Jyoti Balasundaram, Member (J)

1. The Respondents/assessees are engaged in the manufacture of Vicco Vajradanti (Powder), Vicco Vajradanti (Paste), Vicco Turmeric Skin Cream & Vicco Vajradanti Sugar Free. Under the Central Excise Tariff which existed prior to 28.2.86, the department had classified the products as under:

(1) Vicco Vajradanti (powder & paste) under Tariff Item 14F.F. as Tooth Paste

(2) Vicco Turmeric Skin Cream under T.I. 14F as Cosmetic and Toilet preparations.

2. As against this, the assessees claimed that they were covered by exclusion clause in T.I. 14E i.e. P & P medicines excluding those medicines which were exclusively Ayurvedic, Unani, Siddha and Homeopathic. Since the claim of the assessees was not accepted by the Central Excise Department, the assessees filed a Civil Suit before the Court of Civil Judge, Senior Division, Thane. On 6.5.82, the Ld. Civil Judge rejected the suit holding that the products are Ayurvedic medicinal preparations. The Union of India challenged the judgment before the Honble Bombay High Court, which by its judgment dated 27.4.88, held that the products in question are Ayurvedic medicines falling under Tariff Entry 14E. However, the High Court declined to hold that the products are entitled to total exemption from payment of excise duty under the exclusion clause in entry 14E and held that the claim of their being manufacturers of exclusive Ayurvedic medicines cannot be upheld. The Court also held that this point may be specifically agitated and could thereafter be decided either in some other matter or for some other year or for the period subsequent to 1.3.1986. The High Court vacated the injunction granted by the Trial Court against the department restraining it from recovering excise duty from the assessees in respect of these products. Both the department and the assessees appealed against the High Courts judgment before the Apex Court which vide its order dated 19.4.93, in terms of an agreement arrived at between the two parties, held that the products were classifiable under T.I.68 which attracted Nil rate of duty and upheld the decision of the High Court except for the said modification in classification covering the period prior to 28.2.86.

3. Upon the introduction of Central Excise Tariff Sub-Heading 3003.31 in CETA 1996, the assessees filed classification/declaration under Rule 173-B of the Central Excise Rules, 1944 with effect from 28.9.96 classifying these products under CET Sub-Heading 3003.31 attracting Nil rate of duty with remarks "However we are paying duty @ 10% Adv. under protest without prejudice". On the basis of the Honble Supreme Courts Judgement dated 30.3.1995 in the case of Shri Baidyanath Ayurveda Bhavan Ltd., : 1996 (83) ELT 492 (SC) holding Dant Manjan Lal, an Ayurvedic product as a cosmetic, the department proposed classification of the products in dispute in the present case under CET Sub-Heading 3306.10 and Chapter Heading 33.04 attracting duty at the rate of 8% and 30% ad-valorem respectively. Accordingly, 3 show cause notices were issued raising a demand of an aggregate of Rs. 5,21,18,958 for the period from 31.10.96 to 30.6.97. The assessees raised a preliminary objection to jurisdiction on the ground that the issue of classification had already been decided by the Bombay High Court and the Supreme Court. The Bombay High Court disposed of their Writ Petition with a direction to the department to decide the appeal filed by the assessees against the provisional assessment orders. The court also stayed the show cause notices subject to the assessees executing Bond and Bank Guarantees for removal of the goods under provisional assessment procedure. Another Writ Petition was filed in the Bombay High Court by the assessees and the Court directed the department to decide the preliminary issue within two months from its order dated 15.3.01. The Dy. Commissioner passed adjudication order on 4.5.2001 wherein he modified the classification/declaration by classifying Vicco Vajradanti (powder & paste) and Vicco Vajradanti sugar free under GET Sub-Heading 3306.10 and Vicco Turmeric skin cream under CET Sub-Heading 3304.00, finalised provisional assessment for the period 1.7.97 to 31.3.2000 and demanded duty of Rs. 16,65,20,401, confirmed the demands raised under the 3 show cause notices, imposed penalty of Rs. 1,35,00,000 under Rule 173Q of CER and directed the assessees to keep the Bank Guarantees alive till the amounts of duty so assessed provisionally were paid and also directed the assessees to submit relevant information for the period from 1.4.2000 to 31.3.2001 for completion of finalisation of the provisional assessment.

4. Aggrieved by the above-mentioned order, the assessees filed an appeal before the lower Appellate Authority who set aside the order of the Dy. Commissioner holding inter alia that the Dy. Commissioners order was against the judgment of the Honble Bombay High Court holding that the products in question were Ayurvedic medicine and also holding that the products in dispute fell for classification under CET Sub-Heading 3003.31, after noting that the claim of the assessees that the products were manufactured exclusively in accordance with the formulae described in the authoritative text books on Ayurveda was not controverted by any evidence to the contrary produced by the department. Hence, this appeal by the Revenue.

5. We have considered the rival submissions and perused the records.

6. The Revenue challenges the order of the Commissioner (Appeals) on the ground that he has erred in holding that the Dy. Commissioner had no jurisdiction to issue a fresh order on classification which had become final by the decision of the Apex Court in its order dated 19.4.93 in Civil Appeal No. 2123/93 in the assessees own case on classification of the same products, for the reason that the Supreme Court had only affirmed the earlier judgment of the Honble Bombay High Court which had not restricted reclassification of the disputed products for the period subsequent to 28.2.1986. The further ground of challenge to the impugned order is on the basis of the Supreme Court decision in the case of Shri Baidyanath Ayurved Bhavan v. CCE, Nagpur, 2002 (82) ECC 460 (SC) : : 1996 (83) ELT 492 (SC) on classification of "Dant Manjan Lal" which is comparable and identical to the products in dispute, as "toilet preparation" and not as Ayurvedic medicament. The Revenue further contends that the Commissioner (Appeals) reliance on the Tribunals order No. C1/4292/WZB/20GO. dated 13.12.2000 in the case of Shri Baidyanath Ayurved Bhavan Ltd., : 2001 (138) ELT 218 is wrong as this decision has been over-ruled by the Larger Bench of the Tribunal as reported in : 2002(140)ELT 459. The Revenues challenge to the classification by the Commissioner (Appeals) under CET sub-heading 3003.30 is for the reason that the addition of ingredients other than those described in Authoritative Books as certified by the Joint Commissioner, Food & Drug Administration, Maharashtra, establishes that the ingredients from which the products in dispute were manufactured were not only those described in the Authoritative Books but also others which are not so covered, and therefore, the products are not manufactured exclusively in accordance with the formulae described in the prescribed books as required for classification under the above mentioned Chapter Heading. Lastly, the Revenues reliance is upon the common parlance Test to support its contention that the disputed products are not Ayurvedic medicaments as they are popularly understood as cosmetics or toiletries which are available in general stores and do not require to be prescribed by a Medical Practioner for treatment of specific diseases or condition.

7. We find that this case has a chequered history. In August 1974, show cause notice alleging short levy of duly on Vicco Vajradanti during the period 1.3.1974 to 30.6.74 on account of alleged misdeclaration of price was issued arid the notice was adjudicated by the order dated 24.3.1975 holding that no deduction was permissible for transport charges, sales tax etc. The assessees appeal against this order was partly allowed by holding that sales tax, if included in the price, should be excluded for the purpose of assessing the price. The Revision Petition filed by the assessees was disposed of by order dated 14.6.1976 wherein, it was held that the transaction between the manufacturer and its sole selling agent was not at arms length. In the meanwhile, in or about September 1975, the assessees started contending that no excise duty was payable in respect of Vicco Vajradanti as it did not fall under Tariff Item 14FF of the Schedule to the erstwhile Central Excise Tariff (duty had been paid under this Tariff Item). The Revenue recovered excise duty under Tariff Item 14FF from October 1975 onwards. In July 1976, the asessees filed a fresh classification list: claiming that Vicco Vajradanti and Vicco Turmeric were not excisable. Show cause notice dated 5/8.11.1976 was issued proposing classification of Vicco Vajradanti as a tooth paste under T.I. 14FF and Vicco Turmeric as a cosmetic and toilet preparation under T.I. 14F. By order dated 4.6.1977, the Asstt. Commissioner of Central Excise upheld the classification proposed in the notice. The recovery of duty on the above basis for the period commencing from March 1974 (in respect of Vicco Vajradanti) and for the period commencing from October 1975 (in respect of Vicco Turmeric) was challenged by the assessee in the form of a Civil Suit (Special Civil Suit No. 143/1978) in the Court of Civil Judge Senior Division Thane. The suit was decreed in favour of the Plaintiff (assessees), declaring that the order dated 4.6.77 was ultra vires and without jurisdiction and by granting perpetual injunction for restraining the defendants from implementing or acting in furtherance of the above-mentioned order and from recovering any excise duty from the plaintiff in respect of the products i.e. Vicco Vajradanti tooth paste and/or Vicco Turmeric vanishing cream. The Court also directed refund of a sum of Rs. 95,18,169.15 together with another amount of Rs. 25,90,312 recovered by the Excise Authorities after filing of suit up to the end of March 1979.

8. The Revenue appealed against this judgment before the Honble Bombay High Court by preferring first Appeal No. 613 of 1982 which was disposed of by judgment dated 27.4.1988 in which it was held that the products in dispute are Ayurvedic medicines and cannot be classified as cosmetic. The Court considered the evidence lead on behalf of the Plaintiffs before the Trial Court in the form of examination of experts viz. Dr. V.S. Upasak and Dr. D.S. Antarkar and Dr. Joshi and held as under:

"whether the two products are medicine or merely tooth paste and vanishing cream or rather a cosmetic cream has to be decided on this record. On the record as is available to us, it is more than amply proved by overwhelming evidence that the products would be excisable under Entry 14E and at the rates prescribed from time to time in respect of the said Entry. The consumers and Doctors, and the later category will include the general practioncrs dentists and Ayurvedic experts, consider that the two products are medicines and further that they are Ayurvedic medicines. In this respect even the first two witnesses who were examined on behalf of the Defendants were ultimately forced, much against their inclination, to concede that these products were prescribed by doctors and sold by them under doctors prescriptions. The third witness examined on behalf of the Defendants has not carried the matter any further and her evidence is almost totally useless as far as these proceedings are concerned. In addition to this, we have the classifications made by various Governmental Authorities including the Sales-Tax Commissioner accepting the status of the two products as Ayurvedic medicines. Last but not the least we have unshaken testimony of P.W. 11 Dr. Antarkar, admittedly an expert on Ayurvedic medicine.

There is over-whelming evidence, therefore, on the record which is almost one sided to establish that the two products under consideration must be regarded as Ayurvedic medicines although they may also be used as tooth paste and are used as cosmetic cream."

9. The Court held that there was over whelming fresh evidence to enable to conclude definitely that these are products which are regarded as medicines, further that they are patent or proprietary medicines and finally that they are Ayurvedic medicines and would therefore be covered by Heading 14E of the Schedule to the erstwhile Tariff. The Court further held that it cannot be held that they are entitled to total exemption from payment of excise duty under exclusion under Entry 14E and the claim of the assessees being manufacturers of exclusive Ayurvedic medicine cannot be upheld for the reason inter alia that there was no such averment in the Plaint before the Thane Court and, therefore, no issue was specifically framed by the Trial Court in this behalf, and therefore, such a claim could not be decided on the basis of evidence, which may have come on the record without necessary pleading. In the result, the High Court decreed a sum of Rs. 1,12,98,552.43 in favour of the Respondents/Plaintiffs, accepting the Revenues figure of refund payable as a result of difference between excise duty paid under T.I. 14F and T.I. 14FF and that payable under T.I. 14E under which the assessees liability was held to lie. The Court also vacated the injunction granted for the period subsequent to 31.3.86 when the CETA was introduced in the statute.

10. Against the above judgment, the assessees preferred an S.L.P. No. 14082/88 before the Apex Court. The Civil appeal arising out of the S.L.P. [Civil Appeal No. 2123(NM)/1993] was decided by the Honble Supreme Court vide its order dated 19.4.93 by the passing of consent order accepting the judgment of the Bombay High Court that the products in dispute are rightly classifiable as Ayurvedic medicine excluded from T.I. 14E and classifiable under T.I. 68 of the erstwhile CET and eligible to exemption under Sr. No. 21 of Notification No. 234/82-CE dated 1.11.82. The Supreme Court affirmed the judgment dated 27.4.1988 of the Honble Bombay High Court in terms of the compromise. The Supreme Court judgment is reproduced below:

"We have heard Sri K.K. Venugopal, learned senior counsel for the appellants and Shri K.T.S. Tulsi, learned Additional Solicitor General for the respondents, Leave granted.

2. The parties have broadly agreed to certain terms for the final disposal of this appeal.

3. In terms of the said agreement, the parties accept the judgment of the Bombay High Court that the products in question are rightly classifiable as Ayurvedic medicines. The stand of the Revenue is that Ayurvedic medicines are excluded from tariff item No. 14E and are classifiable under tariff item 68 of the erstwhile Central Excise Tariff and entitled to full exemption under serial No. 21 of Notification No. 234/82-CE dated 1st November, 1982, a position which the appellants accept.

4. The question of the refund of the amounts paid would depend on whether the amounts were passed on to the purchasers or not. The consequential relief, if any, shall therefore, be subject to the provisions of Section 11B of the Central Excises and Salt Act, 1944 as amended by Act 40 of 1991.

5. In terms of the compromise, we affirm the judgment of the Bombay High Court dated 27th April, 1988, subject to the modifications indicated above."

The Union of India had also filed Special Leave Petition No. 1918/99 against the Bombay High Court judgment in so far as it was against them and the SLP was dismissed as time barred. In 1999, UOI filed an inter-locutary application before the Supreme Court for clarification that its order dated 19.4.93 would not affect the classification of the products in dispute in terms of the CETA, 1985 and for direction for classification of the goods in accordance with the Supreme Courts decision in the case of Shri Baidyanath Ayurved Bhavan Ltd, v. CCE, Nagpur, 2002 (82) ECC 460 (SC) : : 1996 (83) ELT 492 (SC) holding that Dant Manjan Lal (tooth powder) (which was identical to Vicco Vajradanti tooth paste and powder) was not an ayurvedic medicine but a toilet preparation. The. Revenue averred in the LA. that it was facing certain difficulties in classifying these products of the assessees in view of the earlier decision dated 19.4.93 of the Apex Court particularly when the Law Ministry had opined that recovering excise duty on these products cannot be against the spirit of the Bombay High Court as affirmed by the Supreme Court and in view of the fact that implementation of the Bombay High Court order would be contrary to the ruling of the Apex Court in the case of M/s. Baidyanath Ayurved Bhavan Ltd. The relevant portion of the I.A is reproduced below:

6. In the meantime, Central Excise Gold (Control) Appellate Tribunal passed judgment dated 8.1.1991 in the case of CCE v. Shree Baidyanath Ayurved Bhavan Limited, wherein it was held that Dant Manjan Lal is appropriately classifiable under heading No. 33.06 of the Central Excise Tariff Act, 1985 which had replaced the Schedule to the Central Excises and Salt Act containing the Tariff items referred to earlier. Heading No. 33.06 is as follows:

"33.06 Preparations for Oral or Dental Hygeine, including dentifrices (for example, Toothpaste and Tooth Powder) and Denture Fixative Pastes and Powders.

7. This judgment was circulated vide Boards Circular No. 11/91-CX.3 dated 10.4.1991. Based on this Circular, CCE, Bombay-Ill issued Show Cause Notices to M/s. Vicco Laboratories asking them to the pay duty under Heading No. 33.06. However, the issue was settled by CCE on receiving directions from the Board to finalise the matter in the light of the Bombay High Courts order in the case of M/s. Vicco Laboratories itself.

8. Pursuant to the above, the question of law came to be settled by a decision of this Honble Court in the matter of M/s Shree Baidyanath Ayurved Bhavan Limited, 2002 (82) ECC 460 (SC) : : 1996 (83) ELT 492 (SC) whereby this Honble Court upheld the Order of the CEGAT dated 7.6.1985 and held that Dant Manjan Lal (Tooth Powder) is not a medicine (Ayurvedic) and accordingly it is not classifiable as an Ayurvedic medicine. This Honble Court also laid down clear guidelines on classification of such products, holding that while classifying various products, resort should not be had to be scientific & technical meaning of the terms & expressions used, but to their popular meaning, that is to say, the meaning attached to them by those using the product. In this context this Honble Court held. "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.

9. In view the above ruling of this Honble Court and in order to ensure uniformity in the practice of assessment of similar goods, the Board vide letter F.N. 103/2/96-CX.3 dated 31.10.1996 has withdrawn the instructions dated 12.5.89 issued to CCE, Bombay-Ill and CCE Nagpur (as mentioned above. The Board vide Circular No. 259/93/96-CX dated 31.10.1996 has also circulated the judgment of this Honble Court to the field formations for necessary action will regard to classification of similar goods.

10. The Applicant however faces, certain difficulties in classifying the goods of the Appellant particularly in view of the earlier decision of this Honble Court. The Branch Secretariat of the Ministry of Law and justice had opined that this Honble Court on 19.4.1993 passed an order, based on certain broadly agreed terms by both the parties, affirming the judgment dated 27.4.88 of the Bombay High Court and for all practical purposes the Department was left with no other alternative except, to follow the judgment of the Bombay High Court in this case. It had been further opined that still if any excise duty is leviable, it can be provided if it is permitted under the relevant tariff. Further it was clarified by the Ministry of Law and justice that, in any event, if at all Excise Duty is attracted, it cannot be against the spirit of the High Court judgment, which was affirmed by this Honble Court.

11. The difficulty faced by the Applicant herein was that if the Baidyanath judgment is implemented, such products, would merit classification as cosmetics under Chapter Heading No. 33 of Central Excise Tariff Act. On the other hand, if the High Court Order dated 27.4.1988, as upheld by this Honble Court on 19.4.1993, is implemented not only will it be contrary to the ruling of this Honble Court in the case of M/s. Baidyanath, but will also result in loss to the Government exchequer to the tune of crores of rupees. Hence, the Applicant craves leave to file the present Application.

12. It is most humbly and respectfully submitted that the Classification of the subject goods was in the context of the Schedule to the Central Excises and Salt Act. The present position is that the classification is in terms of the Central Excise Tariff Act, 1985 which has been aligned with the H.S.N. and has different provisions. Further the Order dated 19.4.1993 was passed on the basis of a consent memo without this Honble Court going into the merits of the rival contentions of the parties. Earlier when Show Cause Notices were issued to the Appellants, the Appellants, had filed contempt petition before this Honble Court. This Honble Court had dismissed the contempt petition by an Order dated 16.9.1996 on the ground that no order contrary to the judgment of this Honble Court dated 19.4.1993 had been passed. It is in these circumstances that the Applicant most humbly and respectfully crave leave for the following prayers and direction:-

PRAYER :

It is therefore most humbly and respectfully prayed that this Honble Court may be pleased to;

(i) Clarify the Order of this Honble Court dated 19.4.1993 will not affect the classification of the subject goods in terms of Central Excise Tariff Act, 1985.

(ii) Direct the Adjudication of the Show Cause Notices issued to the Appellants relating to classification of the subject goods in accordance with law; and

(iii) Direct the classification of the subject in question in accordance with the laid down by this Honble Court in : 1996 (83) ELT 492 ; and

(iv) pass such further or other order as this Honble Court may deem fit and proper in the Circumstances of the case.

By order dated 17.7.2000, the LA. was withdrawn by the Revenue. The order dated 17.7.2000 is reproduced below:

"Mr. Altaf Ahmed, learned Additional Solicitor General submits that the authorities shall proceed in accordance with law and seeks to withdraw this application. We record the statement of the learned Additional Solicitor General and dismiss this application as withdrawn."

11. The result is that the finding of the High Court holding the products: in dispute to be ayurvedic medicine as affirmed by the Apex Court has attained finality and it is not open to the department to re-agitate the issue of fresh classification as "cosmetic or toilet preparations" even in the context of the new Tariff (Ch. 33). The only scope open to the Government is to agitate that the disputed products although covered by Chapter 30, are not covered under CET Sub-Heading 3003.31 as claimed by the Respondents and accepted by the lower Appellate Authority. In this connection we find that the show cause notice dated 2.5.97 which is relevant for the purpose of this case makes an oblique reference to the goods not being manufactured exclusively in accordance with the formulae prescribed in Authoritative Books, although the products contained ingredients mentioned in such formulae, and not being sold under the names as specified in such books, as required under CET Sub-Heading 3003.31. We, find that the respondents had taken the stand right from the beginning that the products in question were manufactured exclusively in accordance with the formulae prescribed in Authoritative Ayurvedic Text Books viz. Bhav Prakash, Niganthu Ratnakar and Charak Samhita and in accordance with the licence granted under the Drugs and Cosmetics Act, 1940 and had given all the details in the reply to the show cause notice and their contention has not been rebutted. Even today, the only ground raised in the appeal for agitating this issue is that the addition of ingredients other than those prescribed in the Authoritative Text Books would show that they are not manufactured exclusively in accordance with the prescribed formulae. We have gone through the certificate of the Jt. Commissioner Food and Drugs Administration, wherein it has been clearly stated that the ingredients added have no therapeutic values. This aspect has not been controverted. Therefore, it only remains for us to see whether the addition of inert ingredients other than those prescribed in the Authoritative Text Books, will take the products out of the coverage of CET Sub-Heading 3003.31. The respondents have shown that the ingredients of Vicco Vajradanti paste and powder are as--Babul, Bakul, Jamhbul, Lavang, Manjistha, Bor, Acrod, Akkal Kadha, Jesthamadh, Ajwan, Dalchini, Khair, Patang, Harada, Vajradanti, Anant Mool, Amala, Behada, Kavab-Chini and Maifal. They have stated that Vicco is the house mark, whereas Vajradanti is the generic name found in the Authoritative Text Books as one of the ingredients. Similarly, they have stated that Vicco Turmeric cream is manufactured from turmeric and sandal wood oil. Since turmeric is the basic ingredient or the therapeutic ingredient, they have used the generic name " Turmeric" for this product.

12. Regarding addition of other substance, it has been clarified by CBEC Circular No. 196/30/96 CX dated 3.4.96 that-

"the benefit of exemption under Sl. No. 3 of Notification No. 75/94-C.E. should not be denied to ayurvedic medicines if they are manufactured in accordance with the formulae prescribed in the authoritative text books and sold under the generic name mentioned in the said authoritative text books but contain preservatives, ineart excipients, binding agents etc, not having any therapeutic value. In such cases the assessing officers may obtain a certificate to be produced by the manufacturers from the appropriate Drug Authorities that the drug satisfies the following conditions:--

(a) the medicament has been prepared in accordance with the formulae prescribed in the authoritative text books; and

(b) The ingredients added, other than those prescribed in the authoritative text books, should not have any therapeutic value."

13. The Food and Drugs Administration has certified that the ingredients added to Vicco Vajradanti Paste and Powder and Vicco Turmeric Skin Cream other than those prescribed in the authoritative text books, have no therapeutic value. The certificate is reproduced below:-

"This is to certify that M/s. Vicco Laboratories, S-89, MIDC Hingna, Nagpur are holding Drug Manufacturing licence since 1972 in form of 25 D bearing licence No. ND/AYU/11 issued by this administration under the provisions of Drugs and Cosmetics Act, 1940 and Rules thereunder. Under the said licence they are permitted to manufacture Ayurvedic medicines "Vicco Vajradanti paste Vicco Vajradanti powder and Vicco Turmeric skin cream".

The said products are Ayurvedic medicaments which contain ingredients which are exclusively in accordance with formulae described in Authoritative text books viz. Bhavprakash, Nighantu Rathakar & Charkasamhita.

The ingredients added other than prescribed in the authoritative text books have no therapeutic values."

14. It is pertinent to note that the matter of classification was examined in consultation with the Advisor (Ayurvedic and Siddha) in the Office of the Directorate General of Health Services and they were found to be appropriately classifiable as ayurvedic medicaments under Chapter Heading No. 3003.30, as seen from the CBEC letter dated 12.5.89 to the Collector of Central Excise, Bombay-Ill.

15. In the light of the above discussion, we hold that the products in dispute are classifiable under CET Sub-heading 3003.31 and therefore, it is not necessary to consider the alternate claim of the Revenue for classification under Heading 3003.10, which alternate classification, according to Revenue, can be considered in the light of the Apex Courts decisions in the case of Voltas Ltd. v. CC, Bombay [1997 (91) ELT 261 (SC) and National Thermal Power Co. Ltd. v. Commissioner of Income-Tax, 1998 (99) ELT 200 (SC) .

16. In the result, we uphold the impugned order of the Commissioner (Appeals) and reject the appeal of the Revenue.

17. Cross objection is also disposed of in the above terms.

J.H. Joglekar, Member (T)

1. While agreeing with the orders of the Member (Judicial), I would only deal with the plea made by Shri Mondal that the products be classified under Heading 3003.10. He cites two judgments referred to in para 15 of the order of the Member (Judicial). It is his submission that Tribunals are empowered and required to pronounce upon classification, which was initially not claimed by either side.

2. We have seen the judgment in the case of Voltas Ltd. (supra). The Tribunal having arrived at the conclusion that heading 84,18 (1) was more appropriate; still upheld the Revenues classification of the same goods under heading 84.18 (2). The Honble Supreme Court in correcting this clear error directed classification under heading 84.18 (1).

3. The judgment would show that the Tribunal on their own had studied the classification suggested by the importer and by the Revenue and had found that neither was correct. The judgment however does not establish that a third opinion should be formed in each and every case. Where the Tribunal agrees with one of the two alterate classifications, the possibility of a third classification need not arise.

4. In the National Power Co. Ltd. (supra) judgment the Honble Supreme Court held that the Tribunal was competent to examine the question of law which question had not earlier been raised during the original proceedings.

5. We find that this judgment has no relevance. Classification is essentially a question of fact to be determined on the basis of attendant evidence. The ratio of tills judgment therefore does not apply.

6. In the case of Hindustan Polymers Co. Ltd., v. Collector of Central Excise, Guntur, 1999 (106) ELT 12 (SC) the Supreme Court were dealing with an appeal filed against an order of the Tribunal. In that case the show cause notice alleged that the classification of both uncoloured polystyrene and coloured polystyrene as made by the assessees under item No. 15(A)(1)(ii) was not proper but that the coloured polystyrene was required to be classified under the tariff item No. 68. The uncoloured polystyrene was being used captively in the manufacture of coloured polystyrene. The Tribunal held that coloured polystyrene did not fall under Tariff Item No. 68. The Tribunal however did not set aside the lower order in its entirety but moulded relief quantifying the duty with the limitation period as calculable under Tariff Item No. 68. The Supreme Court set aside the Tribunal judgment holding as below:-

"While we appreciate the Tribunals desire to do complete justice and mould the relief in that direction, we think that, in the circumstances, the Tribunal should not, in this case, have parsed an order which proceeded upon a basis that is altogether different from that of the demand made upon the appellants. That is not "moulding" relief. The demand that was made upon the appellants was under tariff Item 68 and it proceeded upon the basis that there was a process of manufacture of coloured polystyrene from uncoloured polystyrene. Having come to a conclusion against the Revenue on these counts, the appropriate order for the Tribunal to have passed was to have set aside the demand and left it open to the Revenue to proceed against the appellants, as permissible under the law. The appellants would then have had the opportunity of meeting the precise case made out by the Revenue.

In the result, the appeals are allowed and the judgments and orders of the Tribunal are set aside. It shall be open to the Revenue to proceed against the appellants, as permitted by the law, upon the basis set down in the judgment and order of the Tribunal. No order as to costs.

7. In the case of Warner Hindustan Ltd. v. CCE, Hyderabad, 1999 (66) ECC 592 (SC) : : 1999 (113) ELT 24 the context was of classification of "Halls Ice Mint tablets". The assessees classification under heading 3003.30 was challenged vide show cause notice alleging classification under heading 3003.19. The Revenue before the Tribunal for the first time took the stand that the correct classification for the tablet was under heading 17.04. The Tribunal accepted this classification. The Supreme Court set aside the judgment of the Tribunal holding that it was impermissible for the Tribunal to consider a case that was laid for the first time in appeal because the stage for setting out the factual matrix was before the authorities below.

8. The starting point of the present proceedings before us was the issue of the show cause notices by the juris dictional Superintendent at Nagpur dated 2.5.97, 18.9,97 and 27.10.97. The allegations in all three notices read as below:

"The above-mentioned products are being used daily and are sold without prescription by the medical practitioner and also are available generally in General/Departmental/Grocery shops. Thus, the above-mentioned products do not appear to be Ayurvedic Medicines but are toilet preparations and therefore are not classifiable as medicines (Ayurvedic) and accordingly appears to be classifiable under Chapter sub-heading 3306.10 (Item Nos. i, ii, & iv) and 33.04 (Item No. iii) attracting excise duty of 8% and 30% advalorem respectively".

9. As has been observed in para 11 of the order of Member (Judicial) (perhaps in deference to the findings of the Bombay High Court which was upheld by the Supreme Court) it was admitted by Revenue that the products were Ayurvedic products and the following paragraph has also been incorporated in the show cause notice.

"Even if for the sake of argument it is argued that all the above-mentioned products are Ayurvedic Medicines, and although these products are Ayurvedic Medicines, and although these products contain such ingredients mentioned in the formulae described in the authoritative books of Ayurvedic system, the products in question do neither appeared in any authoritative books of Ayurveda (Granth), nor are manufactured exclusively in accordance with the formulae prescribed in the said authoritative books. These are also not sold under the names as specified in such books. Even if taken to be Ayurvedic medicine, the goods at Sr. No. iii attract duty @ 8% advalorem and therefore there is no reason for the Notice to pay the said duty under protest.

10. The manner in which the paragraph is worded does not make it a charge in the show cause notice.

11. The Deputy Commissioner in paragraph 64 of his Order in Original confirmed the classification as alleged in the show cause notice. The Commissioner in his order in appeal in paragraph 11 records that the Departmental Representative before him had urged for classification under heading 3003.39 for the contested products as "other medicines". In his findings however, he passed no orders on the submissions.

12. Thus for the second time in these proceedings an absolutely new classification is being canvassed which classification was neither alleged in the show cause notice nor was dealt with by the original or the appellate authority.

13. In the light of the Supreme Court judgments cited above, we are not required to go into alternate classification at this stage.

14. In the result the appeal from Revenue is dismissed.