case law reported in 1988 (36) ELT 369A (Bom.) - Leukoptasl (India) Ltd. v. State of Goa in which the Bombay High Court held that the definition of drug given in the Drugs and Cosmetics Act is relevant for determining its meaning in trade and that popular or commercial meaning of the term is synonymous with the meaning given in the Act. Shri Lachman Dev's attention was drawn to a decision of this Tribunal in the appeal of the same firm of Patna v. Collector of Central Excise, Patna reported in 1985 (22) ELT 844 (Appeal No. ED(SB) 248/82-C in its Order No.438-439/85-C dated 7-6-1985)in which the Tribunal had considered the same issue and had found that the product Dant Manjan Lal is classifiable under Item 68 and is not an Ayurvedic drug. The learned consultant submitted that in the Tribunal's decision the meaning given to the term drug is not in consonance with the criteria laid down in the Bombay High Court decision cited by him supra, and that further, the factual position has since changed with the inclusion of Ayurvedic Sar Sangrah in the First Schedule of the Drugs & Cosmetics Act, 1940 and also the affidavits have now been filed of actual users which were not there before. Shri Lachman Dev, therefore, contended that there were sufficient grounds for the Tribunal now to take a different view from the one expressed in its previous decision due to the changed circumstances. He also mentioned that the same issue was pending before the Supreme Court. Shri Lachman Dev also submitted that in any case, the appellants are not liable to pay duty, as they had claimed during the proceedings before the Asstt. Collector in a letter dated 26-11-1985 that even if Dant Manjan Lal falls under Tariff Item 68, no duty is payable since they did not use power in its manufacture and hence, the goods were exempt from duty under Notification 179/77 dated 18-6-1977. This was an additional ground taken by M/s. B.A.B. before the Assistant Collector.
3. Presenting the department's appeal, the learned Departmental Representative Shri S. Chakraborty contended that the order of the Collector (Appeals) is not proper because it gives a decision that the product manufactured by M/s. B.A.B. has acquired the status of Ayurvedic drugs on and from 28-8-1987, whereas the period under dispute for the assessment of the product was much prior to that. The learned DR also contended that there has been no change in the circumstances relating to the same product dealt with above by the previous order of the Tribunal because that order related to the period prior to 28-8-1987. As regards the Bombay High Court decision on Leukoplast (India) Ltd. relied upon by M/s. B.A.B., the learned DR pointed out that in the previous decision of this Tribunal on the same case, the view taken by it that definition in the Drugs and Cosmetics Act cannot be imported into the Central Excises & Salt Act or for interpretation of Central Excise Tariff, had been followed by the Tribunal in a further decision in the case of Sunny Industries (P) Ltd. v. Collector of Central Excise -1989 (39) ELT 468 and further submitted that the Tribunal in taking this view had followed the Supreme Court decision in the case of Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh - AIR 1967 SC 1454. The learned DR further cited the case law AIR 1981 SC 951 in the case of Union of India v. R.C. Jain to say that definition in other Act cannot be imported into a different statute and submitted that the Tribunal is bound to follow the ratio of the Supreme Court decision and these decisions have consistently held a view different from that of the Bombay High Court decision relied upon by M/s. B.A.B. As regards their claim for exemption under Notification 179/77, Shri Chakraborty pointed out that this was a new ground taken in the de novo proceedings and outside the purview of the directions given by the Collector (Appeals) to the Asstt. Collector while remanding the case to him. Therefore, this cannot be raised by M/s.
B.A.B. at this stage. The claim made in their letter of 26-11-1985 was being made for the first time for the exemption, which is much subsequent to the original adjudication of the matter by the Asstt.
Collector.
4. In respect of the appeal by the department against the impugned order of Collector (Appeals), Shri Chakraborty contended that the criteria for classification for the period 28-8-1987 is totally different because the Central Excise Tariff Act, 1985 was in force at that time. Sub-heading 3306.00 of the Central Excise Tariff Act, 1985 specifically covers preparations for oral or denial hygiene including dentifrices (for example toothpaste and tooth-powder) and denture fixative pastes and powders. Further, Note 2 under Chapter 33 of Central Excise Tariff Act, 1985 is to the effect that Heading Nos. 3303 to 3308 apply, inter alia, to products suitable for use as goods of these headings and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents or are held out as having subsidiary curative or prophylactic value. The learned DR pointed out that Dant Manjan Lal is a product of daily use for cleaning teeth, whereas medicine is used for specific period on Doctor's prescription. It may have some curative or prophylactic value, but yet, has to be classified only under sub-heading 33.06. Therefore, the Collector (Appeals)'s order is bad in law. Shri Lachman Dev, the learned consultant in reply, contended when the item is included in the Drugs and Cosmetics Act, it is recognized as a medicine and by virtue of that, it will remain a medicine even for the past period. Their claim for exemption for not using power had also been verified by the department.
5. We have carefully considered the submissions made by the learned consultant and the learned DR. We find that the issue whether Dant Manjan Lal produced by M/s. B.A.B. is an Ayurvedic medicine or drug, to be eligible for exemption under Notification 55/75 as amended by Notification 62/78, has been considered in detail by this Tribunal in its decision reported in 1985 (22) ELT 844 - Shree Baidyanath Aymved Bhawan Ltd. v. Collector of Central Excise, Patna. Paras 72-78 of this decision arc very relevant and are reproduced below : "72. A 'medicine'/'drug' as known in common parlance is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments.
73. The main thrust of the argument of Shree Baidyanath Ayurved Bhawan Ltd. is that all the ingredients of its 'Dant Manjans' are exclusively Ayurvedic medicines for the treatment of mouth and teeth diseases and as such its Dant Manjans are also Ayurvedic medicines.
75. The end product should not be known by its ingredients. Hon'ble Supreme Court in the case of Delhi Cloth Mills v. State of Rajasthan - 1980 ELT 383 held that a commodity should be considered as a whole and should not be classified only from the point of view of one of the elements that go in the making of it, however, important that element may be.
76. In the case before us, the end product is 'Dant Manjan' in a powder form. Allahabad High Court in the case of Commissioner of Sales Tax, U.P. v. Sarin Chemicals (24 STC 406)held that tooth powder used for cleaning the teeth is an article of cosmetics or toilet requisites. In that case the manufacturer had claimed medicinal properties for their products and this is what the Judge observed on the point :- "...Some of them do possess some prophylactic and remedial properties but whether they do or do not possess the medicinal properties, claimed by their manufacturers, the fact remains that they are used for dental cleanliness which is an essential act of toilet".
Cleaning teeth being an act of daily toilet, dentifrices produced in the form of tooth powder used for cleaning teeth would be an article of toilet as held by the Bombay High Court in the case of Commissioner of Sales Tax v. Vicco Laboratories (22 STC 169). Madras High Court in the case of V.P. Somasundra Mudaliar v. State of Madras [1963 (1.4) STC 943] also took the view that the tooth powder is a 'toilet' requisite.
Hon'ble Supreme Court in the case of Sarin Chemical Laboratory v.Commissioner of Sales Tax, U.P. (AIR 1972 SC 65) also held that tooth powder in common parlance is considered as a toilet article. In this judgment, Supreme Court referred to the decisions of Allahabad, Bombay and Madras High Courts mentioned above and confirmed the view taken by those High Courts that the tooth powder is a 'toilet requisite'.
77. A passage from Encyclopaedia of Chemical Technology, New York, Vol.
4 appearing at Pages 928 to 930 have been quoted with approval by the Madras High Court in V.P. Somasundra Mudaliar's case (supra) which reads as under :- "A dentifrice is defined as a cleansing agent in the form of a powder, paste or liquid to be used on the teeth ... Modern dentifrices are an extension of the numerous abrasive and cleansing substances used as dentifrices in the early part of 10th century....Although dentifrices have been considered dental cosmetics at first the emphasis of advertising and the awakening of the hygiene consciousness occasioned by the rising standard of living caused dental cleansing to be regarded as an indispensable daily hygiene rather than an elective enhancement of beauty....
Although manufacturers of dentifrices have advanced such claims in their behalf as ability to prevent dental caries (decay) and treatment of pyorrhoea the inexorable fact remains that the dentifrices may be expected to perform only the principal function, the cleansing of the teeth, which includes the prevention of layers of mucous, plaques that gives them an appearance of yellowness.
Dentifrices are not functionally antiseptic but in cleansing teeth, they serve as detergents for teeth and mucous membranes of the mouth since water is usually used to dispose of the dentifrice after brushing....
78. In the presence of these authoritative pronouncements, it hardly lies in the mouth of Shree Baidyanath that its product Dant Manjans which is essentially nothing but a tooth powder is a medicine or drug".
The findings are fully applicable to the facts of the present case. It has been argued before us that there have been certain changed circumstances and that these should be sufficient ground for us to take a different view from the earlier decision of the Tribunal cited supra.
One such circumstance is the inclusion of Ayurvedic Sar Sangrah in the First Schedule of the Drugs and Cosmetics Act, 1940 vide Gazette Notification dated 28-8-1987, according to which Dant Manjan Lal is prepared. However, a perusal of the decision of the Tribunal supra shows that the Tribunal had applied the test of common parlance, trade understanding and judicial decisions on the subject. In para 99 of its decision, the claim of inclusion in the Drugs and Cosmetics Act as an argument has been taken up and dealt with only for argument's sake.
Therefore, the inclusion of Ayurvedic Sar Sangrah in the First Schedule of the Drugs and Cosmetics Act would not be such a circumstance as to warrant a change in view. Another circumstance pointed out by the appellants for a different view is the decision of the Bombay High Court in Leukoplast (India) Ltd. case saying that the definition of drug in the Drugs and Cosmetics Act can be taken as synonymous with popular or commercial meaning of the term 'drug'. However, in the Tribunal's decision, the Tribunal had gone by the ratio of the Supreme Court decision in the case of Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh - AIR 1967 SC 1454, as well as other decisions of Allahabad High Court and Delhi High Court. The Tribunal had further noticed the specific instance of the Bombay High Court ruling in Misc. Petition 201/77 dated 1-9-1977 wherein the Court set aside the order of the Customs authorities which had interpreted the word 'food' occurring in Item 21(2) of the Schedule to Indian Tariff Act, 1944 in the light of the definition of the word 'food' in the Food Adulteration Act, 1954. Therefore, this also cannot be considered a circumstance warranting a change in view. As for the other argument that the affidavits of actual users have now been produced which were not before the Tribunal in its previous decisions, we find that the Tribunal had, with reference to the ingredients in the product and the various judicial pronouncements and the public understanding of the product, given a clear finding that tooth powder is an article of every day use meant for cleaning teeth as an indispensable hygiene intended to protect the teeth and preserve them in good condition and that although the manufacturers of these Dant Manjans have claimed that they are able to prevent dental decay and pyorrhoea, Alveerine, toothache, etc., the fact remains that these Dant Manjans may be expected to perform only the principal function of cleaning the teeth. Admittedly, there is no change in the principal function of the product since the previous decision of the Tribunal. Therefore, the ratio of the decision is fully applicable to the facts of the present case and it is, accordingly, held that Dant Manjan Lal produced by M/s. B.A.B. is classifiable under Item 68-CET during the period material to this case and it is not a drug or Ayurvedic medicine and, accordingly, is not eligible for exemption under Notification 55/75, as amended by Notification 62/78. It is further well settled by the decision of the Hon'ble Delhi High Court in the case of Paras Laminates Pvt. Ltd. v.CEGAT - 1990 (45) ELT 521 that judicial propriety and decorum requires that if a two-Member Bench is appraised of a decision given by a three-Member Bench, the said Bench should accept and follow the same and not embark upon to reconsider the matter even if they are inclined to take a different view. Therefore, we are clearly bound by the previous decision of the Tribunal by a Co-ordinate Bench, more so, when this matter is stated to be also pending before the Supreme Court. In this view of the matter, the order of the Collector holding that w.e.f.
20-8-1987 Dant Manjan Lal has acquired the status of medicine preparation within the meaning of definition of Ayurvedic drug, as laid down in Section 3 of the Drugs and Cosmetics Act, 1940 is not maintainable because it is seen that the classification of the goods for the period on and from 28-8-1987 was not at all before that authority and the order of the Collector (Appeals) does not give any finding as to the position regarding classification prior to that date, which was in fact the issue before him for decision. However, as we have seen, the issue is squarely covered by the earlier decision of this Tribunal reported in 1985 (22) ELT 844.
6. In this context, it was also argued before us by the learned DR that M/s. B.A.B. cannot now, at this stage, claim the exemption under Notification 179/77 as it will be a new ground and outside the purview of the direction given by the Collector (Appeals) as contained in his order remanding the case to the Assistant Collector. On a careful consideration of the submissions, we find that M/s. B.A.B. had made a claim for this exemption in a letter dated 26-11-1985 although admittedly, subsequent to the original adjudication of the case by the Collector, but well before he passed the order dated 4-7-1986 in the de novo proceedings. We also note that the order-in-appeal dated 3-7-1983 directs the Asstt. Collector to decide the case de novo on merits. In such a circumstance, and since before the order in the de novo proceeding was passed by the Assistant Collector, M/s. B.A.B. did raise the question of eligibility to the exemption under Notification 179/77, it will, in our view, be appropriate to take a view that the effect of the Collector (Appeals)'s order was wide enough throwing open the entire question for de novo consideration, and in such a view of the matter, the question of eligibility to exemption under that notification would require to be gone into. We further find that the Collector (Appeals) in the impugned order did not go into this aspect because on merits, he came to the conclusion that Dant Manjan Lal was an ayurvedic medicinal preparation (though with effect from 28-8-1987).
However, as we have already seen, Dant Manjan Lal is classifiable under Item 68-CET without benefit of Notification 55/75 and in this context, it becomes even more necessary and in the interests of justice that their claim for exemption under Notification 179/77 should be gone into. In the circumstances, the impugned order of the Collector (Appeals) is set aside and we remand the case to the Collector (Appeals) for deciding the question of eligibility of M/s. B.A.B. for exemption under Notification 179/77 after taking into consideration evidence available to see whether they fulfil the conditions thereto in accordance with law and after giving M/s. B.A.B. an opportunity of personal hearing and to furnish such evidence as they may possess in this regard. The appeals of M/s. B.A.B. and the department are disposed of in the above terms.
The Cross Objection filed by the department in the appeal of M/s. B.A.B is misconceived as it is in the nature of comments on the appeal filed by M/s. B.A.B. and is, accordingly, dismissed.