IMPORTANT POINT
For determining the classification of a product, the twin test noticed in Puma Ayurvedic Herbal (P) Ltd. Continues to be relevant.

JUDGMENT

R.M. Lodha, J.—

The only issue in this batch of thirteen civil appeals is in respect of classification of “Dant Manjan Lal” (DML) manufactured by M/s. Baidyanath Ayurved Bhawan Limited (‘Baidyanath’, for short). While Baidyanath contends that the product DML is a medicament under Chapter Sub-heading 3003.31 of the Central Excise Tariff Act, 1985, the stand of the Department is that the said product is a cosmetic/toiletry preparation/tooth powder classifiable under Chapter Heading 33.06.

2. The true classification of the product DML has been subject of fluctuating opinion among the benches of the Customs, Excise and Gold (Control) Appellate Tribunal (for short, ‘Tribunal’). West Regional Bench of the Tribunal decided the classification in favour of Baidyanath and held that DML is classifiable under Chapter Sub-heading 3003.31. The similar view has been taken by East Regional Bench of the Tribunal. However, the larger bench of the Tribunal to which the issue of classification of DML was referred, has held that DML is classifiable under Chapter Sub-heading 3306.10. It is for this reason that the Department as well as Baidyanath have preferred separate appeals.

3. The litigative journey with regard to classification of this product has reached this Court earlier in Shree Baidyanath Ayurved Bhawan Ltd. Vs. Collector of Central Excise, Nagpur1. We shall refer to that decision a little later. First we shall advert to the sequence of facts leading to the present controversy.

4. Baidyanath is engaged in the activity of manufacturing medicines adopting Indian systems. They have their works situate at Calcutta (now Kolkata), Naini, Patna, Nagpur and Jhansi. One of the products being manufactured by Baidyanath is DML. The product is a powder compounded with Geru, Peepall, Sonth, Kali Mirch, Tambakuh, Clove Oil, Camphor, Pepperment, Babul Chhal, Tumber Beej. Baidyanath claims 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 (for short ‘Act, 1940’). It is also the case of the Baidyanath that DML is sold in the name which is specified in Ayurved Sar Sangraha.

5. Prior to 1975, the product DML was considered to be classifiable under Tariff Item 14E of the First Schedule of the Central Excise and Salt Act,1944 (for short ‘Act, 1944’) which item covered medicines. Accordingly, DML was not subject 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. Baidyanath filed a fresh classification list and commenced paying excise duty as was leviable under Residuary Item 68 of the Act, 1944.

6. On March 1, 1978, the Central Government issued an Exemption Notification bearing No. 62/78-CE whereby exemption was extended to “.....all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified.” Baidyanath claimed the benefit extended by the Central Government under the said Notification and stopped paying duty on the product DML while filing fresh classification list.

7. In the month of March 1980, the Department expressed doubts about the classification of DML and issued notices to Baidyanath requiring them to show cause as to why DML be not subjected to tariff rate without treating it as an Ayurvedic Medicine and without extending the benefit available under the Notification No.62/78-CE.

8. Baidyanath resisted various show cause notices on diverse grounds, namely; that DML is an Ayurvedic Medicine, that it manufactures the same under a drug licence; that all the ingredients of DML are mentioned in the authoritative book of Ayurved System of Medicine; and that the product is an Ayurvedic Medicine in the trade and common parlance. The Baidyanath, t