Procter And Gamble India Ltd. vs Municipal Corporation Of Greater ...
2003 Latest Caselaw 1102 Bom

JUDGMENT

R.M.S. Khandeparkar, J.

1. Heard the learned Advocates for the parties. Perused the records.

2. Since common questions of law and facts arise in all these petitions, they were heard together and are being disposed of by this common judgment.

3. The short point which arises for consideration in all these petitions is whether the products like cough drops, cough tabs, cough tablets, cough syrup and cough lozenge, manufactured by the petitioners can be subjected to levy of octroi duty under the provisions of the Mumbai Municipal Corporation Act, 1888, hereinafter called as "the said Act"?

4. Few facts relevant for the decision are that, in Writ Petition No. 2194 of 1993, the petitioners manufacture the products of cough drops, blue throat drops and vepa throat drops under the brand name of Vicks. In Writ Petition No. 932 of 1994, the petitioners manufacture the products of cough tablets under the trade name 'Solo Eucamenth Cough Tablets'. In Writ Petition No. 2216 of 1996, the petitioners manufacture the product of cough tablets under the trade name 'Solo Orange Cough Tabs'. The petitioners in Writ Petition No. 2096 of 1996, manufacture cough tablets by the trade name 'Solo Cherry Mint Cough Tablets. In Writ Petition No. 1971 of 1997, the petitioners manufacture cough tablets under the trade name 'Solo Ginger Lemon Cough Tablets', and in Writ Petition No. 910 of 2001, the petitioners manufacture cough syrup and lozenge under the trade name 'Encof. The petitioners manufacture the said cough syrup and lozenge by trade names under the Agreement with another company by name M/s. Prophyla Biological Pvt. Ltd. In all these petitions, the petitioners were informed by the respondents authorities that their products were being classified not as medicines, even though for a number of years, the products enjoyed the exemption from the octroi levy on the basis that the products were medicines, and, therefore, the same were liable for payment of octroi duty. The said demand is being challenged in all these petitions on the ground that the point regarding non-liability of the petitioners to pay octroi duty on such products has been decided by this Court in the matter of Procter and Gamble India Limited and Anr. v. The Municipal Corporation of Greater Bombay and Ors., and confirmed by the Division Bench in an unreported decision in the matter of Municipal Corporation of Greater Bombay and Ors. v. Procter and Gamble India Limited (formerly known as "Richardson Hindustan Limited") in Appeal No. 916 of 1993 in Writ Petition No. 3589 of 1983 decided on 9th August, 1994, and accordingly the respondents are not entitled to claim payment of octroi duty on the said products. Reliance is also sought to be placed in the decisions in the matter of B. P. L. Pharmaceuticals Ltd. v. Collector of Central Excise, Vadodara, and the Commissioner of Central Excise, Calcutta v. Sharma Chemical Works, reported in 2003(154) E.L.T. 328. It is the contention of the petitioners that the authorities have arbitrarily sought to levy the octroi duty on the said products. It is their contention that the petitioners products have already been classified as the medicines by the licensing authorities as well as the Central Excise Authorities, and considering the law laid down by this Court, it is not permissible for the Corporation while deciding the issue regarding the liability of octroi duty to change such classification. Besides, the respondents have not even discharged initial burden in relation to their claim about the classification of products and regarding the liability of the petitioners to pay octroi duty on the said products. On the other hand, it is sought to be contended on behalf of the Corporation that the analysis of some of the products subsequent to the demand of payment of octroi duty on such products by the Corporation reveal that the products cannot be said to be medicines as they formed part of confectionery, and, therefore, considering the provisions of law contained in the Schedule annexed to said Act, the products of the petitioners cannot be considered as exempted from the liability of payment of octroi duty. It is also sought to be contended that the orders of the authorities can be subjected to appeal under Section 217 of the said Act and the petitioners, therefore, having alternative efficacious remedy, cannot approach this Court in writ jurisdiction.

5. As regards the contention regarding the alternative remedy, it is well settled that once the petitions are admitted for final hearing, without any reservation of right in favour of the respondents to raise plea of non-maintainability of the petitions on account of any such alternative remedy being available to the petitioners, the respondents cannot be allowed to non-suit the petitioners, at the final stage, merely on such a technical plea and more particularly when the petitioners have a good case on merits. Applying the same rule to the case in hand, the objection relating to the availability of alternative remedy is rejected.

6. As rightly submitted by the learned Advocate for the petitioners, the learned Single Judge in Proctor and Gamble's case (supra), held that once the competent authority under the Drugs and Cosmetics Act, which has an elaborate machinery appointed for determining the classification of the goods, classified the petitioners' goods as drugs and concluded that the product is an Ayurvedic Drug, the Corporation is bound by the said classification. Undoubtedly, the said ruling regarding the binding nature of classification done by other authority upon the Corporation and absence of jurisdiction to the Competent Authority to inquire into the question as to whether the products could fall under the Entry No. 8 of Schedule-H of the said Act or not, was not upheld by the Division Bench, and the same was therefore set aside by the Division Bench. Nevertheless, it was held by the Division Bench that once the classification is done by such authorities unless the cogent materials are placed on record by the Corporation, such a classification cannot be ignored nor the Corporation can arbitrarily refuse to rely upon such classification. In fact, the Apex Court as well as this Court has consistently taken the view that, when any revenue department wants to insist upon a classification of a particular product under a particular heading or item of tax-tariff law, it is for the department to establish the same with necessary materials in support of such claim. The burden in that regard always lies initially upon the Department seeking to classify a product under a specific class, and in the absence of discharge of such burden, once the competent authority under the Drugs and Cosmetics Act classifies a particular item under a particular class, the same will have to be accepted as a proper and valid classification even for the purpose of considering the liability relating to octroi duty under the said Act. In fact, the decisions of the Apex Court in Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay, reported in 7997 Vol. 89 E.L.T. 16 as well as the Commissioner of Central Excise, Calcutta v. Sharma Chemical Works (supra) are clear on the point of burden of proof regarding the classification upon the revenue department. In Hindustan Ferodo's case (supra), it was clearly held that once a particular product falls within a particular item, the onus is on the revenue, and it is for the revenue to place necessary evidence on record in that regard and unless the said burden is discharged, the onus does not shift upon the assessee. Similarly in Sharma Chemical Work's case (supra), it was ruled that it is settled law that the onus or burden to show that a product fall within a particular Tariff Item is always on the revenue and mere fact that a product is sold across the counters and not under a Doctors prescription, does not by itself lead to the conclusion that it is not a medicament. So also merely because the percentage of medicament in a product is less, it does also ipso facto mean that the product is not a medicament. It was also held that the medicament would also necessarily be covered by fillers/vehicles in order to make the product usable and the main criteria for determining classification is normally the use it is out to by the customers who use it and hereunder again the burden lies upon the revenue to establish this aspect of the matter.

7. Perusal of the records in each of the petitions would reveal that the respondents have not bothered to place on record any material in respect of their claim regarding the classification of products of the petitioners as confectionery and not the medicines so as to make the products liable for payment of octroi duty.

8. Added to the above, the facts disclosed by the petitioners along with the necessary materials on record reveal that the products in question contained ayurvedic medicines, having the ingredients like, Pudina, Nilgiri Tel, Narangi Tel, Ntmbuka Sat Nigantoo Ratnakar, Sushruta Samhita, Bhava Prakash, Yashtimadhu, Vasaka, Haridra, Talispatra, Clove Oil, Khadir, Cinnamon Oil, Ilaichi Power and Saffron, Kantakari, Amla, Tulsi, Banaphsha, Pippali, Somavalli, Soonth, Kankol, Talispatra, etc. Similarly, in the case of Procter and Gamble, the Cough Syrup contains Aqueous Extract derived from Dasamula Kvatha and Bharngyadi Kvatha. Dasamula Kvatha contains Salaparni, Prsniparni, Brhati, Kantakari, Goksura, Bilva, Agnimantha, Syonaka, Kasmari and Patala, whereas Bharngyadi Kvatha contains Bharngi, Musta, Parpataka, Dhanya, Yavasa, Sunthi, Bhunimba and Kustha. It cannot be disputed nor it has infact been disputed that all these ingredients are essentially of ayurvedic medicaments. There is nothing on record to disclose that the products of the petitioners are used by the customers as confectionery items. Once it is apparent that the products of the petitioners were all throughout exempted from the payment of octroi duty on the basis that they belong to the family of medicines, if the Corporation wanted to classify such products differently as forming part of confectionery items, so that the same can be subjected to the payment of octroi duty, it was necessary for the Corporation to place on record the cogent materials in support of such claim, and in the absence thereof, there was no obligation cast upon the assesses to lead any evidence in support of their contentions. However, materials on record placed by the petitioners clearly reveal that there is absolutely no substance in the contentions of the respondent-Corporation that the products can be classified as the confectionery items and not medicines.

9. Considering the decision of the learned Single Judge in Procter and Gamble's case and the confirmation thereof on facts of that case, by the decision of the Division Bench in Appeal No. 916 of 1993 and the law laid down by the Apex Court in the decisions referred to above, the contentions of the respondent-Corporation regarding the classification of the products of the petitioners as confectionery items cannot be sustained and the impugned orders in that regard are liable to be set aside and the products of the petitioners are to be held as not liable to be so classified and are therefore not liable for payment of octroi duty, being medicines as were earlier classified. Rule is made absolute accordingly with no order as to costs. In case the petitioners have deposited and/or paid any amount towards the claim made by the respondent-Corporation under the impugned orders, the petitioners shall be entitled for refund of the said amount within a period of eight weeks from the date of demand for such refund. Order accordingly.