Classification upheld for Keo Karpin products as Medicines, not Cosmetics. Revenue burden of proof.

The court dismissed all four writ petitions, upholding the classification of "Keo Karpin Hair Vitalizer" and "Keo Karpin Baby Oil" under Entry 60 (Medicines, Drugs, and Pharmaceutical Preparations) and not Entry 69 (Perfumery and Cosmetics). The department failed to prove that these products were cosmetics, and the burden of proof lies with the revenue. The petitions were dismissed with no order as to costs.

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Issues Involved:

1. Classification of "Keo Karpin Hair Vitalizer" and "Keo Karpin Baby Oil" under the Rajasthan Sales Tax Act.
2. Determination of whether these products fall under Entry 60 (Medicines, Drugs, and Pharmaceutical Preparations) or Entry 69 (Perfumery and Cosmetics).

Issue-Wise Detailed Analysis:

1. Classification of "Keo Karpin Hair Vitalizer" and "Keo Karpin Baby Oil" under the Rajasthan Sales Tax Act:

The primary issue in the writ petitions was the classification of "Keo Karpin Hair Vitalizer" and "Keo Karpin Baby Oil" for sales tax purposes. The respondent claimed these products should be classified under Entry 60 of the notification issued under the Rajasthan Sales Tax Act, 1954, which pertains to "Medicines, Drugs and all kinds of pharmaceutical preparations excluding chroquine." Conversely, the department argued that these products should fall under Entry 69, which includes "Perfumery (excluding 'Agarbatties', 'Dhoop' and 'Loban'), cosmetics, including tooth paste 'Manjan', Comb, brushes, perfumed hair oil, razor and other shaving articles but excluding razor blades."

2. Determination of whether these products fall under Entry 60 (Medicines, Drugs, and Pharmaceutical Preparations) or Entry 69 (Perfumery and Cosmetics):

The court referred to various precedents to determine the classification of these products. Notably, in the case of B.P.L. Pharmaceuticals Limited v. Collector of Central Excise Vadodara, the Supreme Court classified "Selsun" as a medicine based on its anti-fungal and anti-seborrhoeic properties. Similarly, in Commissioner of Central Excise, Calcutta v. Sharma Chemical Works, the Supreme Court held that "Banphool Hair Oil" was an Ayurvedic medicament and not a perfumed hair oil.

The court also considered the composition and usage of the products. "Keo Karpin Hair Vitalizer" contains ingredients like Keratin Hydrolysate, D-Panthenol, Biotin, and Resorcinol, which are typically used in medicinal preparations. The product is marketed as preventing hair fall and treating dandruff, indicating its medicinal properties. Similarly, "Keo Karpin Baby Oil" contains Vitamin A, D3, E, and other medicinal ingredients, and is claimed to protect children from rickets and vitamin deficiencies.

The court emphasized that the classification should consider the nature of the article, its ingredients, uses, market treatment, and whether it is manufactured under a license from the Drugs Controller. The respondent had obtained necessary permissions and licenses under the Drugs and Cosmetics Act, 1940, to manufacture these products as medicinal preparations.

The court rejected the department's argument that the products should be classified based on their sale across the counter without a doctor's prescription. Citing the Supreme Court's decision in the Banphool Hair Oil case, the court reiterated that the method of sale does not determine whether a product is a medicament.

The court concluded that the Taxation Tribunal's finding that "Keo Karpin Hair Vitalizer" and "Keo Karpin Baby Oil" fall under Entry 60 and not Entry 69 was correct. The department failed to provide evidence that these products were cosmetics, and the burden of proof lies with the revenue.

Judgment:

The court dismissed all four writ petitions, upholding the classification of "Keo Karpin Hair Vitalizer" and "Keo Karpin Baby Oil" under Entry 60 (Medicines, Drugs, and Pharmaceutical Preparations) and not Entry 69 (Perfumery and Cosmetics). The petitions were dismissed with no order as to costs.

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