2023 (5) TMI 191 - SC - Central Excise

Supreme Court confirms 'Aswini Homeo Arnica Hair Oil' as medicament under Central Excise Tariff Act

The Supreme Court upheld the Tribunal's decision, confirming that 'Aswini Homeo Arnica Hair Oil' should be classified as a 'medicament' under Chapter 30 ... Classification as medicament versus cosmetic - twin test - common parlance test and ingredients test - preparations for use on the hair versus medicaments - exclusion of Chapter 30 for preparations of Chapter 33 even if therapeutic or prophylactic - specific tariff entry prevailing over a general entry - re-examination of classification after amendment of tariff entries (2012)Classification as medicament versus cosmetic - twin test - common parlance test and ingredients test - preparations for use on the hair versus medicaments - exclusion of Chapter 30 for preparations of Chapter 33 even if therapeutic or prophylactic - AHAHO is classifiable as a medicament under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985 and not as a cosmetic or toilet preparation under Chapter 33. - HELD THAT: - The Court applied the established twin test: (i) the ingredients test (whether ingredients appear in authoritative pharmacopeia/Materia Medica) and (ii) the common parlance/commercial usage test. On ingredients, AHAHO contains four homeopathic medicines (Arnica Montana, Cantharis, Pilocarpine, Cinchona) which are shown to appear in Homeopathic Pharmacopoeia and Materia Medica; the product is manufactured under appropriate homeopathic drug licences and the Tribunal's earlier detailed analysis of similar ingredients in Bakson Homeo Pharmacy supported medicinal character. On common parlance, the product is marketed and understood by users and traders as a homeopathic medicament (labels, Schedule K listing, licensing, prior appellate decisions and judicial findings all point to medicinal understanding), and mere over the counter availability or depiction of a person with long hair on the label does not convert a medicament into a cosmetic. The Court rejected the Adjudicating Authority's emphasis on the word 'Hair Oil' on the label as determinative, holding that the oil is the medium of administration for the homeopathic medicament and that prophylactic/therapeutic uses of the product are sufficient to classify it under Chapter 30. The Court also noted that absence of dosage particulars or contra indications on the label did not negate the product's pharmaceutical character in the circumstances. On these bases the Tribunal's conclusion that AHAHO is a medicament was endorsed. [Paras 26, 27, 28, 29, 34]Product AHAHO is a medicament under Chapter 30 and not a cosmetic under Chapter 33.Re-examination of classification after amendment of tariff entries (2012) - specific tariff entry prevailing over a general entry - The amendments to the tariff entries effected in 2012 did not justify reopening or re classification of AHAHO. - HELD THAT: - The Court reiterated that mere rewording, regrouping or micro classification of tariff headings does not permit reclassification of a product unless there is a change in the nature, character or use of the product or a fresh interpretation showing a different legal character. The Court held that the 2012 amendments (rewording of Chapters 30 and 33, prominence of 'hair oil' sub headings, deletion of certain references) did not alter the substance of AHAHO nor affect its classification as a homeopathic medicament; the product remained the same in composition, character and use and therefore prior acceptance and the Tribunal's conclusion could not be displaced by the changed wording of tariff entries. The Court rejected the Revenue's contention that the amended entries required a re look and observed that specific entries do not operate to change the character of a product when the product continues to meet the medicament tests. [Paras 30, 31, 32, 33, 34]No re examination or reclassification was justified by the 2012 tariff amendments; the product's earlier classification as a medicament stands.Final Conclusion: The appeal is dismissed. The product 'Aswini Homeo Arnica Hair Oil' (AHAHO) is held to be a medicament under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985 for the period December 2013 to November 2014, and the 2012 amendment of tariff entries did not justify reopening its classification. Issues Involved:1. Classification of the product 'Aswini Homeo Arnica Hair Oil' (AHAHO) under the Central Excise Tariff Act, 1985.2. Justification for re-examination of the product's classification due to amendments in the tariff entries in 2012.Summary:1. Classification of the Product:The primary issue was whether AHAHO should be classified as a 'medicament' under Chapter 30 or as a 'cosmetic' under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985.Adjudicating Authority's Findings:- The product did not meet the criteria for 'medicament' as it was not prescribed by medical practitioners, lacked dosage specifications, and had no significant therapeutic claims.- The product was labeled as 'Hair Oil' and available over the counter, implying it was a cosmetic necessity.- The product was classified under Tariff Item 3305 90 19 as 'cosmetic' (Hair Oil).Tribunal's Findings:- The product was made of four homeopathic medicines (Arnica Montana, Cantharis, Pilocarpine, and Cinchona) and was licensed as a homeopathic medicine.- The product label indicated its therapeutic uses, such as controlling hair fall, preventing dandruff, and inducing sleep.- The product passed the common parlance test as it was understood and marketed as a homeopathic medicine.- The Tribunal held that AHAHO should be classified under Chapter 30 as a 'medicament.'Supreme Court's Analysis:- The product contains recognized homeopathic medicines and is manufactured under a drug license.- The product's therapeutic and prophylactic uses were evident from its ingredients and label.- The expression 'Hair Oil' on the label was indicative of the medium of administration rather than its primary function.- The product passed both the ingredient test and the common parlance test, confirming its classification as a 'medicament.'2. Justification for Re-examination of Classification:The secondary issue was whether the amendments in the tariff entries in 2012 justified a re-examination of the product's classification.Adjudicating Authority's Justification:- Substantial changes in the tariff headings, including rewording of Chapter 30 and detailed specifications in Chapter 33, warranted a re-examination of the product's classification.Supreme Court's Analysis:- Changes in tariff structure alone do not justify reclassification without showing a change in the product's nature or use.- The product's composition, character, and uses remained the same despite the amendments.- The product continued to fit the description of a 'medicament' under Chapter 30, and there was no justification for reclassification.Conclusion:The Supreme Court upheld the Tribunal's decision, confirming that AHAHO should be classified as a 'medicament' under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985. The amendments in 2012 did not warrant a re-examination of the product's classification. The appeal was dismissed.