Allowing the appeal of Naturelle Health Products Ltd of Hyderabad, the court ruled that it belonged to the ayurvedic medicaments, which was not liable to any duty.
Naturelle produced certain medicated cough drops and throat drops with licence under the Drugs and Cosmetics Act for the manufacture of ayurvedic drugs.
The assistant collector of central excise issued a show cause to the firm asking it to explain why the drugs should not be classified as patent or proprietary medicine under sub-heading 3003 .10 of the Central Excise Tariff attracting 15 per cent duty.
The company replied to the notice showing grounds that their products were ayurvedic medicines. The reply was rejected by the authorities, and the tribunal on appeal.
The Supreme Court said a patent ayurvedic medicine could be one where all the ingredients found mention in the ayurvedic texts, though the formula or preparation of the medicaments was not in accordance with the texts.
The court has also held in the Amruthanjan case that the mere fact that the ingredients were purified or added with some preservatives did not really alter their character.
The judgment delivered by Justice PV Reddi and Justice AR Lakshmanan said the tribunal misdirected itself in law and facts by being influenced by unimportant factors like the mention of similar names of goods in western pharmacopoeia and patents in the US.
The tribunal failed to take into account relevant factors like the issue of licence under the Drugs Act and the popular understanding of the products and the law laid down by the Supreme Court in this field.
