Full Judgment Text
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CASE NO.:
Appeal (civil) 5401 of 2007
PETITIONER:
Union of India and Anr
RESPONDENT:
Vicco Laboratories
DATE OF JUDGMENT: 26/11/2007
BENCH:
Dr. ARIJIT PASAYAT & P. SATHASIVAM
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 5401 OF 2007
(Arising out of SLP (C) No. 12476 of 2007)
Dr. ARIJIT PASAYAT, J.
Leave granted.
Challenge in this appeal is to the order passed by a
Division Bench of the Bombay High Court allowing the writ
petition filed by the respondent. Challenge in the writ petition
was to the show cause notice dated 29th April, 2005 issued by
the Commissioner of Customs and Central Excise, Nagpur
(hereinafter referred to as the ’Commissioner’) on the ground
that the Commissioner was seeking to re-open and re-litigate
the issues which have been finally concluded by the decision
of the High Court and this Court in favour of the writ
petitioner and, therefore, the said show cause notice was
without jurisdiction and had been issued in arbitrary exercise
of power and that it is an abuse of process of law.
The petition was resisted on the ground that at the stage
of show cause notice there should not be any inference. In fact
the notice was issued pursuant to the liberty given by this
Court in C.A.Nos. 7896-97/2003 disposed of by a three-Judge
Bench by order dated December 7, 2004. The High Court
accepted the position that normally the High Court should not
interfere at the show cause notice stage. But in view of the
factual scenario the Court entertained the writ petition and
decided in favour of the respondent.
Background facts in a nutshell are as follows:
The respondent is a manufacturer of various products
including Vicco Vajradanti and Vicco Turmeric which are
stated to be ayurvedic medicines. A show cause notice dated
8th November, 1976 was issued requiring the respondent to
satisfy as to why the said products should not be classified as
"cosmetics" and not "ayurvedic medicines". This show cause
notice is hereinafter referred to as the "Ist SCN". After hearing
the respondent, the Commissioner under order, dated 4th
June, 1977 classified the said products as "cosmetics". The
same was challenged by the respondent by way of Civil Suit
No.143 of 1978 in the Court of Civil Judge, Senior Division,
Thane, which came to be decreed in favour of the respondent
holding that the said products were "ayurvedic medicines",
and therefore, cannot be classified as "cosmetics". The
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appellants carried the matter in an appeal by filing First
Appeal No.613 of 1982 before the High Court without any
success as the same was dismissed on 27th April, 1988
holding that the products were "Ayurvedic medicines". The
Special Leave Petition preferred by the appellants being SLP
No.1918 of 1989 was dismissed on 6th September, 1990.
Simultaneously, the respondent had also filed the Special
Leave Petition No.14082 of 1988 which came to be disposed of
by an order dated 19th April, 1993, while affirming the
judgment of this Court with a rider that the claim for refund of
the amounts already paid, would be subject to ascertaining
whether the amounts were passed on to the purchasers or not,
and that the consequential relief shall be subject to the
provisions of section 11B of the Central Excise and Salt Act,
1944 (in short the ’Act’) as amended by Act 40/1991.
On 28th February, 1986, Central Excise Tariff Act, 1985
(in short ’Tariff Act’) was introduced, to be effective from Ist
March, 1986. Under the Old Tariff Act, the ayurvedic
medicines fell under the Notification No.234 of 1982, the
products being listed at Sl. No.21. In term of the Tariff Act,
the product was sought to be classified by the respondent
under Chapter 30 sub-heading 3003.30 and the same was
approved by Assistant Commissioner, Nagpur, by his order
dated 6th October, 1986. Pursuant to the direction by
the Commissioner, a show cause notice dated 3rd July, 1987
was issued requiring the respondent to show cause as to why
the products should not be classified as cosmetics falling
under Chapter 33. This was the second Show Cause Notice in
relation to the same products, and hereinafter is referred to as
the "2nd SCN". After the reply being filed to the 2nd SCN, the
same was recalled under the order dated 21st June, 1989. The
matter was, however, carried in appeal before the
Commissioner of Central Excise (Appeals) but the same was
withdrawn on 26th December, 1989.
On 31St October, 1996, the Central Board of Excise
issued a circular withdrawing its earlier clarification dated 12th
May, 1989 in respect of Vicco Products and asked the
authorities to reopen and finalise the classification of Vicco
products on the basis of the judgment in Shree Baidyanath
Bhavan Vs. CCE Nagpur, reported in 1996(83) ELT 492 : 1996
(9) SCC 402. Consequently, fresh show cause notices dated 2nd
May, 1997, 18th September, 1997 and 27th October, 1997
came to be issued requiring the respondent to satisfy as to
why the products should not be classified as "cosmetic" falling
under Chapter 33. These three show cause notices are
hereinafter referred to as the "3rd SCNs". Meanwhile, by Telex
dated 8.9.1997, the Board further clarified that the circular
dated 31.10.1996 is general in nature and the Vicco products
having been subjected to the specific judgment and order of
the High Court affirmed by this Court, the circular would not
have overriding effect. The department further sought opinion
of the Law and Judiciary Department on 13.11.1997.
Thereafter, the Union of India moved an application being IA-1
of 1999 in this Court in Civil Appeal No.2123 of 1993 arising
out of the SLP No.14082 of 1988 which was filed by the
respondent for clarification of the order dated 19th April, 1993
with reference, to Shree Baidyanath’s judgment (supra).
On 17.07.2000 the said application was withdrawn
stating that the authorities will act in accordance with the
provisions of law, which statement was recorded by this Court
while disposing of the said application.
On 14.5.2001 with reference to the 3rd SCNs, the Deputy
Commissioner passed orders classifying the respondent’s
products as "cosmetics" falling under Chapter 33. The
respondent preferred appeal before the Commissioner of
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Central Excise (Appeals) which came to be allowed by an order
dated 10.01.2002. The appellant carried the matter in appeal
before CEGAT, which came to be dismissed by an order dated
03.02.2003. The appellant filed special leave petition before
this Court. The same were converted into the Civil Appeals
No.7896-97 of 2003 and the appeals were dismissed by this
Court on 07.12.2004.
Again, on 29.04.2005 a fresh show cause notice came to
be issued requiring the respondent to satisfy as to why the
products should not be held as products under Chapter 33.
The same was questioned before the High Court and by the
impugned judgment the same was quashed.
The stand of the appellants in support of the appeal is
that the liberty granted by this Court in the earlier case was
on the footing that there was need for factual adjudication on
applying correct position. In the earlier round of litigation the
foundation of the revenue’s case was the decision in Shree
Baidyanath Ayurved Bhawan’s case (supra). This Court
categorically held in the said case as follows:
2. In this connection your kind attention is also
invited to the Board’s Circular No. 11/91-CX-1
dated 19.4.03 (copy enclosed) whereby the Board
had circulated order No. 22/91-C, dated 8.1.91 of
CEGAT in the case of CCE, Indore Vs. M/s. Shree
Baidynath Ayurved Bhavan Ltd. to the fluid
formations. The Hon’ble Tribunal relying on its
earlier orders No. 438-439/85-C, dated 7.6.1985
(1985) (11) ELT 175 (tribunal) and No. 714-715/90-
C, dated 10.7.90 (1991 (51) ELT 502 (tribunal), all
in the cases of M/s. Shree Baidyanath Ayurved
Bhavan is not an Ayurvedic drug or medicine and it
is appropriately classificable under heading No.
33.06 of the. CETA, 1985. Aggrieved by the
judgments of the CEGAT the assessee had gone in
appeal to Supreme Court. The appeals of M/s.
Dabur India Ltd. on the same issue were also tagged
with the appeal of Shree Baidyanath Ayurved
Bhavan Ltd.
3. Now the Hon’ble Supreme Court vide its
judgment dated 30.3.1995 (1996 (83) ELT 392 (SC)
(copy enclosed), has dismissed the appeal of M/s.
Shree Baidyanath Ayurved Bhavan Ltd. and M/s.
Dabur India Ltd. and upheld the judgments of
CEGAT wherein it had been held that the product
"Dant Manjan Lal" is a toilet preparation and not a
medicinal preparation (Ayurvedic) and therefore not
classifiable as a medicine (Ayurvedic) and
accordingly not eligible for the benefit of exemption
notification. The judgment of Supreme Court is
being circulated to all the field formations of CBCE
for necessary action in the matter.
4. Therefore, keeping in view the aforesaid judgment
of Supreme Court the Board has decided to
withdraw its aforesaid instructions contained in
letter No.F.No.1031/14/88-CS.3 dated 12 5.1989.
You may therefore decide classification of the
goods in question in the light of Hon’ble Supreme
Court’s said judgment under intimation to the
Board.
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It was submitted that fresh materials had been
considered and it has been found that the products are to be
classified under Entry 33.04 and 33.06 and not by Entry
3003.31. Reference is also made to the Notes in Chapter 30
and Chapter 33. So far as Chapter 30’s notes are concerned
reference is made to notes 1 and 2 and notes of Chapter 33
which read as follows:
"Chapter 30 1. This Chapter does not cover:
(a) Food or beverages (such as, dietetic, diabetic
or fortified food, food supplements, tonic
beverages and mineral waters) (Section IV);
(b) Plasters specially calcined or finely ground for
use in dentistry (Chapter 25);
(c) Aqueous distillates or aqueous solutions of
essential oils, suitable for medicinal uses
(Chapter 33);
(d) Preparations of Chapter 33 even if they have
therapeutic or prophylactic properties;
(e) Soap or other products of Chapter 34
containing added medicaments;
(f) Preparations with a basis of plaster for use in
dentistry (Chapter 34);
(g) Blood albumin not prepared for therapeutic or
for prophylactic uses (Chapter 35).
2. For the purposes of heading No.30.03:
(i) ’Medicaments’ means goods (other than foods
or beverages such as dietetic, diabetic or
fortified foods, tonic beverages) not falling
within heading No.30.02 or 30.04 which are
either:-
(a) Products comprising two or more
constituents which have been mixed or
compounded together for therapeutic or
prophylactic uses; or
(b) unmixed products suitable for such uses
put up in measured doses or in packings for
retail sale or for use in hospitals.
(ii) ’Patent or proprietary medicaments’ means any
drug or medicinal preparation, in whatever form, for
use in the internal or external treatment of, or for
the prevention of ailments in human beings or
animals, which bears either on itself or on its
container or both, a name which is not specified in
a monograph, in a Pharmacopoeia, Formulary or
other publications, namely:-
(a) The Indian Pharmacopoeia;
(b) The International Pharmacopoeia;
(c) The National Formulary of India;
(d) The British Pharmacopoeia;
(e) The British Pharmaceutical Codex;
(f) The British Veterinary Codex;
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(g) The United States Pharmacopoeia;
(h) The National Formulary of the U.S.A.;
(i) The Dental Formulary of the U.S.A. and
(j) The State Pharmacopoeia of the U.S.S.R’
or which is a brand name, that is, a name or a
registered trade mark under the Trade and
Merchandise Marks Act, 1958 (43 of 1958), or any
other mark such as a symbol, monogram, label,
signature or invented words or any writing which is
used in relation to that medicine for the purpose of
indicating or so as to indicate a connection in the
course of trade between the medicine and some
person, having the right either as proprietor or
otherwise to use the name or mark with or without
any indicating of the identity of that person.
Chapter 33
2. Heading Nos. 33.03 to 33.07 apply, inter
alia, to products, whether or not mixed (other
than aqueous distillates and aqueous
solutions of essential oils), suitable for use as
goods of these headings and put up in
packings with labels, literature or other
indications that they are for use as cosmetics
or toilet preparations or put up in a form
clearly specialised to such use and includes
products whether or not they contain
subsidiary pharmaceutical or antiseptic
constituents or are held out as having
subsidiary curative or prophylactic value.
4. In relation to products of heading Nos.
33.03, 33.04 and 33.05, conversion of powder
into tablets, labelling or relabelling of
containers intended for consumers or
repacking from bulk packs to retail packs or
the adoption of any other treatment to render
the products marketable to the consumer,
shall be construed as ’manufacture’.
6. Heading No. 33.05 applies, inter alia, to the
following products; brilliantines, perfumed hair
oils, hair lotions, pomades and creams, hair
dyes (in whatever form), shampoos, whether or
not containing soap or organic surface active
agents".
It was submitted that the products are sold across the
counter and without prescription. The outward packings also
described as cosmetics.
The primary stand also is that the High Court should not
have interfered at the show cause notice stage.
In response, learned counsel for the respondent with
reference to history of the long drawn litigation submitted
that the High Court has rightly taken note of various factual
aspects and quashed the show cause notice.
In Dabur India Ltd. v. Commissioner of Central Excise,
Jamshedpur, (2005 (4) SCC 9), this Court reiterating its
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earlier decision in Commissioner of Central Excise, Calcutta v.
Sharma Chemical Works (2003 (5) SCC 60) held that merely
because a product is sold across the counters and not under
a doctor’s prescription does not by itself lead to the
conclusion that it is not a medicament. It was also held that
in the product the percentage of medicament may be small
but that by itself does not ipso facto mean that the product
is not a medicament. It was held that generally the
percentage or dosage of the medicament will be such as can
be absorbed by the human body and that the medicament
would necessarily be covered by fillers/vehicles in order to
make the product usable.
In Meghdoot Gramodyog Sewa Sansthan, U.P. vs.
Commissioner of Central Excise, Lucknow (2005 (4) SCC 15)
this Court had held that the products cannot be classified as
cosmetics solely on the basis of outward packing of the
products. It was specifically held that the composition and
the curative properties of the product being admitted, it was
not open to the department to hold the product to be
cosmetics merely by reason of the outward packing.
In Naturalle Health Products (P) Ltd. v. Collector of
Central Excise, Hyderabad (2004 (9) SCC 136) it was held
that the essential character of medicine and the primary
function of the medicine is derived from the active
ingredients contained therein and it has certainly a bearing
on the determination of classification under the Act. Further
re-iterating its earlier decision in Amrutanjan Ltd. v. CCE
(1996 (9) SCC 413) this Court held that "the mere fact that
the ingredients are purified or added with some preservatives
does not really alter their character."
First round of show cause notice dated 8.11.1976
states as follows:
"M/s Vicco Laboratories Ltd. furnished
Photostat copies of the certificates bearing Nos.
A/Cert/12/75 dated 6.1.1976 and
A/Cert/388/76 dated 6.1.70 issued by Food
and Drug Administration, Maharashtra State,
Bombay in support of their claim.
M/s Vicco Laboratories, Dombivli are
hereby required to show cause to the Asst.
Collector, central Excise, Kalyan Division,
Kalyan why "Vicco Vajradanti Paste" and Vicco
Turmeric Vanishing Cream should not
continue to be classified as tooth paste. T.I.
No.14FF and Cosmetic & Toilet preparation
T.I. 14 FF respectively as these products are
marketed and are known in the Trade parlance
as tooth paste and vanishing cream and not as
Ayurvedic medicies."
Suit No.143/1998 was filed challenging the show cause
notice.
Whether the two products Vicco Vajaradanti and Vicco
Turmeric Skin Cream were Ayurvedic Medicines or
Cosmetics (toothpaste, vanishing cream, cosmetic cream)
was adjudicated in Thane Suit No.143 of 1978, where
evidence was led by the plaintiff (Vicco Laboratories) and by
the defendants (Revenue Department). Amongst the issues
framed were issue Nos. 1 to 3 reading as follows:
(i) Do Plaintiffs prove that their products
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Vicco Vajaradanti and Vicco Vanishing Cream
are Ayurvedic medicinal preparations?
(ii) Do Defendants prove that Vicco
Vajaradanti falls under item 14 FF of first
schedule of Central Excise and Salt Act, 1944?
(Tooth paste including dental cream)?
(iii) Do defendants prove that Vicco Turmeric
Vanishing cream falls under item 14F (1) of the
said schedule? (Cosmetic and toilet
Preparation for the care of the skin).
Eleven witnesses were examined on behalf of the
plaintiff and three witnesses on behalf of the Department.
The finding of the trial Court on issue Nos. 1 to 3 is as
follows:
"In the result the plaintiff have proved
their product Vicco Vajaradanti and Vicco
Turmeric as Ayurvedic medicinal preparations
whereas the defendants have failed that they
fall under tariff items 14FF and 14F.
Therefore, Vicco Vajaradanti is not merely a
tooth paste but a medical formulation meant
for treatment of tooth and gum trouble
whereas Vicco Turmeric does not simply give a
promise beauty but is meant for treatment of
dermatitis. Accordingly, the issue No.1 is held
in the affirmative and the issue Nos. 2 and 3 in
the negative."
In appeal No.613/1982 filed by the Department in the
Bombay High Court, the High Court by judgment dated
27.4.1988 held:
"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 14 E 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 practitioners
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 Ayuvedic medicines. Last but
not the least, we have unshaken testimony of
P.W. 11 Dr Antarkar, admittedly an expert on
Ayurvedic medicines.
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There is overwhelming 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.
The High Court however held that the plea of plaintiff
Vicco Laboratories raised an oral arguments that the
products were "exclusively ayurvedic medicines (and
therefore, wholly exempt under Entry 14E) could not be
accepted since there were no pleadings to that effect:
therefore they were taxable at 12= % as "patent and
proprietary medicines". (Entry 14E)
The respondent and the Revenue both approached this
Court by SLPs being SLP No. 14082 of 1988 (by Vicco
Laboratories) and SLP No. 1918 of 1989 (by Department)
against the judgment and order dated 27.4.1988 of the
Bombay High Court. SLP No.1918/1989 was dismissed by
this Court on 6.9.1990 whereas consent order dated
19.4.1983 came to be passed in SLP No.14082/88.
"We have heard Sri K.K. Venugopal, learned senior
counsel for the appellants and Sri 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
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. 14-E 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 118 of the Central Excises and
Salt Act, 1994 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.
6. The appeal is disposed of accordingly, No.
costs."
Clarification application filed before this Court by the
Department that the Consent Order dated 19.4.1993 did not
apply to the Tariff Act was dismissed as withdrawn on
17.7.2000.
Meanwhile, the Tariff Act, came to be passed which
repealed the old Tariff Act. The new entries were:
Chapter 30 - dealt with Pharmaceutical products
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Chapter 33 - dealt with Essential Oils and Resinoids,
Perfumery, Cosmetic or Toilet Preparations.
Meanwhile before the judgment and order of Bombay
High Court and of this Court in Thane Suit, afresh (2nd) round
of Show cause notices for the period December 1986 to March
1989 were issued. In the show cause notice it was alleged as
follows:
"Whereas it appears that these products namely
Vicco Vajradanti Powder Paste are meant for oral or
dental hygiene and are used as tooth powder and
tooth paste, the same appear to be classifiable
under sub-heading 3306.00 and chargeable to duty
at 15%. Similarly, Vicco Turmeric appears to be a
Vanishing Cream falling under subheading 3304.00
and;
"Whereas no material change in the composition of
above mentioned products has been taken place,
these products appear to be tooth powder, tooth
paste and vanishing cream classifiable under
heading 3306.00 and 3304.00 respectively, and
Whereas, Vicco Turmeric Cream has mainly
prophylactic cosmetic effect and it cannot be
considered Ayurvedic medicine, it appears to be
Vanishing Cream only and;
Whereas as per Note 1(d) of Chapter 30-
"Preparation of Chapter 22 even if they have
therapeutic and Prophylactic properties, they are
classifiable, under Chapter 33 and are excluded
from Chapter 30 and;
Whereas, Vicco Vajradanti Powder is put up in the
form of "Dant Manjan" and paste has been put up
in the form of "Tooth Paste" and Vicco Turmeric has
been put up in the form of Cosmetic/ Vanishing
Cream; and
Whereas, for the last so many years you were
advertising and marketing these products as tooth
powder, tooth paste and vanishing cream
respectively. Accordingly, Vicco Vajradanti Powder
and Paste appear to be preparation for oral and
dental hygiene falling under sub-heading 3306.00
and Vicco Turmeric appears to be falling under sub-
heading 3304.00."
Advice was received from the Central Board of Excise and
Customs by letter dated 12.5.1989 which stated as follows:
"Sir,
Sub: Central Excise - Vicco Vajradanti (powder
and paste) and Turmeric - Classification under
the Central Excise Tariff Act, 1985 -regarding.
l am directed to refer to your letter F. No. V.
Ch. 39 (30) 1/89/ 1369, dated the 4 n
January, 1989 on the subject mentioned above
and to say that the matter of classification of
Vicco Vajradanti (powder and paste) and Vicco
Turmeric Cream manufactured by M/s Vicco
laboratories has been got examined in
consultation with he Advisor (Ayurvedic and
Siddha) in the Directorate General of Health
Services.
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2. The Board has taken note of Note (2) to
Chapter 30 and 33 of the Schedule to the
Central’ Excise Tariff Act, 1985 coupled with
the opinion of the Advisor (Ayurvedic and
Siddha) in the Directorate General of Health
Services including the decision of the Bombay
High Court feels that there are stronger
reasons to treat the subject good as Ayurvedic
medicines.
3. Accordingly, it is viewed that the above-
mentioned products would be appropriately
classifiable as Ayurvedic Medicaments under
sub-heading No.3003.30 of the Schedule of the
Central Excise Tariff Act, 1985".
At this juncture, it would be necessary to take note of
the stand of learned counsel for the appellants that in the
packages meant for export different descriptions were given.
In this context it is to be noted that in the packing meant for
export instead of the word ’Ayurved’, the expression ’Herbal’
is used. The special permission was taken from the Drugs
Control Authority for such use. The letter dated 14.6.1996 of
the Government of India, Ministry of Health & Family Welfare
(Department of ISM & H) is relevant. The same reads as
follows:
"New Delhi, dated 14.6.1996
To
The Asstt. Drug Controller (India),
New Custom House, Fort,
Bombay-400038.
Sub: Export of Vicco Vajradanti Tooth Paste,
Powder and Turmeric Cream- regarding
A representation received from the firm in
regard to export of the subject products with
labeling acceptable to importing countries and
the modification made in the labels, which are
otherwise used in the country. Having
examined the matter, it is opined that there
may be no objection in export of subject
products labeled as herbal products. This
permission is limited to export purpose only.
Sd/- Illegible.
(Ashwini Kumar)
For Drug Controller General (I)
Copy to:
Shri G.K. Pendharkar,
Vicco Laboratories,
25, Jerbai Wadia Road,
Parel, Bombay -400012"
Normally, the writ court should not interfere at the stage
of issuance of show cause notice by the authorities. In such a
case, the parties get ample opportunity to put forth their
contentions before the concerned authorities and to satisfy the
concerned authorities about the absence of case for
proceeding against the person against
whom the show cause notices have been issued.
Abstinence from interference at the stage of
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issuance of show cause notice in order to relegate
the parties to the proceedings before the concerned
authorities is the normal rule. However, the said rule
is not without exceptions. Where a Show Cause
notice is issued either without jurisdiction or in an
abuse of process of law, certainly in that case, the
writ court would not hesitate to interfere even at
the stage of issuance of show cause notice. The interference at
the show cause notice stage should be rare and not in a
routine manner. Mere assertion by the writ petitioner that
notice was without jurisdiction and/or abuse of process of law
would not suffice. It should be prima facie established to be
so. Where factual adjudication would be necessary,
interference is ruled out.
Case of the respondent that the classification
of the said products having attained finality
pursuant to the decision of this Court, the appellants have no
jurisdiction to issue impugned show cause notice on the
ground on which it has been issued and it virtually amounts
to re-opening of the issue which stands concluded by the
decision of this Court, and that therefore it is an abuse of
process of law. The High Court after referring to the history of
litigation rightly concluded that the matter stood concluded
by judgments of this Court and the High Court in respondents’
case.
In the earlier judgment this Court had given liberty to the
Department in the following terms:
"Although the adjudicating authority had
found in the course of the hearing that the market
survey indicated that the product in question was
known as a cosmetic we do not go into the question
as this was not the ground on which the show
cause notice was issued. The show cause notices
having proceeded on a misapprehension of the tests
laid down in Shree Baidyanath’s case, the same
cannot be sustained.
The appeals are accordingly dismissed without
any order as to costs. It will be open to the
Department to take such test if otherwise so entitled
in respect of the products for the purpose of
classifying the products under the appropriate tariff
heading as they may be advised."
However, as rightly observed by the High Court the
impugned show cause notice was nothing but a repetition of
the earlier show cause notices with slight variations which in
no way was relatable to any different test.
When the factual scenario is considered in the
background of the legal principles set out above, the
inevitable conclusion is that the appeal is sans merit,
deserves dismissal which we direct. Costs made easy.