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2006 Supreme(SC) 1101
2006(9) Supreme 216
SUPREME COURT OF INDIA
(From Customs, Excise & Service Tax Appellate Tribunal, New Delhi)
S.B. Sinha and Dalveer Bhandari, JJ.
Commissioner of Central Excise, Surat - Appellant
versus
M/s Zandu Pharmaceutical Works Ltd. - Respondent
Civil Appeal No. 7849 of 2004
Decided on 10-11-2006
Counsel for the Parties :
For the Appellant : Mohan Kumar Parasaran, A.S.G., Ms. Sandhya Goswami and B. Krishna Prasad, Advocates.
For the Respondent : Madhav Rao, Alok Yadav and Rajesh Kumar, Advocates.
Headnote:Central Excise Tariff Act, 1985 - SH No. 3305.99 and SH 3305.10 - Hair oil manufactured by respondent was being classified under SH No. 3003.39 as Ayurvedic Medicament - Show cause to classify the product under SH No. 3305.99 as cosmetic product and for recovery of Rs. 11,12,129 on account of short payment of central excise by wrong classification - Deputy Commissioner held product classifiable under SH 3305.99 and respondent was directed to make good the short payment - Commissioner (Appeals) dismissed appeal - Tribunal in appeal held product classifiable under CH 3305.10 as perfumed hair oil and matter was remanded to Adjudicating Authority for computation of excise duty - State Appeal - Before the assessing authority, respondent had disclosed manufacturing process - On almost identical situation, such a product had been held to be an Ayurvedic product - No appeal had been filed against order of Tribunal refusing to classify product of respondent as an Ayurvedic Medicament - Question whether product had any therapeutic value or not was not needed to be gone into - No reason to interfere.
Held : The Tribunal, on the other hand, as indicated hereinbefore, proceeded on the basis that only because some ingredients of the product are mentioned in the authoritative books of Ayurveda, the same would not make the product a medicament. It also noticed the ingredients and the therapeutic or prophylactic uses of the product.(Para 8)
Recently, however, in Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise, Nagpur [2006 (196) E.L.T. 3 (SC) : (2006) 3 SCC 266], Puma Hair Tonic Powder and Puma Anti-Dandruff Oil, Puma Shishu Rakshak Tel were held to be medicinal products having regard to the medicinal property. Respondent, therefore, could contend that there product also is an Ayurvedic medicament. Tribunal, however, proceeded on the alternative submissions made on its behalf. No appeal has been filed against the order of the Tribunal refusing to classify the product of respondent as an Ayurvedic Medicament. (Para 16)
We are, therefore, only left with the contention that the product of Respondent is a perfumed hair oil. Indisputably, perfume is added. Addition of perfume is a part of manufacturing process. It is one of the ingredients of the product. (Para 17)
We therefore without going into the question as to whether the product of Respondent has any therapeutic value or not would agree with the judgment of the Tribunal. We, thus, find no merit in this appeal. It is dismissed accordingly.(Para 18)
JUDGMENT
S.B. Sinha, J. - Respondent herein manufacture hair oil under the brand name of "Alma Lio". It was classified under SH No.3003.39 of the Schedule appended to the Central Excise Tariff Act, 1985 (for short, the 1985 Act). The said entry provides for excise duty at the rate of 8% ad valorem being Ayurvedic Medicament. A show cause notice was issued as to why the said product shall not be classified under SH No.3305.99 being a cosmetic product attracting excise duty at the rate of 30% ad valorem. It was alleged that by wrong classification of its product there had been a short payment of central excise duty amounting to Rs.11,12,129/-. A demand of the said amount in terms of Rule 9(2) of the Central Excise Rules, 1944 (for short, the Rules) read with section 11A of the Central Excise Act, 1944 (for short, the 1944 Act) was issued. A penal action in terms of rule 173-Q of Rules was also proposed. Cause having been shown by Respondent, the matter was heard by the Deputy Commissioner, who opined that the product was classifiable under SH 3305.99 of the 1985 Act. Respondent was directed to make good the short payment. A penalty of Rs.11,12,129/- was also imposed upon it together with interest. An order for recovery of interest under section 11 AB of the 1944 Act was also passed. The appeal preferred by Respondent before the Commissioner (Appeals) was dismissed by an order dated 17.4.2003. He, however, opined that the product being not perfumed and being hair tonic, and as such different from hair oil, could be classified under Chapter Heading No.3305.99 falling in the residuary group. He also directed valuation of the goods to be done under Section 4A of the 1944 Act. On a further appeal made by Respondent before the Tribunal, the product was held to be classifiable under SH-3305.10 as perfumed hair oil. The matter was remanded to the Adjudicating Authority for recomputing the duty of excise payable.
2. Appellant is, thus, before us.
3. Mr. Mohan Parasharan, the learned Additional Solicitor General of India, appearing on behalf of Appellant, submitted that the Tribunal went wrong in classifying the product of Respondent as perfumed hair oil although it never disclosed the manufacturing process involved therein.
4. Mr. Madhav Rao, the learned counsel appearing on behalf of Respondent, on the other hand, supported the judgment.
5. Before the assessing authority, Respondent disclosed the manufacturing process undertaken by it, which is as under :
"(a)Aqueous extract of Mehandi, Bhringraj, Amla, Doodhi Seeds, Renukbeej, Ambagotti, is prepared and concentrated.
(b)Coconut oil in hearted with Nagarevel Pan.
(c)Concentrated equeous extract is added to coconut oil and boiled.
(d)Milk solution is added to hot Coconut oil and boiled. Then kapur kachli powder is added.
(e)Bulk is cooled and fragrance is added. It is kept for 7 days and filtered."
6. The assessing authority in its order furthermore noticed :
"They further submitted that the Coconut oil is used in the said Product for the purpose of using the same as base to enable application of the above referred Ayurvedic Ingredients. Their product contains, time tested herbs with well known properties. They submitted the various properties of the said Ayurvedic. Ingredients ultimately ensured dandruff free hair, and also strengthen and promotes of the various ingredients use is the said "Almalio" the details against each of the said Ingredients:-
(A)Mehandi, :To strengthen and Amlaki & promote healthy Kapur Kachlihair growth.
(B)Bhringraj:To make hair dark, luxuriant and prevent dandruff.
(C)Doodhibeej :To cool head& Dugdha
(D)Renuk beej :To Nourish the & Amaresthiscalp.
They submitted that the use of the above Ingredients in their product "Almalio" are having Pre-dominant curative or prophylactic value and the use of the same cannot be compared with any other ordinary preparation intended to be use on hair."
7. It is, therefore, not correct to contend that Respondent never disclosed
