Per Jeet Ram Kait : The Revenue by these appeals challenge the orders in appeal No. 135/2001-(CBE)(GV) and No. 136/2001-CBE (GCN) both dated 21.06.2001 passed by the Commissioner, Central Excise (Appeals).

2. After hearing both sides the operative portion of the order rejecting the Revenue appeals was pronounced in the open Court on 5.3.2003.

3. The brief facts of the case are that the respondents are manufacturers of Krithika Hair Vitalizer, Saagar Capsules, Saagar Cream, Nimizyne Capsules. Krithika Hair Vitalizer and Saagar Capsules are manufactured by them on job work basis for M/s. Mothi Pharma Pvt. Ltd. who supply the various siddha ingredients to them free of cost while the other items are manufactured out of their own raw materials and sold to M/s. Mothi Pharma Pvt. Ltd. In the month of January 1998 the officers of the DRI visited the factory premises of the assessee as well as M/s. Mothi Pharma Pvt. Ltd. and according to them the product Krithika Hair Vitaliser was a cosmetic preparation falling under Chapter 3305.10 as against the one claimed by the party under sub-heading 3003.39, and the other items were siddha medicaments. As a follow up action proceedings were initiated against the respondents by issue of show cause notice which culminated in the order of adjudication passed by the Additional Commissioner of Central Excise, where by he has classified Krithika Hair Vitaliser and Saagar Capsules under Heading 3003.10 and demanded duty under Rule 9 (2) read with Sub-Section 1 (1) & (2) of Section 11A of the CE Act, 1944 and also imposed penalty under various provisions of Central Excise Rules and also under Section 11AC of the CE Act, 1944. He has also ordered confiscation of the plant and machinery with option to the redeem the same on payment of fine of Rs. 5,000/-. He has also demanded interest under Section 11AB of the Act.

4. Aggrieved by the said order of the original authority the assessee filed appeal before the Commissioner (Appeals) who vide Order in Appeal No. 135/2001 (CBE)(GVN) dated 21.6.2001 held that the product Krithika Hair Vitaliser was also classifiable under chapter heading 3003.39 as claimed by the assessee. As regards Saagar capsules, he has noted that the original authority has traversed beyond the scope of the show cause notice by classifying the same under sub-heading 3003.10 when the show cause notice proposed classification under sub-heading 3003.90, as the dispute was only relating to Krithika Hair Vitaliser and not other products. The Commissioner (Appeals) also directed the lower authority to re-determine the value and demand duty at the rate applicable to the said product viz. Krithika Hair Vitaliser under sub-heading 3003.39. By the said order he has also set aside penalty imposed and the fine levied on the assessee.

5. Against the same order in original, the department also filed appeal before the Commissioner (Appeals) challenging the classification of the product Krithika Hair Vitaliser adopted by the original authority under sub-heading 3003.10 as patent or proprietary medicaments other than those medicaments which are exclusively Siddha and claimed classification of the same under sub-heading 3305.10 as perfumed hair oil. The department's appeal was rejected by the Commissioner vide Order in Appeal No. 136/2001 (CBE) (GVN) dated 21.6.2001. It is in the above circumstances that the department has come in appeal. In the appeals, the department has inter alia taken the following grounds :

(1) Krithika Hair Vitaliser is manufactured by 11 raw materials of plant origin in shade and cleaning after which it is soaked in the ratio of one part with seven parts of coconut oil previously warmed, thoroughly stirred, heated for complete extracting filtered and mixed with suitable fragrance for packing in plastic containers. The raw materials are individually indicated in the Siddha pharma formulary separately and no composition as prescribed in the formulary is followed during manufacture.