1. Briefly staled the facts of the case are that Shree Baidyanath Ayurved Bhawan Limited, Nagpur (hereinafter called the appellants) manufacture patent or proprietary medicine falling under item 14E of the CET. They also manufacture other products including (1) Dant Manjan, (2) Surma and (3) Kajal.
Prior to 1975, the appellants classified Dant Manjans, Surmas and Kajals manufactured by them under item 7 of the classification list meant for showing "other goods manufactured". With effect from 1-3-1978 when a residuary item 68 was introduced in the Central Excise Tariff, these three products were classi- Pharmaceuticals and drug intermediates not elsewhere specified were exempted from payment of excise duty. The appellants treated these products, namely, Dant Manjan, Surma and Kajal as Ayurvedic drugs/medicines and did not pay any excise duty with effect from 1-3-1978 by taking benefit of Notification No. 62/78 C.E., dated 1-3-1978.
2. The Superintendent, Central Excise, Range V, Nagpur issued to the appellants a show cause notice dated 3-11-1981. A paragraph of this notice reads as under : "And whereas it appears that the notice have been wrongly and wilfully taken recourse to Notification No. 62/78, dated 1-3-1978 which on its true and correct interpretation has no application to the said goods in question, as the said goods cannot be treated as Ayurvedic medicines, drugs, pharma-ceuticals and drug intermediates because they are patently marketed as tooth powder, Surma, Kajal to the consumers as well as to trade." 3. In reply to the said show cause notice the appellants raised the following contentions : 1. Since Ayurvedic medicines have been specified under Item 14-E of the Central Excise Tariff, even if by way of exclusion, they cannot be included in the residuary Item 68; 3. The sale of the product as Ayurvedic medicine is evident from the description on the containers and the advertisement regarding it; 4. All the ingredients of Dant Manjan, appear in original books on Ayurved viz., Bhav Prakash, Banoshadha, Sushrut Samhita, Chandrodaya, etc. It is exclusively Ayurvedic medicine for the treatment of mouth and teeth diseases like Pyorrhea, alveerine, toothache, gum-boils, etc. All the ingredients arc medicinal like red earth, long pepper, ginger, black pepper, tobacco, clove, camphor, menthol, neem chhal, Babhul Chhal, etc. and they have got both pharmacological and thereptic qualities. In colloquial language it is called as 'Manjan'; 5. The manufacture and sale of the product Dant Manjan has been authorised by the highest authority in the State viz. Food and Drug Control Administrator as per his sanction order dated 19-3-1977 issued under the Drugs and Cosmetics Act, 1940; 6. The Principal, Ayurvedic College, Bombay and the Principal, Government Ayurvedic College, Bundelkhand (Jhansi) who are experts in the field of Ayurved, have certified that Dant Manjan is an Ayurvedic medicine. The analystical report showing the properties and effect of each ingredient also proves this fact; 7. The product Dant Manjan is a 'Drug' as defined in Section 3(b) of the Drugs and Cosmetic Act, 1940 and is entitled to exemption under Notification No. 62/78, dated 1-3-1978; 8. The show cause notice is not valid as it does not disclose the evidence on which it is based. No material like market enquiry has been supplied. It only makes an arbitrary mention that it is not Ayurvedic medicine. It is based on only opinion, presumption and assumption; 9. The onus of prof for taxing it is on' the Department which has not been discharged; 10. The classification of this product is approved by the Department and unless that decision which is quasi-judicial is annulled under Section 35-A of the Act, no proceedings can be held; 11. The change in view or stand that is being sought to be done now is not permissible in law; 12. Since there was no clandestine or fraudulant removal, Rule 9(2) cannot be invoked; 14. Section 11-A which came into force on 17-11-1980 cannot be pressed into service for the period from 1-3-1978 onwards; 4. The Collector of Central Excise Nagpur by his Order-in-Original No.1/1981, dated 21-9-1982 rejected the contention of the appellants that these products, namely, Dant Manjan, Surma and Kajal are Ayurvedic drugs/medicines. It was ordered that these goods shall not be eligible for exemption from payment of duty admissible under Notification No.62/78, dated 1-3-1978. The demand was, however, restricted to a period of six months only prior to the issue of the show cause notice dated 3-11-1981 under Section 11A of Central Excises and Salt Act, 1944.
5. Not satisfied with the said order passed by the Collector of Central Excise, the appellants filed appeal before this Tribunal.
6. We have heard Shri D.B. Engineer, Senior Advocate assisted by Shri G.P. Vimal, Advocate and Shri Lachman Dev, Consultant for the appellants and Mrs. V. Zutshi for the respondent and have gone through the record.
7. As far as Dant Manjan and Surma are concerned, the parties adopted the same arguments which were advanced in Appeal Nos. 248/82-C and 106/83-C titled Baidyanath Ayurved Bhawan Ltd. v. Collector of Central Excise, Patna and Collector of Central Excise, Patna v. Baidyanath Ayurved Bhawan Ltd. respectively and did not raise any other ground.
Regarding Kajal, the learned Consultant, Shri Lachman Dev argued the matter on behalf of the appellants.
8. According to Shri Lachman Dev, Item 14E CET was introduced in 1960- At that time patent or proprietary medicines were defined in the Drugs Act, 1946. In 1964 Section 3(a) was introduced in the Drugs and Cosmetics Act. If the ingredients of a product are Ayurvedic in nature or it is manufactured as per the formula prescribed in the authoritative books of Ayurvedic, the product should be taken as exclusively Ayurvedic. According to Shri Lachman Dev, we are not to resort to the provisions of Drugs and Cosmetics Act when otherwise it can be held that the preparation is an Ayurvedic medicine. He referred to Hamdard's case in this behalf. He pointed out that the Drugs Act and Excise Act are not pan materia. They are different. If the ingredients are Ayurvedic, the product is also Ayurvedic. He drew our attention towards the Board's instructions dated 23-6-1961 which are to the effect that some pharmacopeal ingredients in small quantity used in the manufacture of Ayurvedic drugs do not change the character of the drugs from Ayurvedic if they find mention in the authoritative treatises on Ayurveda and are also established as such by uses and trade. Section 3(h) of the Drugs and Cosmetics Act has widened the scope of the definition of the 'drug'. According to Shri Lachman Dev, keeping in view this legal proposition, 'Kajal' manufactured by the appellants is a patent and proprietary medicine classifiable under Tariff Item 14E CET but excluded from payment of duty being exclusively Ayurvedic drug/ medicine.
9. Mrs. Zutshi, SDR, countered the arguments of.Shri Lachman Dev and alleged that Kajal cannot be treated as a drug and more so an Ayurvedic drug. There is nothing on record to show and prove that Kajal is a patent or proprietary medicine manufactured by the appellants. There is also nothing on record to show that it is an exclusively Ayurvedic drug. It is used for beautification.
10. As far as Dant Manjan is concerned it has been held by us in our earlier order in the connected appeals No. 248/82-C and 106/82-C (Order No. 438 and 439/85-C) that Dant Manjan is not an Ayurvedic drug or medicine. It is a toilet requisite classifiable under item 68 and is not entitled to the benefit of exemption Notification No. 62/78, dated 1-3-1978.
11. Our findings are based on a decision of the Supreme Court in the case of Sarin Chemical Laboratory v. Commissioner of Sales Tax, U.P.(AIR 1971 SC 65) wherein their Lordships of the Supreme Court held that tooth powder in common parlance is considered as a toilet Article. In this judgment Supreme Court referred to the decisions of the Allahabad, Bombay and Madras High Courts. Allahabad High Court in the case of Commissioner of Sales Tax, UP. v. Sarin Chemicals (24 STC 406) held that tooth powder used for cleansing 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 prophylectic 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." Cleansing teeth being an act of daily toilet, dentifrices produced in the form of tooth powder used for cleansing 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 Mudaliarv. State of Madras (1963) 14 STC 943 also took the view that the tooth powder is a toilet requisite.
12. Without discussing the matter in detail, following our earlier decision in Appeal Nos. 248/82-C and 106/82-C (Order No. 438 & 439/85-C) we hold that Dant Manjan Lal as manufactured by Shree Baidyanath Ayurved Bhawan Ltd., Nagpur, is classifiable under Tariff Item 68 CET and is not entitled to exemption under Notification No.62/78-CE, dated 1-3-1978. We confirm the findings of the Collector of Central Excise Nagpur on this point.
13. On the limitation point the Collector has already restricted the demand for a period of six months from the date of issue of the show cause notice.
14. Regarding 'Surma' also manufactured by Shree Baidyanath Ayurved Bhawan Ltd., we have held in our earlier Order No. 438 & 439/85-C passed in Appeal Nos. 248/82-C and 106/82-C that it is a patent or proprietary medicine falling under Tariff Item 14E CET but excluded being exclusively Ayurvedic drug. The Departmental Representative did not dispute this fact that the product, i.e., 'Surma' manufactured by the appellants are sold in the market as medicines bearing the name of Baidyanath and the symbol of 'Shivling'. From the symbol of 'Shivling' the connection between the medicines and Shree Baidya-nath Ayurved Bhawan Ltd. is fully established. The Trade Mark 'Shivling' on the medicines manufactured by Shree Baidyanath Ayurved Bhawan Ltd. indicates the connection between the products and Shree Baidyanath Ayurved Bhawan Ltd. who has a proprietary interest in these medicines i.e. Surmas.
15. The crucial point for decision is whether this product 'Surma' is exclusive Ayurvedic medicine or not. After discussing the entire case law on the sub-ject, taking into account the ingredients contained in the 'Surmas' and the Board's circular letter No. 8 (Med.) 162, dated 26th June, 1961 it was held that Surmas are exclusively Ayurvedic drug though pharmacopoeal items have been used in a very small quantity in the manufacture of Surmas.
Following our earlier decision in Appeal Nos. 248/82-C and 106/82-C (Order No. 438 & 439/85-C) we hold that the 'Surmas' in dispute Maianufactured by the appellants are classifiable under item 14E (CET) and are excluded being exclusively Ayurvedic drug. We set aside the order of the Collector of Central Excise, Nagpur regarding this product 'Surma'.
16. Regarding 'Kajal' there is no material on record to show and prove that this product is exclusively Ayurvedic drug. 'Kajal' as is understood in common parlance is used for beautification purposes as it gives lustre to the eyes. 'Kajals' are not 'Surmas' and that is why they have been named separately. In the absence of any material available on record, we are not in a position to agree with the learned consultant for the appellants in holding that 'Kajals' are patent or proprietary medicines falling under item 14E (CET) but excluded being exclusively Ayurvedic medicine. Neither in common parlance nor as per the definitions given in the Drugs and Cosmetics Act, 1940, 'Kajal' can be termed as a drug or medicine.
17. Admittedly, this product 'Kajal' has not been manufactured as per the formula laid down in any of the specified books of Ayurveda as mentioned in the First Schedule of the Drugs and Cosmetics Act, 1940 and as such it cannot be treated as Ayurvedic medicine as defined in Section 3 (a) of the Drugs and Cosmetics Act, 1940. The definition of the word 'drug' as given in Section 3(h) of the Drugs and Cosmetics Act also does not bring this product within the purview of Ayurvedic drug or medicine. No body has come forward to say that it is being used as a medicine for the remedy of eye trouble.
18. 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. Here there is nothing on record to show and prove that 'Kajal' manufactured by the appellants in common parlance is known as a substance or preparation used in the treatment of diseases and has a curative power so as to make it effective for treatment of ailments.
19. Under these circumstances, we find no force in the contention of the learned consultant for the appellants that the 'Kajal' manufactured by the appellants is a patent or proprietary medicine falling under Tariff Item 14E (CET) and excluded being exclusively Ayurvedic drug.
20. In view of the reasons given in our earlier Order No. 438 & 439/85-C passed in Appeal Nos. 248/82-C and 106/82-C and our discussion above, we confirm the findings of the Collector, Central Excise regarding the products 'Dant Manjan' and 'Kajal' by holding that both these products fall under item 68 CET and are not entitled to take the benefit under Notification No. 62/78, dated 1-3-1978 as they are neither drugs nor medicines.
21. We, however, set aside the findings of the Collector, Central Excise regarding the product 'Surma' and hold that the 'Surma' in dispute manufactured by the appellants is patent or proprietary medicine classifiable under item 14E (CET) but excluded being Ayurvedic medicine.