Commissioner Of Central Excise, Nagpur vs Baidynath Ayurwed Bhawan Ltd

4. Baidyanath is engaged in the activity of manufacturing medicines adopting Indian systems. They have their works situate at Calcutta (now Kolkata), Naini, Patna, Nagpur and Jhansi. One of the products being manufactured by Baidyanath is DML. The product is a powder compounded with Geru, Peepall, Sonth, Kali Mirch, Tambakuh, Clove Oil, Camphor, Pepperment, Babul Chhal, Tumber Beej. Baidyanath claims that DML is manufactured in accordance with the formulae given in Ayurved Sar Sangraha (an authoritative text on the Ayurved system of medicine) by using the ingredients mentioned therein. Ayurved Sar Sangraha is notified under the First Schedule of the Drugs and Cosmetics Act, 1940 ( for short `Act, 1940'). It is also the case of the Baidyanath that DML is sold in the name which is specified in Ayurved Sar Sangraha.

5. Prior to 1975, the product DML was considered to be classifiable under Tariff Item 14E of the First Schedule of the Central Excise and Salt Act,1944 ( for short `Act, 1944') which item covered medicines. Accordingly, DML was not 4 subject to levy of excise duty and exempted therefrom. On March 1, 1975, Residuary Item 68 was incorporated in the Act, 1944 wherein all items not elsewhere specified in the tariff were liable to be classified. Baidyanath filed a fresh classification list and commenced paying excise duty as was leviable under Residuary Item 68 of the Act, 1944.

6. On March 1, 1978, the Central Government issued an Exemption Notification bearing No. 62/78-CE whereby exemption was extended to ".....all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified." Baidyanath claimed the benefit extended by the Central Government under the said Notification and stopped paying duty on the product DML while filing fresh classification list.

10. The aforesaid order of the Tribunal came to be challenged at the instance of Baidyanath before this Court in various appeals. The appeals were admitted and finally disposed of on March 30, 1995 (referred to hereinafter as Baidyanath I1) . This Court held that the product DML would have to be classified on the basis of the common trade parlance test and applying that test, the Tribunal was correct in its finding that DML was not known as an Ayurvedic Medicine. The finding of the Tribunal that DML was toilet requisite was upheld. Be it noticed here that during the pendency of the appeals before this Court, Central Excise Tariff Act, 1985 (for short, `New Tariff Act' ) was enacted which replaced the Schedule to the Act, 1944. Chapter 30 of the New tariff Act deals with pharmaceutical products. Chapter Sub-heading 3003.30 provided for no excise duty leviable on medicaments, including those used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic System. On August 28, 1987, the First Schedule to the Drugs and Cosmetic Act, 1940 7 was amended and the book `Ayurved Sar Sangraha' was included therein.

11. On September 25, 1991, the Central Board of Excise and Customs (for short, `the Board') issued a circular in respect of DML and advised its classification as an Ayurvedic Medicine. It is Baidyanath's case that in pursuance of the circular dated September 25,1991, the concerned Commissioner of Central Excise issued trade notices directing the field formations to classify DML as an Ayurvedic Medicine. The assessee filed classification list in its various units declaring DML as an Ayurvedic Medicine and claimed the exemption benefit extending thereto. Baidyanath, thus, stopped paying excise duty on DML.

It is this line of reasoning with which we are in agreement. The Tribunal rejected the claim of the appellant holding that ordinarily a medicine is prescribed by a medical practitioner and it is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes. We are, therefore, of the opinion that the Tribunal applied the correct principles in concluding that the product in question was not a medicinal preparation (`Ayurvedic') and, therefore, the appellant was not entitled to the benefit of the exemption notification. Having heard the learned counsel at length and having perused the line of reasoning adopted by the Tribunal with which we are in general agreement, we see no reason to interfere with the conclusion reached by the Tribunal and, therefore, we dismiss these appeals, but make no order as to costs."

40. The learned senior counsel for Baidyanath heavily relied upon the statement of the Finance Minister during the parliamentary debate on the question of levy of excise duty on Ayurvedic medicines. In the entire debate there is no reference to the product DML with which we are concerned. The part of statement of Finance Minister reads, `...........there is no excise duty on Ayurvedic Medicines manufactured according to the Ayurvedic formulae, some medicines appears to be Ayurvedic medicines.' The Finance Minister also stated, `........he must raise the dispute on that. It will be decided by the Collector. It will be decided by the appellate authority. There is a method to decide it..........'. We are afraid the statement made by the Finance Minister in the Parliament does not advance the case of the assessee at all insofaras classification of DML is 3 3 concerned as method to decide classification has rightly been observed to be within domain of the authorities.

46. As a result of the foregoing discussion, appeals of Baidyanath must fail and are dismissed. The Department's appeals are allowed. The parties shall bear their own costs.