By IANS
Kathmandu : Dabur Nepal, a wholly owned subsidiary of FMCG giant Dabur India and Nepal's largest exporter, has gone to court to defend one of its most popular products, Dabur Chyawanprash, and its "digestive tablet" Hajmola.
Chyawanprash, widely used in India and Nepal, is an ayurvedic tonic made of nearly 40 herbs. It is said to improve digestion, bolster the immunity system, aid longevity and fight depression.
Six Indian companies are among the best-known manufacturers of Chyawanprash, of which Dabur Chyawanprash dominates the Nepal market.
Both Dabur Chyawanprash and Dabur Hajmola are certified as ayurvedic medicines by Nepal's Department of Drugs Administration (DDA) and are therefore exempt from paying VAT.
However, last month, Nepal's Department of Taxation informed the company that the two products were not medicines and would therefore have to pay VAT.
Officials at the department told IANS they had not yet reached a decision whether they would ask the Indian company to pay VAT on the two products from a future date or from the time they began to be marketed in Nepal.
However, Dabur Nepal's contention is that it is the DDA that has the authority to determine whether a product is a medicine or not and Dabur Chyawanprash and Hajmola have been licensed by it to be sold as ayurvedic medicines.
Since they are licensed as ayurvedic medicines, Dabur Chyawanprash and Hajmola advertisements – starring Bollywood don Amitabh Bachchan – have to undergo additional trouble and expense, getting the approval of the DDA before being released in Nepal.
Dabur Nepal has now gone to Nepal's Supreme Court, asking for a resolution of the dispute.
If the tax authorities decide to slap VAT on the two brands since their launch in Nepal, it will complicate matters. The two products are sold at a price that doesn't include VAT and there will be no way the company can collect the tax arrears from thousands of former buyers.
At least three other Indian companies are selling their Chyawanprash brands in Nepal now. They are Vaidyanath Chyawanprash, Himani and Zandu.
However, so far, none of the three is known to have been asked to pay VAT on Chyawanprash.
If the apex court asks Dabur Nepal to pay up, it remains to be seen whether the order would be extended to the competitors and in that case, how it would affect the sale of Chyawanprash in Nepal.
While Hajmola is not a serious issue, Dabur Chyawanprash is, being one of the best-selling Dabur products in Nepal.
Dabur Nepal authorities declined to comment on the dispute, saying it was now under court jurisdiction.