1999 (5) TMI 33 - HC - Central Excise

Prickly heat treatment powder with Chlorphenesin: classified as medicament under Tariff Heading 30.03, not cosmetic 33.04

Applying the common parlance test and examining composition and use, the HC held that the product was not a daily-use talcum powder but a preparation used ... Classification of Prickly heat powder - levy of excise duty under the Heading 33.04 which covers 'body or make-up preparations and preparations for the care of the skin (other than Medicaments) including sunscreen or suntan preparations, manicure or pedicure preparations.' - Words and Phrases - 'Daily use' - common palance or popular meaning test - Whether Nycil powder is a drug or a cosmetic product has been going on since long - HELD THAT:- In our view firstly, the product in question satisfies the common palance or popular meaning test, i.e. popular meaning attached to a product by a consumer. The product is not used by consumers as a daily use talcum powder. It is a product normally used of the specific purpose of treating prickly heat and as soon as the ailment is treated, the use for the product is discontinued. To illustrate the point further we have the analogy of Boroline cream as in the Calcutta High Court judgmnet in Union of India v. G.D. Pharmaceuticals Ltd. [1996 (12) TMI 82 - HIGH COURT OF CALCUTTA]. The SLP against this judgment was dismissed by the Supreme Court. Boroline cream was held to be a medical preparation not classifiable as a cosmetic. Another example of similar nature could be the specialised dental creams which are available for treatment of gum ailments. The use of these specialised dental creams is for specific purpose and for limited period. Rather the dentists advise that such medicated dental creams should not be used for long because they may desensitise the gums. The product in question contains a particular medicine namely, Chlorphenesin IP. The inclusion of this medicine in the composition makes all the difference as found by the HSC. It was because of use of this medicine in Nycil prickly heat powder that the HSC classified it differently as compared to Johnson Prickly heat powder and Shower to Shower powder. In the present case it has to be noted that not only the HSC opinion goes against the respondent, the respondent themselves were all along classifying the product in question under the category of medicaments and not as cosmetics. We find no merit in the submission made on behalf of the respondents that the product is basically a powder and will always retain as its basic character as a talcum powder even if some medicine is added to it, the base being purified talc. It is the additional of medicines which changes its basic character. The result is that this petition succeeds. We hold that Nycil prickly heat powder is liable to be classified under Tariff Heading 30.03 and not under the Heading 33.04 dealing with cosmetics. The circular dated 20th November, 1997 and the dicision of the Central Board of Excise and Customs, dated 20th November, 1997 holding that Nycil prickly heat powder is to be classified under Heading 33.04 are hereby quashed as far as the product of the petitioner is concerned. It follows that the show cause notice dated 26th November, 1997 also stands quashed. Issues Involved:1. Classification of Nycil Prickly Heat Powder under Central Excise Tariff.2. Validity of Circular No. 356/72/97-CX and order dated 5th November, 1997.3. Interpretation of product classification based on popular meaning versus technical meaning.4. Binding nature of the Harmonised Systems Committee (HSC) opinion.Summary:1. Classification of Nycil Prickly Heat Powder under Central Excise Tariff:The primary issue in the writ petition was whether Nycil Prickly Heat Powder should be classified under Heading 30.03 (pharmaceutical products) or Heading 33.04 (cosmetics) of the Central Excise Tariff. The petitioner argued that the product, containing Chlorphenesin IP, is used for the prevention and cure of skin ailments, thus qualifying it as a medicament under Heading 30.03.2. Validity of Circular No. 356/72/97-CX and order dated 5th November, 1997:The petitioner challenged the circular and order issued by the respondents, which classified Nycil Prickly Heat Powder under Heading 33.04. The court noted that prior to these orders, the product was classified under Heading 30.03/sub-heading 3003.10 as a patent or proprietary medicine. The Central Board of Excise and Customs had previously agreed with this classification.3. Interpretation of product classification based on popular meaning versus technical meaning:The court emphasized the importance of the popular meaning attached to a product by its users, rather than its scientific and technical meaning. It was argued that consumers do not buy Nycil as a daily-use talcum powder but for treating prickly heat and other skin ailments. The court referenced similar cases, such as the classification of Boroline cream by the Calcutta High Court, to support this interpretation.4. Binding nature of the Harmonised Systems Committee (HSC) opinion:The court highlighted the significance of the HSC's opinion, which classified Nycil under Heading 30.03. The HSC's recommendation was based on the presence of Chlorphenesin IP in Nycil, distinguishing it from other prickly heat powders classified under Heading 33.04. The court found that the opinion of the HSC should be binding, given its role in harmonizing international trade classifications.Conclusion:The court held that Nycil Prickly Heat Powder should be classified under Tariff Heading 30.03 and not under Heading 33.04. The circular dated 20th November, 1997, and the decision of the Central Board of Excise and Customs were quashed. Consequently, the show cause notice dated 26th November, 1997, was also quashed. The court emphasized that the addition of medicinal ingredients changes the basic character of the product from a cosmetic to a medicament.