Per Jyoti Balasundaram, Vice-President - Common issues arise for determination in these three appeals filed by Seagull Drug Ayurvedic (SDA), Ozone Pharmaceuticals Ltd. (OPL) and its Managing Director Sh. S.C. Sehgal, which are hence heard together and disposed of by this common order.

2. Vide the impugned order the Commissioner has confirmed differential duty demand against SDA under proviso to Section 11A, imposed equal amount of penalty and separate penalties on OPL and its Managing Director Sh. S.C. Sehgal. The duty confirmation and imposition of penalties have arisen pursuant to a show cause notice issued on 30-5-2003 under extended period of limitation under proviso to Section 11A of Central Excise Act for the period 1999 - 2000, 2000-01 and 2001-02.

3. The Commissioner has held that the 'Nomark' cream manufactured by SDA was classifiable under Heading 3304.00 of Central Excise Act as a cosmetic product instead of Ayurvedic medicine classified by Seagull under heading 3003.39 as Ayurvedic medicine. He has held that OPL through whom SDA was selling bulk of their products was a related person of SDA in terms of Section 4(4)(C) of Central Excise Act, 1944. He has also held that, in the facts of the case, extended period of limitation was rightly invoked.

4. We have heard the counsel for the appellants and the ld. DR for the Department and carefully perused the records.

5. We find that prior to starting of manufacture of Nomark cream, SDA was manufacturing Wanish cream for which they were granted Central Excise Registration w.e.f. 1-9-1997. Seagull had claimed the classification of Wanish cream as Ayurvedic medicine under Heading 3003.39. The Department had issued a show cause notice to Seagull wherein it was alleged inter alia that Wanish cream was classifiable as cosmetics under Heading 3304 and was not an ayurvedic medicine as claimed by SDA. The Additional Commissioner vide Order-in-Original No. 16/CE/99, dated 21-6-1999 had held as under :-

"Wanish Skin Cream

The skin cream is packed in 25 gm aluminium tube. On the tube and packing material following indication/instructions are printed :

Store in cool and dry place.

Protect from direct sun-light.

An Ayurvedic Medicine.

From above description of the product and the related documents, it is seen that :

(i) Wanish skin cream is an Ayurvedic Medicine under Drugs and Cosmetics Act, 1940.

(ii) The product is marketed as a medicament for the cure of various types of marks.

(iii) The ingredients of the creams have medicinal value.

(iv) It has substantial therapeutic value as it claims to cure burn marks, hyper pigmentation marks, delivery stretch marks and obesity marks etc.

(v) The skin cream is to be applied at the affected area only and not anywhere else.

(vi) The skin cream has its own shell life as in case of medicines.

(vii) The skin cream is to be applied for a specified condition/ailment and for specified time only.

(viii) The marketing and advertising pattern of the product does not claim the cosmetic use of the product.

Therefore, in view of above characteristics of the products, Wanish Skin Cream is clearly classifiable as 'Ayurvedic Medicine' under Chapter Heading No. 3003.39 of Central Excise Tariff Act, 1985".

We have been informed that the Department had accepted the above order-in-original as no appeal was filed against the said order. While passing the above order the Additional Commissioner had examined the literature of the product as indicated on its packing material, its medicinal values and conditions in which the same was to be applied. He also took into account the fact that Wanish cream was used to cur