Skin Care Products Classification: Rupam & Pailab Ayurvedic, Others Cosmetics

The Advance Ruling classified skin care products, with only Rupam (Pimple Pack) and Pailab (Anti-Crack Cream) deemed as Ayurvedic Medicaments under heading 3004. Other products were classified under heading 3304 as they were not primarily intended as medicaments. Swarnajyoti, Sunayana, and Tarumitra-60 were not yet manufactured, hence no ruling was made on their classification. The ruling remains valid unless voided under Section 104(1) of the GST Act.

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Issues Involved:
1. Classification of 33 skin care products manufactured by the Applicant.
2. Determination of whether these products qualify as Ayurvedic Medicaments under heading 3004 or as skin care preparations under heading 3304.

Detailed Analysis:

1. Admissibility of Application:
The Applicant sought an Advance Ruling on the classification of 33 skin care products. The application was admitted as the question raised was not pending or decided in any proceedings under the CGST/WBGST Act, 2017, making it admissible under section 97(2)(a) of the GST Act.

2. Applicant's Argument:
The Applicant contended that its skin care preparations are Ayurvedic Medicaments intended for therapeutic or prophylactic uses, corresponding to the description of goods under HSN 3004, and thus taxable under Schedule II.

3. Product List Submission:
The Applicant provided a detailed list of 33 products, including descriptions and intended uses, for review.

4. Reference to Previous Rulings:
The Applicant referred to a ruling by the Authority for Advance Ruling, Central Excise, Customs & Service Tax, New Delhi, in the case of M/s Guthy Renker Marketing Pvt Ltd. The ruling emphasized the "common parlance test" for determining the classification of products, stating that products with substantial therapeutic or prophylactic use should be classified as medicaments under heading 3004.

5. Common Parlance Test:
The AAR highlighted that skin care preparations with recognized medical ingredients and drug licenses are considered medicaments if they have substantial therapeutic or prophylactic value. The common parlance test ceases to apply if the products are described in technical/scientific language or if the Tariff Schedule indicates otherwise.

6. Contradiction in Chapter Notes:
A contradiction exists between Note 1 to Chapter 30 and the language of heading 3304. The AAR resolved this by stating that skin care preparations with only incidental therapeutic value fall under heading 3304, while those with substantial therapeutic use are classified under heading 3004.

7. Supreme Court Observations:
The Supreme Court in Puma Ayurvedic Herbal Pvt Ltd observed that products with therapeutic properties remain cosmetics if they primarily serve beauty or makeup purposes. The classification should be based on common parlance and the user's perception of the product.

8. Twin Test for Classification:
The twin test involves determining whether the product is commonly understood as a medicament and whether its ingredients are mentioned in authoritative Ayurvedic texts. Products primarily used for treatment or prevention of specific ailments are classified as medicaments under heading 3004.

9. Application of Twin Test:
The AAR applied the twin test to the Applicant's products. Products primarily used for therapeutic or prophylactic purposes and containing ingredients from Ayurvedic texts are classified as medicaments under heading 3004.

10. Exclusion of Certain Products:
The AAR excluded products like talcum powder, sunscreen, and moisturizing lotion from heading 3004 as they are specifically included under heading 3304. Products not yet manufactured were also excluded from the ruling.

11. Conclusion:
The AAR concluded that only Rupam (Pimple Pack) and Pailab (Anti-Crack Cream) qualify as medicaments under heading 3004. Other products are classified under heading 3304 as they are not primarily offered as medicaments.

Ruling:
Preparations for the care of the skin, namely Rupam (Pimple Pack) and Pailab (Anti-Crack Cream), are classifiable as Medicaments under heading 3004. Products listed as Swarnajyoti, Sunayana, and Tarumitra-60 are not yet manufactured, and no rulings are pronounced on their classification. The remaining products are not offered primarily as medicaments and are classified under heading 3304. This ruling is valid until declared void under Section 104(1) of the GST Act.

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