Biotique Promoter Vinita Jain In Excise Net

Herbal Queen Vinita Jain, promoter of the Biotique range of herbal products, has fallen in the excise net with the department slapping a duty of Rs 3.10 crore against Ishaan Research Laboratories, the company which manufactures the products for her boutique. Besides, a penalty of Rs 1 crore has also been imposed on the company for product misdeclaration and undervaluation.

Vinita Jain, the managing director of Ishaan Laboratories, has been charged a personal fine of Rs 35 lakh and a penalty of Rs 25 lakh was slapped on the marketing arm of the company, Ishaan Marketing Pvt Ltd.

The case was adjudicated by Nisha Malhotra, the commissioner-in-charge of the Directorate General, Anti Evasion (Excise), on Jan 29 this year.

The duty against the company is equal to the amount for which Ishaan Laboratories was show-caused in April 1996.

The company had been 'show-caused' for Rs 3.10 crore in 1996 for misdeclaration and misclassification of products. As far as the misclassification of products is concerned, the department held that the company has been classifying products which are actually cosmetics as ayurvedic medicine.

Products classifiable as 'cosmetics' under Chapter 33 of Central Excise Act attract a higher duty than ayurvedic medicine which is defined under Chapter 30 of the Act.

In fact, prior to March 94, ayurvedic medicines were exempted from duty, and after March 94, patented and proprietoral ayurvedic medicine were charged at the rate of 10 per cent.

By classifying its products as ayurvedic medicine, Ishaan Laboratories, was clearing its products at a lower rate, claimed excise officials.

Biotique's Bio-Apple is actually a shampoo, Bio-Lotion a moisturiser, Bio-Basil a talcum powder while Bio-Thine is actually a hair conditioner, the officials said.

The department has also held that the company marketed its products through a company managed by a 'related person' under Section 4 of the Central Excise Act.

The company used to clear a bulk of their products at a low rate to their marketing company which used to, at times, sell the products at 4 times the assessable value, officials pointed out.

According to revenue officials, most of the companies manufacturing herbal cosmetics were paying excise at the rate of 8 per cent by claiming to be manufacturers of ayurvedic medicaments and obtaining drug licences from the state governments to that effect.

The Excise Department held that these companies were manufacturers of herbal cosmetics and so should pay at the rate of 30 per cent on the assessable value.

As a result of the difference in opinion between the manufacturers and the excise department, the latter sought a clarification from the Central Board of Excise and Customs (CBEC).

The CBEC, in its clarification letter, had stated that all assessments of products claimed to be ayurvedic medicament under Chapter 30 of the Central Excise Tariff Act, 1985 should be re-examined by the commissioners of Central Excise whether they are manufactured under a drug licence or not so as to determine their classification as medicament or cosmetics.