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Shree Baidyanath Ayurved Bhawan Vs. Collector of Central Excise and - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(22)ELT844TriDel
AppellantShree Baidyanath Ayurved Bhawan
RespondentCollector of Central Excise and
Excerpt:
1. shree baidyanath ayurved bhawan limited is a public company limited by shares and is engaged in the business of manufacturing, selling and dealing in ayurvedic medicines/drugs and other allied products. besides manufacturing ayurvedic drugs/medicines, they also manufacture surmas like himalaya surma, moti surma etc. and also dant manjans like dant manjan lal, dant manjan black, dant manjan white.2. prior to march 1, 1975 'dant manjan lal' manufactured by the appellant was considered to be a patent or proprietary medicine falling under item 14-e of the first schedule to the central excises and salt act, 1944, but considered as not excisable to duty by virtue of the express exclusion in the description of the tariff item itself in favour of "medicines" which are exclusively ayurvedic,.....
Judgment:
1. Shree Baidyanath Ayurved Bhawan Limited is a public company limited by shares and is engaged in the business of manufacturing, selling and dealing in Ayurvedic medicines/drugs and other allied products. Besides manufacturing Ayurvedic drugs/medicines, they also manufacture Surmas like Himalaya Surma, Moti Surma etc. and also Dant Manjans like Dant Manjan Lal, Dant Manjan Black, Dant Manjan White.

2. Prior to March 1, 1975 'Dant Manjan Lal' manufactured by the appellant was considered to be a patent or proprietary medicine falling under Item 14-E of the First Schedule to the Central Excises and Salt Act, 1944, but considered as not excisable to duty by virtue of the express exclusion in the description of the Tariff Item itself in favour of "medicines" which are exclusively Ayurvedic, Unani Sidha or Homoeopathic.

3. Immediately after March 1, 1975, when a residuary item being Item No. 68 came to be introduced into the Central Excise Tariff Schedule for "All other goods, not elsewhere specified---" the Excise Department took the view that Ayurvedic Medicines even though they were specified under Tariff Item 14E (Albeit for the purpose only of exclusion) were now classifiable under Tariff Item 68. Pursuant to this view the appellant submitted a classification list in respect of Ayurvedic medicines manufactured by it (including Dant Manjan Lal) and started paying duty leviable thereon under Tariff Item 68, C.E.T. in accordance with the prescribed procedure.

4. On 1st March, 1978, the Government of India issued an exemption Notification, being Notification No. 62/78 whereby the total duty exemption hitherto provided under Tariff Item 68 on goods specified in the Schedule appended to Notification 55/75-C.E., dated 1-3-1975 was extended to "all drugs, medicines, Pharmaceuticals and drug intermediates, not elsewhere specified". Thereafter, the appellant stopped paying duty on the Dant Manjan taking these Manjans exempt from payment of duty by virtue of Notification No. 62/78 and applied for refund of Rs. 3,557.68 which was the balance lying in the appellant's Account current with the Department in respect of Ayurvedic Medicines manufactured and cleared by it on payment of duty under Tariff Item 68.

The application for refund was considered by the Department and the amount claimed was duly refunded by the Assistant Collector of Central Excise, Patna on 9th October, 1978.

5. Thereafter, Shree Baidyanath Ayurvedic Bhawan Limited submitted a classification list for approval of 36 items as P.P. Medicines under Tariff Item 14-E, CET. It was effective from 1-3-1979. At Sr. No. 5 of the list, they declared other goods manufactured by them, the details of these goods were however, given on 12-ll-l979. Another classification list for approval of one Item as P.P. medicine under T.I. 14-E was filed which was effective from 142-1979. Other goods rnanufactfured were described at Sr. No. 5 of the list, 6. The third classification list for approval of three items as P.P.Medicines classifiable under Tariff Item 14-E, CET was filed which was to be effective from 18-1-1980. As usual in this classification list also they declared other goods manufactured at Sr. No. 5 of the list.

7. As per the contention of the Department these classification lists were approved provisionally under the provisions of Rule 9-B read with Rule 173-B of Central Excise Rules, 1944 as further enquiries were to be made in respect to certain items.

8. On 10-3-1980, the Department issued a show cause notice No. V (14-E) (3) VA : 27/76/5473 asking Shree Baidyanath Ayurvedic Bhawan Limited inter alia as to why 'Dant Manjan Lal' 'Dant Manjan Black' and 'Dant Manjan White' should not be classified under Tariff Item 68 and charged to duty at the Tariff rate. Shree Baidyanath Ayurvedic Bhawan Limited was also asked as to why 'Himalaya Surma, Moti Surma, Netra Mrita Surma, Agnimukh Churan, (All containing menthol), Atul Saktidata (containing steel) Gaisol Pachak (containing Menthol and citric acid), Kashati (containing Borax), Namak Sulemani (containing Menthol and citric acid), Pachak Bati and Sodhi Harre (containing Citric Acid), Swet Parpati (containing Potassium Nitrate, Alum and Ammonium Chloride) should not be classified under Tariff Item 14-E because they contain allopathic ingredients and thus not being purely Ayurvedic in character be charged to duty at the Tariff rate under Tariff Item 14-E CET 9. In response to the show cause notice Shree Baidyanath Ayurved Bhawan Limited submitted their written reply on 15-3-1980 as under :- (i) 'Dant Manjan Lal', 'Dant Manjan Black' and 'Dant Manjan White' are all Ayurvedic medicines containing Ayurvedic ingredients and manufactured under their Ayurvedic licence No. 31/76.

(ii) That Ayurvedic drugs and medicines are completely exempted from the purview of Tariff Item 68.

(iii) That Menthol is included in many Ayurvedic medicines and so its inclusion does not change the Ayurvedic character of the medicine like Himalaya Surma, Moti Surma, Netra Mrita Surma, and Agnimukh Churan. All these products are also manufactured under Ayurvedic Licence No. 31/77 and that menthol is commonly known in Ayurved as pepperment which is an Ayurvedic ingredient.

(iv) That Atualshaktidata contains faulad burada (steel) which is finally processed and added. This product is also manufactured under Ayurvedic Licence No. 31/77.

(vi) That the Indian nomenclature of Borax is tankana or shohaga used in Ayurvedic medicines so Kashati is purely Ayurvedic medicine manufactured under the licence.

(viii)That the Ayurvedic nature of a product Pachakbati and Sodhi Harre are not changed due to inclusion of Citric Acid which is known as Nibusat.

(ix) That Potassium Nitrate, alum, Ammonium Chloride whose Indian nomenclature are Shora, Phitkari and Nausadar respectively are used in Ayurvedic medicines, Swet Parpati is purely Ayurvedic medicine manufactured under Ayurvedic licence.

(x) That under the above circumstances, all the products mentioned above do not attract any Central Excise duty by virtue of being Ayurvedic products.

10. The Assistant Collector of Central Excise, Division, Patna by his Order-in-Original No. 2-Val/Classification List/82, dated 30-4-1982 held that Dant Manjan Lal, Dant Manjan Black, Dant Manjan White were classifiable under Tariff Item 68-CET liable to be charged with the effective rate of duty under Tariff item 68.

11. Regarding other products, they were ordered to be classified under Tariff Item 14-E liable to be charged to duty at the effective rate under Tariff Item 14-E.12. Aggrieved, Shree Baidyanath Ayurvedic Bhawan Limited filed an appeal before the Appellate Collector of Central Excise, Calcutta, who by his order-in-appeal No. 372/BR/82, dated 13-10-1982 allowed the appeal and set aside the order of the Assistant Collector.

13. Regarding Dant Manjan Lal, Dant Manjan Black, Dant Manjan White, which the Assistant Collector found to be tooth powder classifiable under Tariff Item 68 without the benefit of Notification No. 62/78, dated 1-3-1978 the Appellate Collector observed :- "It is found from enquiry in the market that these products are used more for the medicinal value of the product for the treatment of various gum ailments and the cleansing of the teeth is merely an incidental one. When the product is sold and bought for medicinal purpose and for the therapeutic value, the product has to be treated as a medicine of the variety known as Ayurvedic" 14. Similarly, the Surma group of medicines like Himalaya Surma, Moti Surma, etc. were also held as Ayurvedic medicines by observing as under :- "Presence of small ingredients which are Allopatheic in nature cannot take away the medicines from Ayurvedic group so long as the products are by large Ayurvedic in nature. Since all the products of the appellant in dispute are medicinal preparations, they are correctly classifiable under Item 14-E CET. However, this tariff itself specifically excludes Ayurvedic and other types of medicines from the levy of excise duty." 15. As the show cause notice was with regard to 14 items only and that Assistant Collector classified 150 items, the Appellate Collector held that only 14 items were to be classified and classification done in respect to those products not mentioned in the show cause notice were held invalid on the principles of natural justice.

16. During the course of the proceedings before the Appellate Collector of Central Excise, Calcutta, regarding the classification of Baidyanath Dant Manjan and Surmas etc. the Preventive Staff of the Central Excise Department visited the premises of Shree Baidyanath Ayurved Bhawan Limited on 3-4-1981 and found that the factory had discontinued payment of duty on 'Dant Manjan Lal' since March, 1978 on the plea that this product is an Ayurvedic Medicine which does not attract duty and, therefore, Baidyanath Ayurved Bhawan Limited was served with a Show Cause Notice, being Notice C. No. V(12)/12-CEP/81-7353 dated 16-7-1981 answerable to the Collector of Central Excise, Patna, which stated that the wrong classification of 'Dant Manjan Lal' had resulted in evasion of Central Excise duty which was otherwise due to the Government and asked the appellant to show cause why a sum of Rs. 18,86,122/- on account of Central Excise duty payable on 'Dant Manjan Lal' manufactured and cleared by the appellant from March, 1978 to April, 1981 should not be recovered from it under Section 11-A of the Central Excises and Salt Act, 1944, on the ground that Dant Manjan Lal was sold and known patently as a tooth powder, was dutiable under Tariff Item 68 and did not qualify for exemption since 1-3-1978.

17. In reply to the said show couse notice Baidyanath Ayurved Bhawan Limited replied inter alia : (i) that Dant Manjan Lal manufactured by the appellant has therapeutic properties and that it acts both as a preventive and curative for dental ailments, maintaining the gum tissues in healthy condition, with its medicinal character being widely known ; (ii) that Dant Manjan Lal does not have any allopathic ingredients and is nothing but ayurvedic drug within the meaning of that expression as given in the Drugs and Cosmetics Act, 1940.

(iii) that Dant Manjan Lal is being manufactured in accordance with the formula prescribed in authoritative text books on Ayurved and on the authority of the Ayurvedic Drug manufacturing Licence No. 31/77 issued by the Drug Controller, Government of Bihar, which showed that it was an Ayurvedic Medicine ; and (iv) that the appellant had manufactured and cleared the preparation in question in accordance with duly approved classification lists, upto 28-2-1979 and that since the matter relating to its proper classification with effect from 1-3-1979 was already the subject of quasijudicial proceedings before the proper officer, the matter covered by the proceedings before the Collector may be held over until the conclusion of those proceedings.

18. The Collector of Central Excise, Patna, however, did not accept the contention of Shree Bidyanath Ayurved Bhawan Ltd. and by his Order-in-Original No. 49-MP/82, dated 26-8-1982 directed Shree Baidyanath Ayurved Bhawan Ltd. to pay duty amounting to Rs. 18,86,122/- on 'Dant Manjan Lal' manufactured and cleared by them under Rule 9(2) of the Central Excise Rules read with Section 11-A of the Central Excises and Salt Act, 1944. He also imposed upon Shree Baidyanath Ayurved Bhawan Ltd. a penalty of Rs. 10,000/-under Rule 173-Q of the Central Excise Rules.

19. Aggrieved by the said order passed by the Collector of Central Excise, Patna, on 26-8-1982, Shree Baidyanath Ayurved Bhawan Ltd. filed an appeal before this Tribunal which was registered as Appeal No.E-248/82-C.20. The Collector of Central Excise, Patna, challenged the order passed by the Appellate Collector of Central Excise, Calcutta, being No.372/BR/82, dated 13-10-1982, who had classified these Dant Manjansunder Tariff Item 68, CET and exempted under Notification No. 55/75, dated 1-3-1975 as amended by Notification No. 62/78, dated 1-3-1978. The classification regarding the Surma Group of medicines under 14-E (CET) but excluded being exclusively Ayurvedic Drug was also challenged in the appeal. That appeal was registered as Appeal No. ED (SB) 106/83-C.Shree Baidyanath Ayurved Bhawan Limited v. Collector of Central Excise, Patna, and Appeal No. ED (SB) 106/83-C titled Collector of Central Excise, Patna v. Shree Baidyanath Ayurved Bhawan Limited involve the same questions of law and facts, so we are disposing of both these appeals by this common order.

22. We have heard Shri S.S. Ray, Shri D.B. Engineer, Senior Advocates alongwith Shri J.R. Cama and Mr. Bimal, Advocates on behalf of the Baidyanath Ayurved Bhawan Limited and Mrs. Vijay Zutshi, Senior Departmental Representative for the department and gone through the record.

23. Mrs. Zutshi, the learned Senior Departmental Representative while challenging the decision given by the Appellate Collector of Central Excise, Calcutta classifying the product "Dant Manjans" under Tariff Item 68 (CET) and exempting them under Notification No. 55/75-Central Excises as amended by Notification 68/72 as 'drug', argued that the correct classification is under 14-E (CET) being 'patent or proprietary medicines'. According to her, these Dant Manjans are not exclusively Ayurvedic medicines as defined under Section 3(a) of the Drugs and Cosmetics Act, 1940, so these are not excluded from the ambit of this Tariff item.

24. She drew our attention towards the definition of 'Ayurvedic drug' as contained in Section 3(a) of the Drugs and Cosmetics Act, 1940 which lays down that Ayurvedic drug includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings, mentioned in and processed and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic system of medicines specified in the First Schedule.

25. According to her, admittedly these 'Dant Manjans' have not been mentioned in processed and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic system of medicine specified in the First Schedule.

26. She also drew our attention towards Explanation I appended to Tariff Item 14-E, (CET) wherein 'Patent or Proprietary Medicines' have been explained. According to her these are medicinal preparations in a powder form which are sold in containers bearing symbol of "SHIVLING" with the name of Shree Baidyanath Ayurved Bhawan Limited and as such these are 'Patent or Proprietary Medicines' as mentioned in Tariff Item 14-E (CET), but not excluded as these are not exclusively Ayurvedic Medicines. She pointed out that this symbol is a registered trade mark of Shree Baidyanath Ayurved Bhawan Ltd. According to her, it may be a drug or medicine but not exclusively an Ayurvedic Medicine as defined in Section 3(a) of the Drugs and Cosmetics Act, 1940. The definition of Ayurvedic drug as given in Section 3(a) ibid cannot be ignored by the fact thas these Manjans are being manufactured under a drug licence issued under the Drugs and Cosmetics Rules and that the Vaids and Hakims describe them as Ayurvedic Drugs. They may be drugs but not particularly Ayurvedic drug as per this definition and hence cannot be excluded from Tariff Item 14-E, (CET).

27. She also drew our attention towards the definition of 'Patent or Proprietary Medicines' as given in Section 3(h) of the Drugs and Cosmetics Act, 1940 (as amended) which, according to her, is in pari materia with the definition given in Explanation I appended to Tariff Item 14-E, CET. As per this definition 'Patent or Proprietary Medicine' means a drug which is remedy or prescription presented in a form ready for internal or external administration of human beings or animals and which is not included in the edition of the Indian Pharmacopia for the time being or any other pharmacopia authorised in this behalf by the Central Government after consultation with the Board. These products are not included in the edition of the Indian Pharmacopoeia or any other pharmacopoeia. These are sold under the registered trade mark of Shree Baidyanath Ayurved Bhawan Limited and are patent or proprietary medicines, but not exclusively Ayurvedic medicines and are, therefore, excisable under Tariff Item 14-E, CET.28. Though before the lower authorities the case of the Department was not that these products are classifiable under Tariff Item 14-E, CET as 'patent or proprietary medicine' but according to Mrs. Zutshi when there is no dispute about the facts even the Appellate Tribunal can assess the product under an item suitable to the product. She cited a decision of the Supreme Court in the case of C.I.T. Madras v.Mahalakshmi Textile Mills reported as I.T.R. 1967 (Vol.66) Page 710 in support of her contention that plea not raised before the department can be raised before the Tribunal. She also cited two other decisions reported as [1984 (15) E.L.T. 186] and 1981 E.L.T. 328) in support of her contention. She argued that a revenue authority can change its earlier stand on cogent reasons.

29. In the alternative, Mrs. Zutshi, the learned Departmental representative argued that if her contention that the proper classification of these products should be under Tariff Item 14-E, (CET) is not acceptable to the Bench, then the benefit of exemption Notification No. 55/75, as amended by Notification No. 62/78, cannot be extended to these products under item 68, CET. According to her, when there is no specific entry in the Excise Tariff with respect to certain goods, the main deciding factor will be how the goods are accepted in the market. Collector (Appeals) findings that there is no dispute that the appellants are marketing their products as Ayurvedic medicines and the public are buying as such are against facts on record. 'Dant Manjans' are used not for prevention or cure of any ailment. Even persons with perfectly healthy teeth use it daily just to clean their teeth and that is why it is called 'Manjan', which means a cleanser.

Just to say it has got some preventive quality or that all ingredients are Ayurvedic in nature and find mention in the authoritative books of Ayurvedic system specified in the First Schedule of the Drugs and Cosmetics Act, 1940 does not make the 'Manjan' i.e. the tooth powder as an Ayurvedic medicine. These Dant Manjans are not available in a medicine shop and no prescription is needed from a doctor for its use.

They are available even in a grocery shop. How these Manjans can be treated as Ayurvedic medicine in common parlance is not understandable, argued Mrs. Zutshi. 'Dant Manjan' is an article of every day use meant for rubbing and cleaning teeth as an indispensable daily hygiene intended to protect the teeth and preserve them in good condition. She cited a judgment of the Supreme Court in the case of Sarin Chemicals Laboratory v. Commissioner of Sales Tax (AIR 1971 SC 65) in which it has been held that tooth powder in common parlance is considered as a toilet article. She further argued that Shree Baidyanath Ayurved Bhawan Limited stopped paying duty on the product from March, 1978 unilaterally. They should have filed a declaration while seeking exemption under the notification, which they did not do intentionally just to evade payment of duty. Besides this, they did not declare an important ingredient in the manufacture of "Dant Manjan Lal", namely 'Geru' and has suppressed a material fact. They are, therefore, liable to pay duty of the entire period under Rule 9(2) of the Central Excise Rules, 1944 and are also liable to pay penalty under Rule 173-Q of the Central Excise Rules, 1944. She also argued that the assessments were provisional after 1st March, 1979 and as such the time limit cannot come to the rescue of Shree Baidyanath Ayurved Bhawan Limited.

30. Shri S.S. Ray, Senior Advocate who opened the arguments on behalf of Shree Baidyanath Ayurved Bhawan Limited could not continue with the same and thereafter Shri D.B. Engineer, Senior Advocate argued the case on behalf of Shree Baidyanath Ayurved Bhawan Limited in detail.

31. Shri Engineer, the learned Counsel submitted that the department cannot take a new stand during the course of arguments at the second appellate stage which is in contradiction with the earlier stand taken by the department before the lower authorities. He pointed out that in the Show Cause Notice No. V(12)/12/CEP/81/7353, dated 16-7-1981, which is the subject matter of Appeal No. 248/82-C, the stand of the department was that 'Dant Manjans' were dutiable under Tariff Item 68-C.E.T. and were not exempted from payment of duty under Notification No. 62/78, dated 1st March, 1978. The allegation against the appellants was that they wrongly classified "Lal Dant Manjan" under exempted category of Ayurvedic Medicine to avail the exemption under Tariff Item 68 after 28th February, 1978.

32. Even in the show cause notice C. No. V/14/E(3) Val. 27/76/5473 dated 10-3-1980 issued by the Assistant Collector of Central Excise, Patna, which is the subject matter of Appeal No. ED (SB) 106/83-C, the stand of the department was that as to why 'Dant Manjan Lal', 'Dant Manjan Black and Dant Manjan White' should not be classified under Tariff Item 68 and charged to duty at the Tariff rate.

33. Before the lower authorities the department did not take up the stand that 'Dant Manjans' were patent or proprietary medicines falling under Tariff Item 14-E (GET). Neither in appeal filed by the Department (Appeal No. E-106/83-C) nor in cross objections in the appeal filed by Shree Baidya-nath Ayurved Bhawan Limited, the department took up this stand that the proper classification of 'Dant Manjans' should be under Tariff Item 14-E (CET) as 'patent or proprietary medicine'. The department now cannot change its stand from Tariff Item 68 to 14-E (CET) as it has neither filed cross objections nor filed any appeal pleading that the proper classification of the product is under Tariff Item 14-E (CET) as 'patent and proprietary medicine'. The only challenge made by the department was that Baidyanath Dant Manjans were not entitled to the benefit of exemption Notification No. 62/78 as they were not Ayurvedic drug or medicine.State of Kerala v.Vijay Stores [1979 (1) SCR-538] in support of his contention that where a party has neither preferred his own appeal nor filed cross objections in the appeal preferred by the appellant, he must be deemed to be satisfied with the decision of the lower authority. Two more decisions, one of Gujarat High Court in the case of F.Y. Khambhaty v. Commissioner of Income Tax, Gujarat (61 ITR 30) and the other of Bombay High Court in the case of Motor Union Insurance Co. v. C.I.T. (131 ITR 272) were cited by Shri Engineer in support of his contention.

35. According to Shri Engineer, a revenue authority can change his earlier stand on cogent reasons namely :- (iv) if there has been a pronouncement of High Court or Supreme Court which necessitates reconsideration of the issue.

36. He cited a decision of Bombay High Court in the case of Camlin (P) Ltd. v. Union of India (1982 ELT 1) and another decision of Delhi High Court in the case of J.K. Synthetics Ltd. and Ors. v. Union of India (1981 ELT 328) in support of his contention.

37. Shri Engineer pointed out that the department cannot make out a new case at the time of arguments before this Tribunal which was never made known to the assessee either in the show cause notice or otherwise. The assessee had no occasion to. meet the new case which enhances the liability and as such the department is debarred from changing its stand now.

38. On merits, Shri Engineer submitted that the preparation of Baidya-nath Dant Manjan is a powder compounded with Geru, Peepal, Sonth, Kali Mirch, Tambakuh, Clove Oil, Camphor, Peppermint, Babul Chhal, Tumber Beej. All these ingredients are Ayurvedic medicines mentioned in the authoritative books of Ayurvedic System of Medicine as specified in the First Schedule to the Drugs and Cosmetics Act, 1940.

These ingredients have therapeutic properties which are spelt out in Ayurvedic Pharmacopoeial books. Owing to its antiseptic, analgestic properties it prevents and cures dental troubles such as bleeding of gums, dental cares, dental neuralgia, pyorrhoea, alveolitis, gingivitis and maintains the gum tissue in healthy condition. Shri Engineer pointed out although 'Baidyanath Dant Manjan' manufactured by the appellant is not mentioned as such specifically in any of the listed authoritative books, there are several 'Manjans' mentioned in these treatises which show that apart from some of the ingredients, the manjans mentioned include several ingredients used in "Baidyanath Dant Manjan". It is an Ayurvedic Drug/Medicine falling under Tariff item 68-CET and is entitled for exemption under Notification 55/75 as amended by 62/78 dated 1-3-78.

39. Shri Engineer submitted that the Dant Manjans manufactured by the appellant are mentioned in the authoritative publication, 'Ayurved Sar San-graha'. He drew our attention towards the correspondence between the appellant company and the Government of India, Ministry of Health & Family Welfare to show that it is under the active consideration of the Government of India to include the book titled "Ayurveda Sar Sangraha" in the First Schedule to the Drugs and Cosmetics Act, 1940.

40. Shri Engineer argued that if 'Dant Manjans' manufactured by the appellant do not fall within the definition of 'Ayurvedic drug' as mentioned in Section 3(a) of the Drugs and Cosmetics Act, 1940 they definitely come within the purview of Section 3(b) of the Drugs and Cosmetics Act, 1940, which defines 'drug'. It is a medicine which is intended to be used for mitigation or prevention of disease in the teeth of human beings and is covered under exemption Notification 55/75 as amended by 62/78, dated 1-3-1978.

41. Shri Engineer argued that it is an admission on the part of the Senior Departmental Representative that this product "Baidyanath Dant Manjan" is a patent or proprietary medicine falling under Tariff Item 14-E. When the department has admitted the fact that it is a medicine or drug how can it be said alternatively that it is not a drug or medicine and as such it is not entitled to the benefit of Notification 55/75 as amended by 62/78 which gives exemption from payment of excise duty to all drugs, medicines, pharma-ceuticals and drug intermediates, not elsewhere specified.

42. No doubt a party can take alternative plea but it cannot take inconsistent pleas. He cited a decision of Allahabad High Court in the case of Nand Kishore Rai v. B. Ganesh Prasad Rai (AIR 1929 All. 446) in support of his contention that admission of party's pleader binds that party.

43. Shri Engineer further argued that besides the admission made by the Departmental Representative that this product i.e. 'Dant Manjan' is a patent or proprietary medicine, there is ample evidence on record to show and prove that the preparations 'Dant Manjan Lal', 'Dant Manjan White' and 'Dant Manjan Black' are drugs as defined under the Drugs and Cosmetics Act, 1940 and are entitled to exemption Notification 55/75 as amended by 62/78. The said preparations are being manufactured by the company on the authority of a drug manufacturing licence granted to it by the Drug Controller, Government of Bihar in terms of the Drugs and Cosmetics Act, 1940 and the rules framed thereunder. The said preparations are compound of ingredients which are exclusively 'Ayurvedic' being mentioned in the authoritative books of Ayurveda listed in the First Schedule to the Drugs and Cosmetics Act, 1940. The preparations in question are Ayurvedic medicines and are marked as such as is evident from the affidavit of various persons produced on record.

Even the Appellate Collector of Central Excise, Calcutta, in his impugned order in Appeal No. 106/83 observed that with regard to the products "Dant Manjan Lal", 'Dant Manjan White' and 'Dant Manjan Black' which the Assistant Collector found to be only tooth powder and therefore, ordered to be classified under Item 68-CET, it is found from inquiry in the market that these products are used more for medicinal value of the product, for the treatment of various gum ailments and cleansing of the teeth is merely an incidental one. When the product is sold and brought more for medicinal purpose and for the therapeutic value, the product has to be treated as medicine of the variety known as 'Ayurvedic'. Shri Engineer pointed out that Shree Baidyanath Ayurved Bhawan Ltd., Patna had put reliance on the certificates issued by the Director of Health Services, Bihar, Patna and highly qualified and emient Hakims and Vaidyas in the country but they were not considered by the Collector of Central Excise, Patna while passing the Order-in-Original No. 49/MP/82, dated 26-8-82. Since the subject goods are claimed to be medicines it is the evidence only of Hakims and Vaidyas or of authorities technically qualified to express an opinion on what precisely are medicines which is relevant for the purpose of their classification and not the opinion expressed by layman or by the public at large. He cited a decision of the Supreme Court reported in AIR 1963 SC 665 in which it was held that the definition of drug in the Drugs Act, 1940 is comprehensive enough to take in not only medicines but also substances intended to be used in the treatment of diseases of human beings or animals. The said preparations are compounded with ingredients which are exclusively ayurvedic being mentioned in authoritative books of Ayurveda listed in the First Schedule to the Drugs and Cosmetics Act, 1940.

43. He drew our attention towards two decisions given by Shri S.K.Bhatnagar, Appellate Collector, Central Excise, New Delhi (as he then was), one reported in 1981 ECR 596 D in which Dant Manjans manufactured by M/s. Hamdard Dawakhana were held to be Ayurvedic drugs & medicines exempted under Notification No. 62/78-CE, dated 1-3-1978. The other decision was with respect to Dant Manjans manufactured by M/s. Dabur Pvt. Ltd. (Order-in-Appeal No. 65 CE MRT/81, dated 31-10-1981. In that case also benefit of Notification No. 62/78-CE was granted. Our attention was also drawn towards a decision given by the Collector of Central Excise, Calcutta, Order-in-Original No.329/14-E/82-Collector/12/83, dated 31-1-1983 passed by Shri B.N.Rangwani (as he then was). In that case also these Dant Manjans were held to be Ayurvedic medicines and as such the proceedings initiated by the department against the assessee were dropped. Civil Judge, Thane, in the case of Vicco Laboratories v. Union of India (Civil Suit No. 143 of 1978) also held Vicco Vajradanti a 'Dant Manjan' as an Ayurvedic Drug/Medicine.

44. He also drew our attention towards various authoritative books on medicine or surgery containing the definition of drug. According to these books a drug is a substance that is used in the treatment, prevention or diagnosis of disease. He also cited various decisions of various High Courts to show as to what is a drug as mentioned in Section 3(b) of the Drugs and Cosmetics Act, 1940. In Abdul Moid v.State of U.P. (Reported in 1977 Criminal Law Journal 1325), the Allahabad High Court held 'Boroline' to be a drug because it prevents infection and therefore it is certainly a prevention of disease. The Calcutta High Court in the case of Ram Chand Sundarka v. State of West Bengal (1971 Criminal Law Journal 1369) held that water meant to be used for dissolving other medicines for injection into human body is a 'drug' Central Board of Excise & Customs in its decision in the case of Abbot Laboratories (P) Ltd., Bombay (1981 ECR 428D), held 'Selson' as patent or proprietary medicine classifiable under Item 14-E (CET).

45. Shri Engineer argued that the medicinal preparation does not lose its character as such because it is sold on the counter to the public rather than to the physician and medical institutions. Dant Manjans though are also available at the grocery shops but they do not lose their character as drug/medicine. They have got medicinal value.

Another decision of Allahabad High Court in the case of Commissioner of Sales Tax v. Gramudyog Karyalaya [1979 (44) STC 270] was also cited before us wherein His Lordship observed as under :- "The word 'medicine' has not been statutorily defined and, as such, the meaning given in common parlance has to be attributed to it. A medicine is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. It need not be used in the very form in which it naturally occurs. It will retain its character as a medicine even though some processing is required before it becomes fit for use by human beings or other living creatures.

Jari bootis are medicinal herbs, which are found in forests. They possess medicinal properties. The fact that they cannot be used straightway as a medicine, but required being reduced to powder or changed into some other form, or combined with other drugs to make them more effective does not alter their medicinal quality. These herbs are valued and sold primarily for their medicinal qualities as recognised in the ayurvedic system of medicine." 46. According to Shri Engineer each of the ingredients of these Dant Manjans is an Ayurvedic medicine described in the authoritative books mentioned in the First Schedule to the Drugs and Cosmetics Act, 1940 and Dant Manjan which is a compound of these Ayurvedic drugs will retain its character as a 'drug' as defined in Section 3 of the Drugs and Cosmetics Act, 1940.

47. Shri Engineer submitted that in common parlance these Dant Manjans are treated as medicines as is apparent from the affidavits and the certificates of the Vaidyas and Hakims. The findings of the Appellate Collector, Calcutta, who on enquiry found that in common parlance these Dant Manjans are known as 'drug or medicine' have not been controverted by filing counter affidavits or some evidence in rebuttal by the department. He cited a well known decision of the Supreme Court in the case of Dunlop India v. Union of India (reported as AIR 1977 SC 1548) and some more decisions of the Supreme Court reported as (AIR 1973 SC 78), (AIR 1977 SC 1548) and (AIR 1968 SC 922) in support of the contention that it is the identity of the goods as understood by public conversant or familiar with the goods which determine their classification and liability to duty.

48. On the point of limitation, Shri Engineer, argued that there is nothing on record to show and prove that the assessment was provisional at any time. No bond was ever executed by the assessee nor the department has produced any document to show and prove that the assessments were provisional. According to Shri Engineer, the department has erred in demanding duty from the appellant under Rule 9(2) of the Central Excise Rules, 1944. The impugned goods were manufactured and cleared by the appellants openly with the full knowledge and consent of the Excise Department. In support of his contention decision of the Supreme Court in the case of N.B. Sanjana v.Elphinston Spinning & Weaving Mills Ltd. (1978 ELT J 339) was cited wherein it has been held that it is pnly when goods have escaped payment of duty due to clandestine removal that Rule 9(2) can apply.

Besides this decision of the Supreme Court, Shri Engineer also relied upon the following decisions, namely, (i) Murugun & Co. v. Dy. Collector of Central Excise, 1977 ELT J 193 ;Sechasavee Paper and Boards Ltd. v. Collector of Central Excise, 49. Shri Engineer also challenged the decision of the Collector of Central Excise with regard to invoking Rule 173-Q for the purpose of imposing penalty on the appellants. According to Shri Engineer. Rule 9 by itself is a complete code and when the authorities have made use of this rule invoking the provisions of Rule 173-Q, imposing penalty is illegal and more particularly when there is nothing on record to show and prove that the appellant had intentionally or deliberately avoided payment of excise duty. He relied upon the decision of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa (1978 ELT J 159) in support of his contention that no penalty should be imposed for technical or venial breach of legal provisions or where the breach flows from the bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Shri Engineer pointed out that on 1-3-1978 when Notification No. 55/75 was amended by Notification 62/78 and the duty exemption provided thereunder was extended to "All drugs, medicines, Pharmaceuticals and drug intermediates not elsewhere specified" there was and could be no doubt that the products manufactured by the appellants which had all along been treated and considered as Ayurvedic drugs or medicines were entitled to duty exemption now provided. In March, 1978 itself the appellants wrote to the Superintendent, Central Excise, Bankipur, Patna, stating that since complete duty exemption had been extended to all medicines from 1st March, 1978, the appellant may be permitted to transfer the balance amounting to Rs. 3,557.68 lying in its P.L.A. from tariff item 68 to the corresponding P.L.A. maintained by it under tariff item 14-E. A reminder dated 7th June, 1978 was also sent in which the fact that the tariff item 68 had become inoperative since 1-3-1978 in/so/far as medicines were concerned was repeated. Later under advice from the Assistant Collector the appellants preferred a refund claim with the department in the prescribed form which was eventually admitted and a sum of Rs. 2,557.68 was paid back to the appellant. According to Shri Engineer, how in these circumstances the appellants can be said to have violated the provisions of Rule 9(1) or the provisions of Rule 173-Q of the Central Excise Rules 50. Shri Engineer pointed out that the period of demand in the show cause notice is 1st March, 1978 to 30th April, 1981. The exemption Notification 62/78 exempting drug/medicine from payment of duty falling under Item 68 was issued with effect from 1st March, 1978. It is only w.e.f. 1-3-1978 the appellants stopped payment of duty on 'Dant Manjan Lal' under a bona fide belief that it is drug/medicine covered under Notification No. 62/78-CE, the intimation of which was duly sent to the department. How can it be said to be a case of clandestine removal or suppression of fact Neither the provisions of Rule 9(2) nor the provisions of Rule 173-Q of Central Excise Rules are applicable in this case. The show cause notice was issued on 16-7-1981 for making demand of duty for the period 1-3-1978 to 30-4-1981. The demand prior to 16-1-1981 is patently barred by limitation.

51. Shri Engineer also argued that when the items are specified in any of the Tariff for the purpose of taxability or for exemption from tax, they cannot be taxed under Item 68, which is a 'residuary item'. For this purpose reliance was placed on the judgment of Gujarat High Court in Darshan Hosiery's case (1980 ELT J 390) wherein it has been laid down as under : "In our opinion, the simple expression "not elsewhere specified" which the Parliament has used in item 68 means total omission or failure to specify either for the purpose of taxability or for the purpose of exemption from taxability. Once an article or goods are found specified in any of the proceeding entries irrespective of the purpose for which they are specified item 68 does not come into play and does not render such goods taxable." 52. As per the contention of Shree Baidyanath in view of the fact that Ayurvedic medicines are mentioned in item 14-E, they got excluded from the purview of item 68 in view of the judgment in Darshan Hosiery's case. It was only on 18-6-1980, the Parliament introduced an explanation and the effect of this amendment is that with effect from 18-6-1980 Ayurvedic medicines which are mentioned in Item 14-E only for the purposes of their exclusion from its purview, fall under the residuary item 68 GET. The duty of excise under Tariff Item 68 for the period prior to 18-6-1980 cannot be claimed on this product 'Dant Manjan Lal' which is an Ayurvedic drug. We have considered the submissions made by both the parties and our findings are as under : 53. Regarding the question whether the department can now be allowed to seek classification of the goods 'Dant Manjans' manufactured by Shree Baidyanath Ayurved Bhawan Limited under Tariff Item 14-E-CET as 'patent or proprietary medicines', the assessee had, at no stage, been asked as to why these preparations should not be classified under Item 14-E and, therefore, he had no opportunity for making any submission on that point.

54. In the Show Cause Notices No. V(12)/CEP/81-7353 dated 16-7-1981, which is the subject matter of Appeal No. E-248/82-C and V-14/E(s)-Val-27/ 76/5473 dated 10-3-1980 which is the subject matter of Appeal No. E-106/83-C, the stand of the department was that the said goods i.e. 'Dant Manjans' should not be treated as Ayurvedic medicines, drugs, Pharmaceuticals, drug intermediates because they are patently marketed as tooth powder and were dutiable under tariff item 68 and were not exempted from payment of duty under Notification No. 62/78, dated 1-3-1978. The allegation against Shree Baidyanath Ayurved Bhawan Limited was that they wrongly classified "Dant Manjan Lal" under exempted category of Ayurvedic medicines to avail exemption after 28th February, 1978.

55. To our mind, the department cannot change its stand so abruptly without giving any opportunity to the assessee to show cause as to why classification of this product be not changed from tariff item 68 to tariff item 14-E as patent or proprietary medicine. No doubt it is correct as has been laid down by 'D' Bench of this Tribunal in the case of Cynamid India Ltd. v. Collector of Central Excise, Bombay [1984 (15) ELT 186] that if the appeal involved the question of correct classification of the goods on which a ruling would have to be given it would not be in the interest of justice or conduce to proper disposal if the appellants were prevented from raising a new ground, but in that case there should not be any dispute about the facts.

56. 'Patent or proprietary medicine' as explained in Explanation I added to Tariff Item 14-E means "any drug or medicinal preparation, in whatever form, for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a pharmacopoeia formulary or other publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is, a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958) or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person." 57. In view of this Explanation, in order to bring a product under this tariff item several factual things have to be proved and this cannot be done unless and until an opportunity is granted to the assessee by issuing a show cause notice to meet the case against him. No doubt in the case of Commissioner of Income Tax v. Mahalakshmi Textile Mills Ltd. (68 1TR 710), the Supreme Court held that the Income Tax Tribunal had jurisdiction to permit the assessee to raise a new contention which was not raised before the departmental authorities but in that case Tribunal had the evidence before it to give the decision on that new ground.

58. The plea of the Departmental Representative that the 'Dant Man-jans' manufactured by Shree Baidyanath are preparations which are sold in containers bearing symbol of 'SHIVLING', which is a registered Trade mark of Shree Baidyanath Ayurved Bhawan Limited and as such are "patent or proprietary medicines" is not based on admitted facts.

59. These facts are in dispute and they are also not before us. The assessee was not afforded any opportunity to meet this case which the department now wants to build up against him. The case law cited by the Departmental Representative does not help her in the circumstances of the present case.

60. We, therefore, uphold the objection of Shri Engineer, the learned counsel for Shree Baidyanath Ayurved Bhawan Limited, and confine ourselves to the real issue whether the goods, namely 'Dant Manjans' can be called medicines or drugs in which case they would be entitled to the benefit of duty exemption vide Notification No. 62/78, dated 1-3-1978, which added "all drugs medicines, Pharmaceuticals and drug intermediates not elsewhere specified" to the exemption Notification No. 55/75, dated 1st March, 1975.

61. Drug or Medicine has not been defined in the Central Excise Tariff under which the concerned Notification No. 62/78-CE, dated 1-3-1978 was issued and so the learned counsel of Shree Baidyanath Ayurved Bhawan Limited urged that resort has to be taken to the definitions given in the Drugs and Cosmetics Act, 1940.

"Ayurvedic (including Siddha) or Unani Drug" includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings mentioned in, and processed and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic (including Siddha) and Unani (Tibb) systems of medicine specified in the First Schedule ; According to Shri Engineer this definition uses the word 'includes' and renders it wide enough to include all medicines prescribed or used and gained recognition in the field of medicine. Although the 'Dant Manjans' manufactured by Shree Baidyanath Ayurved Bhawan Limited have not been mentioned, processed and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic system of medicines specified in the First Schedule to the said Act, but all other ingredients find mentioned in the authoritative books of Ayurved system of medicines specified in the First Schedule and as such 'Dant Manjans' which are compound of these Ayurvedic medicines should also be treated as Ayurvedic medicines.

63. It is also contended that apart from medicine as such the term 'drug' as defined in Section 3(b) of the Drugs and Cosmetics Act, 1940 includes all substances intended to be used for mitigation or prevention of disease in human beings and all such drugs are exempted under Notification No. 62/ 78-CE.64. We are unable to accept the contention of Shri Engineer as far as the present case is concerned.

65. The word 'medicine' or 'drug' has not been statutorily defined in the Central Excise Tariff and as such the meaning given in common parlance has to be attributed to it as has been laid down by Allahabad High Court in the case of Commissioner of Sales Tax v. Gramudyog Karyalaya [1979 (44) STC 270]. The definitions of the terms used in one enactment cannot be imported while interpreting the terms and expressions in another enactment. The definitions are always subject to the context of a particular enactment and the object behind it. Words and phrases occurring in an Act cannot be construed according to the meaning assigned to them in other Acts which are not incorporated or referred to therein. In the case of Macbeth v. Chislet (10 AC 220 at page 224), the House of Lords observed : "It would be a new terror in construction of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act, not incorporated or referred to, such an interpretation is given to it for the purposes of that Act alone." 66. This passage was cited with approval in a Sales Tax case by the Supreme Court in the Commissioner of Sales Tax, Madhya Pradesh v.Jaswant Singh Charan Singh (AIR 1967 SC 1454) and by the Delhi High Court in an Excise case, Hyderabad Asbestos Cement Products Ltd. and Anr. v. Union of India and Ors. (1980 ELT 735).

67. In the case of Commissioner of Income Tax v. Taj Mahal Hotel (AIR 1972 SC 168), Hon'ble Supreme Court laid down "that where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use. Popular sense means "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it." The same view has been expressed by the Supreme Court in some more decisions reported in AIR 1978 SC 1548, AIR 1973 SC 78, AIR 1977 SC 1548, and AIR 1968 SC 922. It is the identity of the goods as understood by public conversant or familiar with the goods which determine their classification and liability to duty.

68. Drugs and Cosmetics Act, 1940 is a distinct and separate Act enacted by the Parliament and no provision of it has been incorporated or referred to in the Central Excises and Salt Act, 1944 or Central Excise Tariff which is also a separate enactment. The main object of the Drugs and Cosmetics Act, 1940 is to prevent manufacture of the products covered by the Act in a sub-standard manner. Ayurved drugs have been brought under the Drugs and Cosmetics Act, 1940, in the year 1969. The object of the Excise Act is to raise revenue, and for this purpose to classify substances according to the tariff entries or according to general usage and known denominations of trade and therefore, for the purpose of classification under the Central Excise Tariff, the provision contained in Drugs and Cosmetics Act cannot be resorted to. In a case of Bombay High Court, Cadbury Fry v. Union of India (Misc. Petition No. 202/71, dated 1-9-1977) decided by Mr.

Justice Karnia, the court set aside an order of the customs authority which had interpreted the word "food" occurring in item 21(2) of the Schedule to the Indian Tariff Act, 1934 in the light of the definition of the word "food" in the Food Adulteration Act, 1954.

69. The question, therefore, is whether 'Dant Manjans' manufactured by Shree Baidyanath are considered in common parlance as Ayurvedic medicine or drug as claimed by them 70. Allahabad High Court in the case of Commissioner of Sales Tax v.Gramudyog Karyalaya (Supra) observed that in common parlance, a medicine is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. It need not be used in the very form in which it naturally occurs. It will retain its character as a medicine even though some processing is required before it becomes fit for use by human beings or other living creatures.

71. In order to show that 'Baidyanath Dant Manjans' are known as Ayurvedic medicines, the following contentions have been raised : (1) The said preparations are manufactured by the company on the authority of a drug manufacturing licence and the sale of the product has been authorised by the Food and Drug Control Administrator.

(2) The sale of the product as Ayurvedic medicine is evident from the description on the containers and the advertisement regarding it.

(3) All the ingredients of Dant Manjans appear in authoritative books on Ayurved viz. Bhav Prakash, Banoshudha, Sushrut Samhita, Chandrodaya etc. It is exclusively Ayurvedic medicine for the treatment of mouth and teeth diseases like Pyorrhoea, Alveerine, Toothache, Gum boils etc. All the ingredients are medicinal like red earth, longtel, Peepal, Kalimirch, Camphor, Menthol, Neem Chhal, Babul Chhal and they have got both pharmalogical and therapeutic qualities. In colloquial language it is called as 'Manjan'.

(4) Certificate issued by Director of Health Services, Bihar, Certificates from recognised Vaids and certificates of Principal Ayurvedic College, Bombay, certificate of the Head of the Department of Surgery in Bundelkhand Government Ayurvedic College, Jhansi and affidavits from various persons show and prove that Baidyanath Dant Manjans are Ayurvedic medicines. The analytical report showing the properties and effect of each ingredient also proves this fact.

(5) Admission made by the Senior Departmental Representative that this product i.e. 'Dant Manjan' is a patent or proprietary medicine also proves the fact that it is a medicine.

(6) Enquiry made by the Appellate Collector, Calcutta revealed that these products are used more for medicinal purposes, for treatment of various gum ailments and the cleaning of teeth is merely an incidental one. When the product is bought and sold for medicinal purpose and for the therapautic value, the product has to be treated as medicine of the variety known as 'Ayurvedic'.

72. A 'medicine'/'drug' as known in common parlance is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments.

73. The main thrust of the argument of Shree Baidyanath Ayurved Bhawan Limited is that all the ingredients of its 'Dant Manjans' are exclusively Ayurvedic medicines for the treatment of mouth and teeth diseases and as such its Dant Manjans are also Ayurvedic medicines.

75. The end product should not be known by its ingredients. Hon'ble Supreme Court in the case of Delhi Cloth Mills v. State of Rajasthan (1980 ELT 383) held that a commodity should be considered as a whole and should not be classified only from the point of view of one of the elements that go in the marking of it, however, important that element may be.

76. In the case before us, the end product is 'Dant Manjan' in a powder form. Allahabad High Court in the case of Commissioner of Sales Tax, U.P. v. Sarin Chemicals (24 STC 406) held that tooth powder used for cleaning the teeth is an article of cosmetics or toilet requisites. In that case the manufacturer had claimed medicinal properties for their products and this is what the Judges observed on the point:- "...Some of them do possess some prophylactic and remedial properties but whether they do or do not possess the medicinal properties, claimed by their manufacturers, the fact remains that they are used for dental cleanliness which is an essential act of toilet." Cleaning teeth being an act of daily toilet, dentifrices produced in the form of tooth powder used for cleaning teeth would be an article of toilet as held by the Bombay High Court in the case of Commissioner of Sales Tax v. Vicco Laboratories (22 STC 169). Madras High Court in the case of V.P. Somasundra Mudaliar v. State of Madras [1963 (14) STC 943] also took the view that the tooth powder is a 'toilet' requisite.

Hon'ble Supreme Court in the case of Sarin Chemical Laboratory v.Commissioner of Sales Tax, U.P. (AIR 1972 SC 65) also held that tooth powder in common parlance is considered as a toilet article. In this judgment Supreme Court referred to the decisions of Allahabad, Bombay and Madras High Courts mentioned above and confirmed the view taken by those High Courts that the tooth powder is a 'toilet requisite'.

77. A passage from Encyclopaedia of Chemical Technology, New York, Vol.

4 appearing at pages 928 to 930, have been quoted with approval by the Madras High Court in V.P. Somasundra Mudaliar's case (Supra) which reads as under :- "A dentifrice is defined as a cleansing agent in the form of a powder, paste or liquid to be used on the teeth... Modern dentifrices are an extension of the numerous abrasive and cleansing substances used as dentifrices in the early part of 10th century...Although dentifrices have been considered dental cosmetics at first the emphasis of advertising and the awakening of the hygiene consciousness occasioned by the rising standard of living caused dental cleansing to be regarded as an indispensable daily hygiene rather than an elective enhancement of beauty...

Although manufacturers of dentifrices have advanced such claims in their behalf as ability to prevent dental caries (decay) and treatment of pyorrhoea the inexorable fact remains that the dentifrices may be expected to perform only the principal function, the cleansing of the teeth, which includes the prevention of layers of muous, plaques that gives them an appearance of yellowness.

Dentifrices are not functionally antiseptic but in cleansing teeth they serve as detergents for teeth and mucous membrances of the mouth since water is usually used to dispose of the dentifrice after brushing...

78. In the presence of these authoritative pronouncements it hardly lies in the mouth of Shree Baidyanath that its product Dant Manjans which is essentially nothing but a tooth powder is a medicine or drug.

79. Now, coming to the ingredients namely Peepal, Kali Mirch, Sonth, Tambakuh, Peppermint, Kapur (camphor) Clove Oil (Long Tel) and Geru, used in the manufacture of Dant Manjan Lal though they have therapeutic properties in the pharmacopial books but their compound i.e. 'Dant Manjan' cannot be said to be a medicine having a curative power so as to make it effective for treatment of ailments Peepal, Kali Mirch, Sonth and Peppermint are daily used in our houses as spices for cooked vegetables. Can cooked vegetable be termed as a medicine is a question which can never be answered in affirmative. Tobacco is used by common man for chewing or in smoking hookah. It is also used in the manufacture of 'biris'. Hookahs or biris cannot be said to be medicines. 'Kapur' (camphor) is used in Hawan Samagri. Can we call it to be medicine Menthol i.e. Peppermint and Long Tel are used in almost every tooth paste but in excise tariff or in common parlance tooth paste is not considered to be medicine or drug. They have got a separate tariff entry in excise tariff distinct from medicine or drug.

Can we call all these ingredients as Medicines in the common parlance The answer is 'No'.Indo International v. Commissioner of Sales Tax "It is well settled that in interpreting items in statutes like the Excise Act or Sales Tax Act, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning. That is to say, the meaning attached to them by those dealing in them." 81. 'Geru' (Red earth) one of the ingredients of 'Dant Manjan Lal' is used to the extent of 70% in the product 'Dant Manjan Lal'. In Ayurvedic books it is shown to have a stringent and cooling quality but Shri Baidyanath Ayurved Bhawan Ltd. does not use it for having that quality. As mentioned in Para (G) of their Memorandum of Appeal (Appeal No. E-248/82-C) 'Geru' is used largely as a filler or colouring agent.

How can we call such an ingredient as medicine in common parlance is a question which has not been satisfactorily answered by Shree Baidyanath.

82. The ingredients of 'Dant Manjan Black' namely Tumbal seed, Bhallatak, Sandha Namak, Tambaku, Marich Alum, Camphor (Kapur) are not understood or treated as medicines in common parlance though they might have been mentioned in Ayurvedic reference books.

83. Similarly the ingredients of 'Dant Manjan White' namely Calcium carbonate (Khariya), Talc Powder (Soap Store) Alum (Phatkari) Boric acid (Tona-kmama) Camphor (Kapur) are not at all understood or treated as medicines in common parlance. Though in their therapeutic guide Shree Baidyanath have declared that the regular use of Dant Manjan Black and Dant Manjan White checks dental decay and keeps the teeth sparkling white and in respect to 'Dant Manjan Lal' they have declared that it prevents and cures dental troubles and maintains the gum tissues in healthy condition, but the Assistant Collector of Central Excise, Division Patna, taking into account the common parlance test rightly held in his Order-in-Original No. 2. Val./Classification List/82 dated 30-4-1982 that in the public and even in commercial understanding these Manjans are understood as tooth cleaning powder and not as medicine.

84. As has been stated above a medicine is a substance or preparation used in the treatment of diseases and must have a curative power so as to make it effective for treatment of ailments. In view of this definition of 'medicine' none of the ingredients of Dant Manjans manufactured by Shree Baidyanath Ayurved Bhawan can be termed as medicine in common parlance. Calling a Dant Manjan i.e. tooth powder as a medicine will be beyond the understanding of a common man who, uses it daily to clean his teeth.

85. The certificates issued by the Director of Health Services, Bihar, and by the recognised Vaidyas and Principal of Ayurvedic Colleges and affidavits of these persons produced by Shree Baidyanath Ayurved Bhawan Ltd. are to the effect that the preparation of Dant Manjans manufactured by Shree Baidyanath are ayurvedic medicines and are dispensed as medicines. The Director of Health Services, Bihar in a certificate dated 20th January, 1982 has certified that Shree Baidyanath Ayurved Bhawan Ltd. has manufactured Dant Manjan Lal under manufacturing licence No. 31/77 and it is an ayurvedic medicine with ayurvedic ingredients which is used to be prescribed for dental diseases. Six certificates at pages 70 to 75 in the Paper Book Volume 1, are from recognised Vaids, namely S/Shri R.D. Jaiswal, Ram Rakesh Pathak, Bamdeo Tripathi, Krishna Kumar Mishra, Acharya Surya Dutta Shastri, Madan Mohan Sharma. Common feature in all the certificates is that Baidyanath Dant Manjan is an important ayurvedic drug for maintaining strong and stable teeth and for protection of dental ailments and its decay. It cured dental troubles such as bleeding of gums, dental caries, pyorrhoea and maintains gum tissues in healthy conditions. Affidavits have been produced for the first time before this Tribunal as Shri Ganga Prasad Bimal, Advocate for Baidyanath Ayurved Bhawan sworn in his affidavit that he had offered to produce affidavits and/or certificates from qualified and eminent doctors of Ayurveda before the Collector, Central Excise, Patna but he was not allowed to do so. Affidavits produced are from S/Shri R.D. Jaiswal, R.R. Pathak, Bamdeo Tripathi, Krishna Kumar Mishra, Surya Dutta Shastri and Madan Mohan Sharma. These affidavits are from the same Vaidyas who have given their certificates earlier as mentioned above.

86. The question before us is whether the certificates and affidavits filed by the recognised Vaidyas help Shree Baidyanath Ayurved Bhawan Ltd. in any way to establish that Baidyanath Dant Manjans are medicines. By saying a product is a medicine it does not become so. The basis of saying 'Dant Manjans' manufactured by Baidyanath Ayurved Bhawan as medicines, as given in the certificates and affidavits seems to be that in the manufacture of 'Dant Manjans' original ayurvedic ingredients have been used and so it is a medicine which prevents and cures dental diseases. As has been discussed by us in detail none of the ingredients of the Dant Manjans manufactured by Baidyanath Ayurved Bhawan can be said to be a 'medicine' or a 'drug' in common parlance.

No doubt, they might be having some therapeutic value as shown in the Ayurvedic books but in common parlance none of these ingredients can be called as a medicine. A common man will not call Peepal, Kali Mirch, Sonth, Tambakuh, Peppermint, Kapur, Long Tel and Geru etc. as medicines and hence in common parlance Dant Manjan which is a compound of these ingredients cannot be called as a medicine or a drug. The technical meaning of these ingredients given in the Ayurvedic Books cannot be taken note of while holding these ingredients as medicine in common parlance. It is not the case of Shree Baidyanath Ayurved Bhawan that Dant Manjan as such is mentioned in recognised Ayurvedic Books as mentioned in the First Schedule. It is only the various ingredients that find place in the treatises. These ingredients cannot be called medicines in common parlance. So certificates and affidavits given by the Vaidyas do not advance the case of Shree Baidyanath Ayurved Bhawan Limited in the absence of any evidence on record to show and prove that the common man who uses this Dant Manjan daily to clean his teeth considers this Dant Manjan as a medicine and not a toilet requisite.

The affidavits of the actual users have not been produced on record to show and prove that Baidyanath Dant Manjan is a medicine and they are using it as such. No shopkeeper selling these 'Manjans' has come forward to depose that he is selling these 'Manjans' as medicine and the public is purchasing them as medicines. Baidyanath Ayurved Bhawan has sought exemption under Notification No. 62/78-CE, dated 1-3-1978, and therefore, it was incumbent upon Shree Baidyanath Ayurved Bhawan Limited to prove that 'Dant Manjans' manufactured by it are actually medicines covered under that Notification. It has been laid down by the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Bihar and Orissa v. Rama Krishna Deo (AIR 1959 SC 359) that it is for a person who claims exemption to establish it. The onus was on Baidyanath Ayurved Bhawan to prove by positive and cogent evidence that Dant Manjan qualifies for being called as Ayurvedic medicines. Certificates and affidavits from Vaidyas, in the absence of any affidavit from the actual users, are not sufficient to show and prove that Baidyanath Dant Manjan qualifies for being called as Ayurvedic medicines. A medicine is prescribed by a doctor to a patient and it is taken only for a limited time but in the case of Dant Manjans whether medicated or not they are safely used throughout the life. Even a person having healthy teeth uses the same in routine. Can anyone be justified to call such a Dant Manjan as a medicine The answer is 'No'. As has been observed in the Encyclopaedia of Chemical Technology New York, Volume 4 at pages 928-930-"Although manufacturer of dentifrices have advanced such claims in their behalf as ability to prevent dental caries (decay) and treatment of pyorrhoea, the inexorable fact remains that the dentifrices may be expected to perform only the principal function, the cleansing of the teeth." 87. The Hon'ble Supreme Court, Allahabad, Madras and Bombay High Courts have held in the cases quoted above, that tooth powder in common parlance is considered as a toilet article, and in the presence of findings of the Hon'ble Supreme Court, which is the law of the land, these certificates/affidavits from Vaidyas have no significance.

88. Regarding the enquiry alleged to have been made by the Appellate Collector, Calcutta, about the use of these Dant Manjans, it is pertinent to note that the Appellate Collector has not given his source of enquiry. He has also not mentioned from whom he had made enquiries and whether any opportunity was given by him to the parties to be associated with such enquiry. The Appellate Collector is a quasi-judicial authority and he is not supposed to conduct enquiry in this way on the back of the parties. Judicial or quasi-judicial authorities are not to become witnesses in the cases to be tried by them. They are not supposed to introduce some matter in the case on their personal knowledge. No reliance can be placed on this private enquiry alleged to have been made by Shri H. Yumkhawthng, Appellate Collector of Central Excise, Calcutta, as he has not made available the material gathered during the enquiry.

89. Regarding the alleged admission made by the S.D.R. Mrs. Zutshi, during the course of arguments that this product i.e. Dant Manjan is a 'patent or proprietary medicine' we find it difficult to agree with Shri Engineer, the learned counsel for Shree Baidyanath Ayurved Bhawan Limited that on the basis of this admission, the case be decided in favour of Shree Baidyanath Ayurved Bhawan Limited.

90. An admission is a statement which suggests any inference as to the existence of a fact in issue or relevant fact. There are two types of admissions i.e. admission of facts and admission of law. In this case, first we have to see whether the stand taken by the party in the course of argument can, at all, be termed as admission, or if so whether it can be taken as an admission as a whole, even though it is based on a point of law.

91. We find that the S.D.R. Mrs. Zutshi argued the case on behalf of the department from two angles. Her first stand was that 'Dant Manjans' manufactured by Shree Baidyanath Ayurved Bhawan Limited are not exclusively Ayurvedic medicines and therefore, were not excluded from the Tariff item 14-E CET, which includes 'patent and proprietary medicines'. She has never accepted this proposition of Baidyanath Ayurved Bhawan that these Dant Manjans are Ayurvedic medicines. The case of Baidyanath Ayurved Bhawan throughout is that these Dant Manjans are ayurvedic medicines. How can it be said to be an admission on the part of the departmental representative that Dant Manjans are Ayurvedic medicines as claimed by Shree Baidyanath Ayurved Bhawan. Besides this, classification is a mixed question of law and fact. Facts are not disputed regarding Dant Manjans and their ingredients. The only dispute is whether they can be called medicines or drugs to seek exemption under Notification 62/78, dated 1st March, 1978. The departmental representative never admitted it to be an Ayurvedic medicine. In the alternative, the case of the department is that if it is not a patent or proprietary medicine then it is not exempted under this Notification No. 62/78 being not a drug or a medicine. A party may take any number of stand during the course of arguments on the basis of the facts available and in pursuance of the stand taken by it in the pleadings.

92. We have not allowed the departmental representative to set up the case that these Manjans fall under Tariff Item 14-E i.e. patent or proprietary medicines because it was a new case taken for the first time before us and the facts are not admitted ones and, therefore, the submissions made by her during the course of arguments cannot be said to be admissions which can be used against the department. Admission on the basis of law made by the counsel is not binding upon the party.

93. The plea of Shree Baidyanath Ayurved Bhawan that the said preparations are manufactured by it on the authority of a drug manufacturing licence and the sale of the product has been authorised by the Food & Drug Control Administration also does not help Shree Baidyanath Ayurved Bhawan to establish that their product is a medicine for the purpose of taking benefit in Notification No. 62/78-CE.94. The Drugs and Cosmetics Act, 1940 is a distinct and separate enactment and no provision of it has been incorporated or referred to in the Central Excise Act, 1944 or Central Excise Tariff which is also a separate enactment. The main object of the Drugs and Cosmetics Act, 1940 is to prevent manufacture of the products covered by the Act in a sub-standard manner. Ayurvedic drugs have been brought under the Drugs and Cosmetics Act, 1940 in the year 1969. So, the mere issue of licence of manufacturing this product under the Drugs and Cosmetics Act, 1940 and regulating the procedure of the sale of the products manufactured under this Act, does not mean that the product so manufactured becomes a drug or a medicine by itself. As Baidyanath Ayurved Bhawan failed to show and prove that their product i.e. Dant Manjans is called a medicine in common parlance, so the issue of manufacturing licence under the Drugs and Cosmetics Act, 1940 does not make it a medicine.

95. The last submission of Shree Baidyanath Ayurved Bhawan Limited that its product is sold as medicine and it is advertised as a medicine and, therefore, it should be treated as a medicine in common parlance is also not sufficient to establish that it is a medicine in common parlance.

96. In the memorandum of appeal No. E-248/82-C sub-paragraph (E), Shree Baidyanath has given description of the label as under :- "Ideal ayurvedic dentifrices. Makes teeth strong and sparkling white. Keeps gum healthy. Stops mouth odour." 97. Can this description on the container of the product 'Dant Manjan' is sufficient to call it an 'ayurvedic medicine' in common parlance 98. Our answer is 'No'. Manufacturers and traders are known to make tall claims in respect of their products. Accordingly, the statements made in the advertisements have been disregarded for classification of products. In a sales tax case the Court held that notwithstanding the label and the mode of advertisement, one has to see to what use the commodity in question is normally put in order to determine its real nature Deputy Commissioner v. Union Carbide (38 STC 198). In an excise case the department relied on the advertisements, the labels on the cartons and bottles whereon in respect of vasmol hair oil and pomade, a claim was made that vasmol could be used as an ideal hair darkener. As the uncontroverted affidavit evidence established it as a hair oil and not as a hair darkener, the Court declined to give weight to statements in the advertisement indicating its use also as a hair darkener observing, "it is usual for an advertiser of products to claim all possible virtues for his products, but it would be erroneous to rely on all these claims to determine of trade use of the products" {Nishat v.Union of India, 1979 ELT J 212). In the case of Blue Star v. Union of India (1980 ELT 280), the department's contention that classification depended on advertisement was rejected. The Court held that "What the petitioner may advertise by way of attracting customers can be no criterion for adjudicating upon the issue whether the duty is payable under a particular tariff item. In other words, payment of duty under a particular tariff item must depend upon the facts of the case and not on the advertisement gimmick of the advertiser". In the case of Abbot Laborator (1981 ECR 428 D) though 'Selsun' was described in the trade literature by the manufacturer as 'Shampoo', it was held to be a mere trade gimmick and since its use was really for removal of dandruffs and mild dermatitis, it was held to be a medicine falling under Item 14-E.So, this type of label on the containers of the Dant Manjans manufactured by Shree Baidyanath Ayurved Bhawan Limited does not advance the case of Shree Baidyanath Ayurved Bhawan to establish that these Dant Manjans are treated as medicine in common parlance.

99. If, for argument's sake, we resort to the definitions of 'drugs' as given in Section 3(a) and 3(b) of the Drugs and Cosmetics Act, 1940, even then the product manufactured by Shree Baidyanath i.e. Dant Manjans cannot be said to be a drug or medicine. Section 3(a) of the Drugs and Cosmetics Act, 1940 provides that:- "Ayurvedic or Unani drug includes all medicines intended for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings, mentioned in and processed and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic systems of medicine, specified in the First Schedule." Admittedly, the Dant Manjans manufactured by Shree Baidyanath do not find mention in any of the authoritative books of Ayurvedic systems of medicine specified in the First Schedule. These Dant Manjans have not been manufactured in accordance with the formulae described in any of the authoritative books and, therefore, these Dant Manjans are not covered by the definition of Ayurvedic medicine as given in Section 3(a) of the said Act.

100. The mere fact that the ingredients used in the manufacture of these Dant Manjans find mention in these authoritative books of Ayurvedic systems of medicine specified in the First Schedule does not lead us to hold that the end product i.e. Dant Manjan is an Ayurvedic medicine as defined in this Sub-section. To be an Ayurvedic medicine under this Sub-section that product must be manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic systems of medicine specified in the First Schedule, but this is not the case here.

101. Regarding definition of 'Drug' as given in Section 3(b) 'drug' includes all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or animals.

102. As has been discussed by us above and as has been laid down by the Hon'ble Supreme Court and various High Courts like Allahabad, Bombay and Madras, 'Dant Manjan' i.e. tooth powder is a toilet requisite. It is an article of every day use meant for rubbing and cleaning teeth as an indispensable hygiene intended to protect the teeth and preserve them in good condition. How can these Dant Manjans be brought within the definition of 'drug' as given in Section 3(b) of the Drugs and Cosmetics Act, 1940. Although Shree Baidyanath manufacturers of these Dant Manjans have claimed that they are able to protect dental caries (decay) and Pyorrhoea, the inexorable fact remains that these Dant Manjans may be expected to perform only the principal function of cleansing of the teeth.

103. The judgments cited by the learned counsel of Shree Baidyanath passed by Shri S.K. Bhatnagar, Appellate Collector, Central Excise and Customs, New Delhi, in the case of M/s Hamdard Laboratoies reported in 1981 ECR 596 D, and that of Shri B.N. Rangwani, the then Collector, Central Excise, Calcutta in Order-in-Original No.329/14-E/82/Collector/12/83, dated 31-1-1983 and that of Civil Judge, Thane in the case of Vicco Vajradanti do not advance the case of the appellants in any way. The judgment passed by Shri Bhatnagar is in appeal before this Tribunal and the other two judgments are also not binding on the Tribunal which have little significance in the presence of the authoritative pronouncement of the Hon'ble Supreme Court in Sarin Chemical Laboratories (Supra). Some other judgments cited by Shree Baidyanath holding 'Boroline' and 'water' meant to be dissolved for administering injection in human being as 'drug' also do not help Shree Baidyanath in the present case. 'Dant Manjan' was not the product in dispute in those cases. As has been laid down by the Allahabad, Bombay and Madras High Courts in the cases referred to above and confirmed by the Hon'ble Supreme Court in the case of Sarin Chemical Laboratories (Supra) a tooth powder though medicated in a toilet requisite.

104. Under these circumstances, we set aside the order passed by the Appellate Collector, Central Excise, Calcutta and confirm the findings of the Assistant Collector, Central Excise that 'Dant Manjan Lal', 'Dant Manjan Black' and 'Dant Manjan White' manufactured by Shree Baidyanath Ayurved Bhawan Limited are classifiable under Tariff Item 68-CET and not entitled to exemption under Notification No. 62/78-CE, dated 1-3-1978.

105. Besides these three Dant Manjans manufactured by Shree Baidyanath Ayurved Bhawan, the classification issue of some other products manufactured by Shree Baidyanath Ayurved Bhawan and mentioned in the show cause notice dated 10-3-1980 were also in dispute. Shree Baidyanath Ayurved Bhawan Limited were required to show cause as to why Himalya Surma, Netramrita Surma, Moti Surma, Agnimukh Churan, Atul Shaktidata, Gasol Pachak, Kashbati, Namak Sulemani, Pachakbati, Sodhi Harre should not be classified under Tariff item 14-E because they contained allopathic ingredients and are not purely ayurvedic in character and be charged to duty under Tariff item 14-E. The Assistant Collector, besides dealing with the classification of these products mentioned in the show cause notice, also dealt with some other products not covered by the show cause notice and the Appellate Collector rightly rejected the order of the Assistant Collector on that point because the product not mentioned in the show cause notice were not subject to classification before him. We arc, therefore, to deal with only those products mentioned in the show cause notice. These are Netramrita Surma, Himalaya Surma, Moti Surma, Agnimukh Churan, Atulsakhti Data, Gasol Pachak, Kashati, Namak Sulemani, Pachakhati and Sodhi Harre.

106. The Assistant Collector has classified these products under Tariff item 14-E as 'patent or proprietary medicines' and subject to payment of duty under that tariff item without any exclusion. However, the Appellate Collector of Central Excise, Calcutta ordered their classification under item 14-E, CET but excluded as Ayurvedic medicines.

107. The dispute is whether these are 'patent or proprietary medicines' or not. Explanation I appended to item 14-E, CET reads as under :- "Patent or Proprietary Medicines" means any drug or medicinal preparation, whatever form, the use in the internal or external treatment of, or for the prevention of ailments in human beings or animals which bears either on itself or on its container or both, a name which is not specified in a monograph in a pharmacopoeia formulary or other publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is, a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person." 108. In the case before us, there is no dispute that these products manufactured by Shree Baidyanath are sold in the market as medicines bearing the name of Baidyanath and the symbol of 'SHIVLING'. During the course of arguments, the learned counsel of Shree Baidyanath admitted that the symbol of 'SHIVLING' is a registered mark of Shree Baidyanath.

From this symbol of 'SHIVLING' the connection between the medicines and Shree Baidyanath Ayurved Bhawan Limited is fully established. The trade mark 'SHIVLING' on the medicines manufactured by Shree Baidyanath indicates the connection between the products and Shree Baidyanath Ayurved Bhawan Limited, who has a proprietary interest in these medicines.

109. The crucial point for decision is whether these products are exclusively Ayurvedic medicines and excluded from Tariff Item 14-E, CET. Item 14-E refers to patent or proprietary medicines other than those which are exclusively Ayurvedic, Unani, Siddha or Homoeopathic.

110. The argument of the learned Senior Departmental Representative is two fold on this point.

111. Her first contention is that these products have not been manufactured as per formulae laid down in any of the specified books on Ayurveda as mentioned in the First Sehedule of the Drugs and Cosmetics Act, 1940, and as such they cannot be treated as Ayurvedic medicines as defined in Section 3(a) of the Drugs and Cosmetics Act, 1940.

112. The second contention raised by Mrs. Zutshi, Senior Departmental Representative, is that all these products contain some allopathic ingredients and as such they cannot be called exclusively Ayurvedic medicines. According to her, in the Surma Group of medicines namely, Netramrita Surma, Himalaya Surma, Moti Surma, 'Menthol' which is an allopathic ingredient has been used.

113. In other products, namely, Gaisol Pachak, Namak Sulemani and Agnimukh Churan, 'Menthol' and 'citric acid' are used, whereas 'Borax' is used in Kashbati. Pachakbati and Sodi Harre contain citric acid whereas Swet Parpati contains potassium nitrate, Alum and Ammonium chloride. In the product Atul Shaktidata, steel is used. All these ingredients though are used in very small quantity but they are allopathic in nature and hence their use in these medicines have made them non-ayurvedic.

114. We do not agree with the learned Senior Departmental Representative.

115. The word 'Ayurvedic medicine' has not been defined in Central Excise Act or Tariff and hence we have to resort to the common parlance test to find out whether these are treated as Ayurvedic medicines by the public.

116. Regarding the Surmas manufactured by Shree Baidyanath, it is clear from the literature produced by Shree Baidyanath that they are used for treatment of eye troubles. In commercial parlance they are also medicines and also used by the public as medicines. This fact has not been disputed by the Senior Departmental Representative. It has been laid down by the Hon'ble Supreme Court in the case of Taj Mahal Hotel (Supra), where the definition of a word has not been given, it must be construed in its popular sense, if it is a word of every day use. The definition of word 'Ayurvedic medicines' given in Section 3(a) of the Drugs and Cosmetics Act, 1940 cannot be made use of for the purpose of classifying a product under Central Excise Tariff. Drugs and Cosmetics Act, 1940 is a distinct and separate Act enacted by the Parliament and no provision of it has been incorporated or referred to in the Central Excises and Salt Act, 1944 or Central Excise Tariff which is also a separate enactment.

117. Regarding her second contention, no doubt it is true that Menthol, citric acid, camphor, iron, Alum, Borax,- Potassium nitrate, Ammonium chloride are pharmacopeal items but their use in Ayurvedic preparations does not render such preparations non-ayurvedic provided the use of these ingredients is recognised in authentic treatises on Ayurveda.

118. Mrs. Zutshi, S.D.R. fairly conceded to this proposition in view of the circulars of the Central Board of Customs and Excise issued in this behalf from time to time. Board's circular letter No. 8 (Medicines) 62 conveyed vide letter F. No. 7/26/61-CX. VI dated 23-6-1961 allowed the use of Iron, Sulphur, Mercury Camphor in Ayurvedic preparations, though they are of B.P. grade. The departmental representative has not disputed this fact that these pharmacopeal items have been used in a very small quantity and that they find mention in the authoritative treatises on Ayurveda and are also established as such by uses and traditions.

119. Under these circumstances, we confirm the findings of the Appellate Collector, Central Excise, Calcutta that the products namely, Himalaya Surma, Moti Surma, Netramrita Surma, Agnimukh Churan, Atul Shaktidata, Gaisol Pachak, Kasbati, Namak Sulemani, Pachak and Sodhi Harre, Swet Parpati as mentioned in show cause notice C. No. V(14F)(3) Val-27/76/5473 dated 10-3-1980 are classifiable under Tariff Item 14-E/- (CET) but excluded being exclusively Ayurvedic medicines.

120. In view of our findings above, we partly accept the appeal filed by the Department (Appeal No. E 106/83-C titled The Collector of Central Excise, Patna v. Shree Baidyanath Ayurved Bhawan Limited, Patna) regarding Dant Manjans by holding that the correct classification of 'Dant Manjan Lal', 'Dant Manjan Black' and 'Dant Manjan White' manufactured by Shree Baidyanath Ayurved Bhawan Limited is under Tariff Item 68 as a tooth powder (goods not elsewhere specified) and not entitled to exemption under Notification No.62/78-CE, dated 1-3-1978 as they are neither drugs/medicines nor Ayurvedic medicines.Shree Baidyanath Ayurved Bhawan Limited, Patna v. The Collector of Central Excise, Patna, we confirm the finding of Shri Surjit Singh, Collector of Central Excise, Patna, that Dant Manjan Lal manufactured and cleared by the appellant Shree Baidyanath during the period March, 1978 to April, 1981 was subject to levy of excise duty under Tariff Item 68-CET at the effective rate of duty but we do not agree with his findings that the entire duty amounting to Rs. 18,86,122.00 is payable. The department has not been able to succeed in establishing that it is entitled to avail the extended period of limitation of five years under Rule 9(2) of the Central Excise Rules, 1944. There is nothing on record to show and prove that the assessment was provisional at any time. No bond was ever executed to show and prove that the assessments were provisional.

These goods were manufactured and cleared openly with the full knowledge and consent of the Excise Department inasmuch as the department granted a refund of Rs. 3,557.68 of the excise duty by giving benefit of Exemption Notification No. 62/78, dated 1st March, 1978 with effect from 1st March, 1978. How can the department now say that the assessee had violated the provisions of Rule 9(1) and therefore, liable under Rule 9(2) to pay duty for the extended period of five years ?N.B. Sanjana v.Elphinston Spinning & Weaving Mills Limited (1978 ELT J 339) held that it is only when goods have escaped payment of duty due to clandestine removal, that Rule 9(2) can be made applicable. In this case the department has not been able to show and prove that these goods have been removed clandestinely by the assessee. The mere fact that the assessee did not mention about one of the ingredients, i.e. 'geru' of this product to the department earlier does not mean that they are guilty of misstatement. The letter shows that they had mentioned some of the important ingredients of that product. It was for the department to verify and ascertain the true facts. This letter cannot be said to be a misstatement on the part of the assessee and particularly when the department accepting this product as a drug or medicine gave benefit of the Exemption Notification No. 62/78 while ordering refund of excise duty with effect from 1st March, 1978. The demand can be restricted only upto six months prior to the issue of the show cause notice dated 16-7-1981 under Section 11-A of the Central Excises and Salt Act, 1944 and not for a period of five years as claimed by the department.

123. The findings of the Collector imposing penalty under Rule 173-Q of the Central Excise Rules are also not sustainable. It has been laid down by the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa (1978 ELT J 159) that no penalty should be imposed for technical or venial breach of legal provisons or where the breach flows from the bona fide belief that the offender is not liable to act in the manner prescribed by the statute. According to their Lordships where a breach of a statutory provision has taken place without any mala fide intention, it should be distinguished from those were breaches are due to deliberate acts on the part of a manufacturer.

Where breach took place in a bona fide belief and without guilty conscious no penalty should generally be imposed even though imposition of penalty is permissible under the statute.

124. In this case we find that the departmental authorities were not sure as to what should be the correct tariff entry for 'Dant Manjan' manufactured by Shree Baidyanath Ayurved Bhawan Limited.

125. Prior to March 1, 1975 it was considered to be a patent or proprietary medicine falling under Item 14-E, CET but considered as not excisable to duty by virtue of the express exclusion in the description of the Tariff item itself in favour of medicines which are exclusively ayurvedic, unani, siddha or homoeopathic.

126. Immediately after 1st March, 1975 when residuary item 68 was introduced in the Central Excise Tariff Schedule for "All other goods, not elsewhere specified..." the Excise Department took the view that Ayurvedic medicines even though they were specified under T.I. 14-E (albeit for the purpose only of exclusion) were classifiable under Tariff Item 68.

127. On 1st March, 1978 when the Government of India issued an Exemption Notification being Notification No. 62/78, whereby the total duty exemption hitherto provided under Tariff Item 68 on goods specified in the Schedule appended to Notification 55/75-CE, dated 1-3-1975, was extended to "All drugs, medicines, Pharmaceuticals and drug intermediates not elsewhere specified" and after the appellant stopped paying duty on 'Dant Manjan Lal' taking it as exempt from payment of duty by virtue of the notification and applied for refund of Rs. 3,557.68 which was the balance lying in the Appellants' Account current with the department in respect of Ayurvedic medicines manufactured and cleared by it on payment of duty under Tariff Item 68, the application for refund was considered by the department and the amount claimed was duly refunded by the Assistant Collector on 9-10-78.

128. Baidyanath has filed classification lists from time to time and nothing was suppressed from the department. Stopping payment of duty on Dant Manjan Lal with effect from 1st March, 1978 was on account of bona fide belief that it is exempted under Notification No. 62/78, dated 1-3-1978 and hence no case for imposing penalty under Rule 173-Q of Central Excise Rules is made out.

129. We quash the findings of the Collector Central Excise imposing penalty of Rs. 10,000/- on Shree Baidyanath Ayurved Bhawan Limited, Patna.

130. In view of our findings above, we order that M/s. Shree Baidyanath Ayurved Bhawan Limited, Patna shall only pay the duty on clearances on the product 'Dant Manjan Lal' effected by them during the period of six months prior to the issue of the show cause notice dated 16th July, 1981 under Section 11-A of the Central Excises and Salt Act, 1944. The penalty amount of Rs. 10,000/- is waived.

131. The order passed by the Collector, Central Excise No. 49/MP, dated 26-8-1982 which is the subject matter of Appeal No. 248/82-C is modified to that extent.

132. Both the appeals No. E-248/82-C and E-106/83-C are hereby disposed of as held above.

This decision of the Appellate Tribunal in/so/far as it held that Surma, Agnimukh Churan, Atul Shaktidata, Gaisol Pachak, Kasbati, Namak Sulemani, Pachak and Sodhi Havre are classifiable under Tariff Item 14-E but are excluded therefrom being exclusively ayurvedic medicines, seems to be self-contradictory. When in a Tariff Entry, a particular article has specifically been excluded, it can still not be presumed that such specifically excluded article will still be classifiable under that Tariff Item. It appears that provision of the Explanation to Tariff Item 68, has not been brought to the notice of the Hon'ble Bench, otherwise the decision might have been different. The said Explanation of Tariff Item 68 reads as under : "Explanation.For the purposes of this Item, goods which are referred to in any preceding Item in this Schedule for the purpose of excluding such goods from the description of goods in that Item (whether such exclusion is by means of an Explanation to such Item or by words of exclusion in the description itself or in any other manner) shall be deemed to be goods not specified in that Item." In view of the above statutory provision of the Tariff Item 68, the decision of the Appellate Tribunal on this aspect of the matter needs re-consideration to the extent that goods which are specifically excluded from Tariff Item 14E, would be classifiable under Tariff Item 68 and not under Tariff Item 14E.


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