1987 (6) TMI 187 - AT - Central Excise

Tribunal rules skincare products as medicinal, not cosmetic. Decision favors appellant.

The tribunal ruled that the products in question are medicinal and not cosmetics or toilet preparations. They are used for treating skin ailments, sold ... Patent or Proprietary Medicines Issues Involved:1. Correct classification of the products Calaminol, Calamyl, Aquaminol, Calacream, and Histacalamine.2. Applicability of the Central Excise Tariff Item 14-F(i) to the products.3. Interpretation of Explanation II in Tariff Item 14-F.4. Distinction between Patent or Proprietary medicines and cosmetics or toilet preparations.5. Relevance of the Drugs and Cosmetics Act definitions in the context of the Central Excises and Salt Act, 1944.Issue-wise Detailed Analysis:1. Correct Classification of the Products:The dispute concerns the classification of five products: Calaminol, Calamyl, Aquaminol, Calacream, and Histacalamine. Initially classified under Tariff Item 14-E as Patent or Proprietary medicines, a show cause notice issued on 13th May 1985 proposed reclassification under Tariff Item 14-F(i) as cosmetics and toilet preparations. The Assistant Collector and the Collector of Central Excise (Appeals) upheld this reclassification for all products except Histacalamine, which remained under 14-E.2. Applicability of Central Excise Tariff Item 14-F(i):The primary question was whether the products should be classified under Tariff Item 14-F(i) as preparations for skin care. The appellant argued that the products are medicinal, not cosmetic, citing their therapeutic value and use in treating skin ailments. The department contended that the products, containing only 5-10% Calamine, were primarily protective and thus cosmetic.3. Interpretation of Explanation II in Tariff Item 14-F:Explanation II to Tariff Item 14-F includes cosmetics and toilet preparations with subsidiary pharmaceutical or antiseptic constituents. The appellant argued that this explanation should not enlarge the scope of the tariff item to include their products, which are primarily medicinal. The department argued that the products' protective nature aligned them with cosmetics.4. Distinction Between Patent or Proprietary Medicines and Cosmetics:The appellant highlighted that their products are marketed and sold as drugs, prescribed by doctors, and supplied to hospitals, not as cosmetics. The department's argument focused on the protective attributes of the products, suggesting they were cosmetic. The tribunal found that the products' primary use in treating skin conditions indicated they were medicinal, not cosmetic.5. Relevance of the Drugs and Cosmetics Act Definitions:The appellant argued that in the absence of definitions in the Central Excises and Salt Act, reliance should be placed on the Drugs and Cosmetics Act definitions. They cited case law to support their position that the products should be classified based on their medicinal use and recognition in the medical profession.Judgment Summary:The tribunal concluded that the products in question are not cosmetics or toilet preparations but are medicinal products used for treating skin ailments. The products are sold through licensed druggists, prescribed by doctors, and supplied to hospitals. The tribunal found no evidence to support the department's claim that the products are known or sold as cosmetics. Consequently, the tribunal set aside the lower authorities' orders for Calaminol, Calamyl, Aquaminol, and Calacream, allowing the appeal in favor of the appellant. The classification of Histacalamine under Tariff Item 14-E remained unchanged.