Therapeutic product classification turns on medicinal use and full disclosure defeating extended limitation.
A product marketed for prevention and treatment of stretch marks during pregnancy was treated as an ayurvedic medicament, not a skin care cosmetic, because its literature described therapeutic use for a specific pregnancy-related condition, the dosage was prescribed, use was limited to a short period, and FDA approval treated it as medicine. The classification under sub-heading 3303.09 was therefore upheld. On limitation, disclosure of the product name and medicament classification in the classification declaration meant there was no basis to allege suppression or misstatement, so the extended period of limitation was not available.
Issues: (i) whether the product marketed for prevention and treatment of stretch marks during pregnancy was classifiable as an ayurvedic medicament or as a skin care cosmetic; (ii) whether the demand was barred by limitation on account of absence of suppression or misstatement.
Issue (i): whether the product marketed for prevention and treatment of stretch marks during pregnancy was classifiable as an ayurvedic medicament or as a skin care cosmetic.
Analysis: The product was described in the declaration as a medicament, its literature showed use for a specific condition arising during pregnancy, the dosage was prescribed, and it was recommended only for a limited period. The record also contained approval from the FDA authority treating the product as a medicine. On these facts, the product was not a general-purpose skin care cream but a formulation intended for therapeutic use.
Conclusion: The product was classifiable as an ayurvedic medicament under sub-heading 3303.09 and not under Heading 33.04.
Issue (ii): whether the demand was barred by limitation on account of absence of suppression or misstatement.
Analysis: The declaration filed under Rule 173B disclosed the product name and its classification as a medicament. Even if the literature was not enclosed, the department could have made further enquiry. On that basis, there was no correct basis to allege suppression or misstatement.
Conclusion: The extended period of limitation was not applicable.
Final Conclusion: The impugned order was set aside and the appeals succeeded on both classification and limitation.
Ratio Decidendi: A product marketed for a specific therapeutic condition, with prescribed dosage and limited-period use, is to be treated as a medicament rather than a cosmetic, and full disclosure in the classification declaration defeats the invocation of the extended period.
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