M/S. NATURALLE HEALTH PRODUCTS (P) LTD. versus COLLECTOR OF CENTRAL EXCISE, HYDERABAD

Citation: [2003] SUPP. 5 S.C.R. 433 · Decided: 11-11-2003 · Supreme Court of India · Bench: P. VENKATARAMA REDDI · Disposal: Appeal(s) allowed

Judgment (excerpt)

MIS. NATURALLE HEAL TH PRODUCTS (P) LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE, HYDERABAD 
NOVEMBER 11, 2003 
[P. VENKATARAMA REDD! AND DR. AR. LAKSHMANAN, JJ.] 
A 
B 
Central Excises and Salt Act, 1944/Central Excise Tariff Act, 1985-
Drugs and Cosmetics Act, 1940-Section 3(a) and 3(h)-Medicated cough 
drops and throat drops and sloan's balm and sloan's rub-Classification C 
under tariff heading for levy of duty-Held: Products are manufactured under 
Ayurvedic drug licence; the customers, practitioners, dealers, licensing 
officials treat it as Ayurvedic medicines; all the ingredients are mentioned in 
the authoritative text books on Ayurveda, though are purified or added with 
some preservatives which does not alter their character-Hence, the products 
are classifiable as Ayurvedic medicaments under Chapter Heading 3003.30 D 
attracting nil rate of duty. 
Appellant-assessee in the first appeal is engaged in the manufacture of 
medicated cough drops and throat drops and in the other appeal the assessee 
is engaged in manufacture of sloan's balm and sloan 's rub. They manufacture 
these products under the Ayurvedic drug licence issued under Drugs and E 
Cosmetics Act, 1940. Appellants claimed classification of their products as 
Ayurvedic medicaments under sub heading 3003.30 of Central Excise Tariff 
attracting nil rate of duty. They were issued show cause notice as to why the 
goods should not be classifiable as Patent or Proprietary medicaments under 
sub-heading 3003.10 attracting duty at the rate of 15% ad valorem. With p 
regard to medicated cough drops and throat drops, authorities below relying 
upon the tribunal's decision in Amrutanjan 's case that the product was not 
ayurvedic medicines as ingredients were synthetic in nature, rejected the 
appellant's claim and also since the products are not manufactured according 
to the formula in authoritative ayurvedic text books. Regarding Sloan's balm 
and Sloan's rub, appellant replied to the show cause notice relying upon the G 
tribunal's decision in Richardson Hindustan's case laying down that the 
product should be known as Ayurvedic medicament in the common parlance 
and the ingredients should be mentioned in Ayurvedic text books. However, 
the Assistant Collector classified the products under sub heading 3003.10 
433 
H 
434 
SUPREME COURT REPORTS [2003) SUPP. 5 S.C.R. 
A and the tribunal upheld the same. Hence the present appeals. 
Appellant-assessee contended that the goods manufactured by them are 
classifiable under sub heading 3003.30; that with regard to medicated cough 
drops and throat drops, authorities below rejected the appellant's claim relying 
on the tribunal's decision in Amrutanjan 's case which is set aside by the 
B judgment of this Court in Amrutanjan limited's case that the ingredients even 
if they are used after refinement, they are not synthetic in nature, and the 
instant issue is covered by the same; that as the goods are Patent or 
Proprietary Ayurvedic medicaments within the definition given in Section 3(h) 
of the Drugs and the Cosmetics Act, the definition of Ayurvedic medicine in 
C Section 3(a) of the Drugs and Cosmetics Act cannot be applied to the instant 
case on which the tribunal has based its order for the purposes of the 
classification of a product for Central Excise duty; that when there is no 
definition of any word in the relevant statute, the word must be construed in 
its popular sense i.e. how the common man who uses it, understands it; that 
the tribunal failed to appreciate that the appellant's products which contained 
D the Ayurvedic ingredients were prepared in accordance with the Ayurvedic 
principles; that the formulations have been developed after referring to several 
authoritative Ayurvedic books and careful evaluation of actions, clinical trials 
etc., and tllt Director of Indian Medicine and Homeopathy have approved the 
same; that the tribunal failed to appreciate that the onus of classification of a 
E product is on the Excise Department who are required to produce the evidence 
to support their stand which was not produced and also did not rebut the 
evidence produced by the appellants; that as the classification of the goods 
was determined by the competent authority under the Drugs Act who issued 
a licence for manufacture and sale of Ayurvedic drugs, the Central Excise 
Authorities have to act on that basis and not to go beyond the same or sit in 
F judgment thereon; and that the member of the tribun

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