Product classification requires common parlance and ingredient-based testing; a drug licence alone cannot decide medicine-versus-cosmetic status.

Product classification under trade tax law must be decided on evidence using the common parlance test and an ingredient-based examination with reference to authoritative Ayurvedic texts where medicine and cosmetic are undefined. A drug licence under the Drugs and Cosmetics Act is only a relevant circumstance and is not conclusive of classification. The Tribunal's order was unsustainable because it gave only broad conclusions, failed to assess the evidence in a reasoned manner, and did not explain why the products satisfied the applicable tests. The matter required fresh reconsideration on the evidentiary material and a reasoned finding on classification.

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Issues: Whether the Tribunal was justified in classifying the products as ayurvedic medicines without a reasoned appreciation of the evidence and without applying the settled twin test for classification.

Analysis: The statutory expressions "medicine" and "cosmetic" were not defined under the trade tax law, so classification had to be determined on evidence and on settled principles. The accepted approach required application of the common parlance test and examination of the ingredients with reference to authoritative Ayurvedic texts. The Tribunal's order recorded only broad conclusions, referred to the assessee's drug licence and literature, but did not examine the 13 sets of evidence in a reasoned manner or explain why the products satisfied the relevant test. A licence under the Drugs and Cosmetics Act was only a relevant circumstance and could not, by itself, settle the classification. In these circumstances, the proper course was to require a fresh decision on the evidentiary material.

Conclusion: The Tribunal's order could not be sustained and the matter was required to be reconsidered by applying the twin test and giving reasons on the evidence.

Final Conclusion: The revision resulted in a remand to the Tribunal for fresh adjudication of the classification issue in accordance with law.

Ratio Decidendi: Where classification of a product as a medicine or cosmetic turns on evidence, the authority must apply the common parlance test and the ingredient-based test and must record a reasoned finding on the material before it; a drug licence alone is not conclusive.

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