P.V. SUBBA RAO

M/s Shahnaz Ayurvedics¹appellant filed these two appeals to assail the following orders passed by the Commissioner and Commissioner (Appeals).

2. The short question to be answered in both these appeals is whether the following 18 goods manufactured by the appellant are Patent and Proprietary Ayurvedic²P&P preparations as asserted by the appellant or cosmetics as held in the impugned orders.

(i) Shabase (ii) Shanaz Forever Root Marrow Base (iii) Shanaz Forever Vegetable Exfoliating Dermabrasive powder (iv) Shanaz Forever Thermal Mini Face Lift (v) Shagrain (vi) Shapeel (vii) Sharose (viii) Shalmond (ix) Shawhite (x) Shamoon (xi) Shaface Plus (xii) Shatreat Plus (xiii) Flower Power Shatreat (xiv) Vegpeel (xv) Flower Power Vegpeel (xvi) Shacomplex (xvii) Shamarrow (xviii) Shapack Mix

3. Consequently, the questions to be answered are whether the demand of duty and penalty can be sustained or not.

Submissions on behalf of the appellant

4. Learned counsel for the appellant made the following submissions:

(i) The department wrongly classified the goods which are ayurvedic medicaments (classifiable under Chapter 30) as cosmetics and soap under chapter 33 & 34 of the Central Excise Tariff.

(ii) The controversy had initially arisen in 1987 with respect to the appellant‟s manufacturing unit in Delhi and an SCN dated 7.3.1988 was issued which was decided by the Additional Commissioner by order-in- original dated 29.8.1989 in favour of the appellant. He had also allowed the exemption available to P&P Ayurvedic medicines.

(iii) Later, on 28.2.1994, the exemption available to P&P Ayurvedic medicines was withdrawn and therefore, the appellant had filed a classification list under Rule 173B of the erstwhile Central Excise Rules, 1944 for its units in Delhi and NOIDA classifying them as P&P medicines (during the relevant time, a manufacturer had to file classification lists giving the products which he intended to manufacture and their classification to the Assistant Commissioner for approval). The classification lists were approved by the Assistant Commissioner, Delhi on 29.9.1994 and Assistant Commissioner, NOIDA on 2.12.1994.

(iv) Thereafter, the classification dispute was again raised by the Department in 1996 and the appellant filed a Writ Petition in Allahabad High Court and by order dated 29.1.2004 the High Court decided the matter in favour of the appellant which order was subsequently upheld by the Supreme Court.

(v) These appeals pertain to the appellants‟ unit in Dehradun which was started on 1.6.2004 and the appellant was registered on 17.6.2004 with the central excise department for manufacture of P&P medicines and cosmetics. For the first ten years, there was no dispute because all goods manufactured by the unit were any way exempted by area-based exemption Notification No. 50/2003-CE dated 10.6.2003 which ended on 16.7.2014.

(vi) The appellant informed the Range officer on 8.9.2014 regarding classification of its finished products and on 19.11.2014, the Range officer instructed the appellant to clear the disputed goods as cosmetics and pay duty.

(vii) After completing the investigation, two show cause notices³SCN dated 4.8.2015 and 9.5.2016 were issued which were decided by the Commissioner by order dated 29.12.2016 impugned in Excise Appeal No.50578 of 2017.

(viii) A follow up SCN was issued on 3.8.2017 which was decided by the Joint Commissioner by order dated 31.10.2023 which was upheld by the Commissioner (Appeals) by order dated 30.1.2025 which is impugned in Excise Appeal No. 51016 of 2025.

(ix) All the disputed goods manufactured by the appellant were P&P Ayurvedic Medicines. The active ingredients of these goods are prescribed in Authoritative Ayurvedic Texts. Other than the active ingredients, these products only contain only permitted preservatives, stabilizers, excipients/base material & stabilizers like starch, lactose and filling agents like sodium lauryl sulphate, liquid paraffin, et