Per Gowri Shankar: M/s Alpine Industries, New Delhi manufacture product named Lip Salve. This product, which is supplied exclusively to the Ministry of Defence for use by members of the Defence Forces, was classified by the manufacturer under sub-Heading 3003.20 of the Central Excise Tariff without payment of duty. The Department was, however, of the view that the product should be classifiable under Heading 3304.00 leviable to duty @105% ad valorem. A show cause notice was, therefore, issued proposing re-classification and consequently recovery of duty. After considering the reply and hearing the party, the Principal Collector, Central Excise, New Delhi, held that the product was not a medicament classifiable under Heading 3003.20 as claimed by the manufacturer, but the product was classifiable under heading 3304.00. He, however, extended the benefit of Notification No. 393 dated 22.8.1986 and correspondingly confirmed the demand of duty.

2. The Order of the Collector was passed on 26th October, 1988. Subsequently, the manufacturer, while classifying the goods under heading 3304.00 claimed the benefit of Notification 27-CE dated 20.3.1990. The show cause notice was issued to him by the Assistant Collector of Central Excise proposing denial of the Notification benefit. After considering the manufacturer's claim that the classification under heading 3304.00 had been claimed under protest and that the product ought to be classifiable under heading 30.03, the Assistant Collector confirmed the demand for duty. His Order has been upheld by the Collector, Central Excise (Appeals). These two appeals are, therefore, against the Order of the Principal Collector and the Collector of Central Excise (Appeals).

3. We have heard Shri V.Lakshmikumaran, Advocate for the appellant. He said that Lip Salve was a medicament for treatment of sore, inflamed, roughened and cracked lips. Each of the active ingredients bees-wax and lanolin is used for its therapeutic purposes as established in various pharmacopoeias. The product did not satisfy the requirement of Note-2 of Chapter 33. It was put up in crude aluminium cans with the only literature pasted on the cans themselves. The appellant was manufacturing the goods under a Drug Licence. The product was manufactured in accordance with the specifications of the Ministry of Defence, and only supplied to the Army for the soldiers posted in high altitudes. The authorities below had not considered this fact, ignored the decision of this Tribunal in Frezco Corporation Vs. Collector of Central Excise [1993 (68) ELT 219] and in Hena Export Corporation Vs. Collector of Central Excise [1993 (67) ELT 907]. The literature cited by the appellant regarding the products, therapeutic properties had not been considered. Further, the Principal Collector in .its earlier Order had held the goods to barrier cream which would be entitled to the benefit of the Notification 393 dated 22.8.1986. Therefore, till such time as this Notification was amended by Notification 27 dated 20.2.1990, this benefit could not be denied. In any event, he argued that in arriving at the duty it is the ex-duty price that should be considered and not the cum-duty price as has been done. He relied upon a number of decisions in support of this. Further, the demand should prospective from the date of the show cause notice. In view of the Supreme Court's judgement in Rainbow Industries Vs. Union of India [1994 (74) ELT 3].

4. Shri V.C. Bhartiya, JDR, Departmental Representative, stated that the product does not figure in Indian Pharmacopoeia, therefore, cannot be considered to be a medicinal. Each of the ingredients has no medicinal use. He referred to Hawley's Condensed Chemical Dictionary in support of this proposition. He relied upon the decision of this Tribunal reported in [1994 (23) ECR 262 and 1991 (37) ECR 774] relating to classification of lanolin and paraffin wax as drugs other than medicaments. He pointed out that the Joint Services S