Common parlance and Ayurvedic-text tests govern cosmetics-versus-medicaments classification; licensing certificates are relevant but not conclusive.

Classification between cosmetics and Ayurvedic medicaments requires a cumulative application of the common parlance test and the ingredient-based test drawn from authoritative Ayurvedic texts. Consumer perception and popular meaning remain relevant, and product nomenclature alone is not decisive. Certificates and entries in the First Schedule to the Drugs and Cosmetics Act, 1940 are relevant evidence for licensing purposes, but they do not by themselves determine excise classification. In classification disputes, the department bears the initial burden, though that burden may be discharged on the basis of the entire record, including material produced by the assessee. The adjudicating authority must assess all evidence objectively before reaching the classification finding.

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Issues: (i) Whether the products were classifiable as cosmetics or as Ayurvedic medicaments; (ii) whether the certificates and First Schedule under the Drugs and Cosmetics Act, 1940 were sufficient to conclude classification without applying the common parlance test; (iii) how the burden of proof in classification disputes is to be discharged.

Issue (i): Whether the products were classifiable as cosmetics or as Ayurvedic medicaments.

Analysis: Classification between cosmetics and medicaments requires application of the twin test: whether the product is understood in common parlance as a medicament, and whether its ingredients are found in authoritative Ayurvedic texts. Consumer perception and popular meaning are material, and the authorities must examine the product on that basis rather than rely only on nomenclature or technical description.

Conclusion: The issue could not be finally determined on the existing record and was remitted for fresh consideration.

Issue (ii): Whether the certificates and First Schedule under the Drugs and Cosmetics Act, 1940 were sufficient to conclude classification without applying the common parlance test.

Analysis: Section 3(a) of the Drugs and Cosmetics Act, 1940 and the First Schedule explain Ayurvedic, Siddha and Unani drugs for licensing purposes, but they do not by themselves displace the need to apply the classification test under excise law. Registration or schedule reference is relevant evidence, but it is not conclusive of excise classification.

Conclusion: The certificates and schedule entries were not sufficient, by themselves, to conclude the excise classification.

Issue (iii): How the burden of proof in classification disputes is to be discharged.

Analysis: The initial burden lies on the department, but it may be discharged by reliance on the entire material on record, including evidence produced by the assessee, if that material supports the department's case. The adjudicating authority must assess all evidence objectively before reaching the classification finding.

Conclusion: The burden of proof is not confined to departmental evidence alone and must be decided on the totality of evidence.

Final Conclusion: The impugned classification orders were set aside and the matter was sent back for fresh adjudication in accordance with the settled legal tests.

Ratio Decidendi: In excise classification disputes between cosmetics and medicaments, the common parlance test and the ingredient-based Ayurvedic test must be applied cumulatively, and statutory licensing documents under the Drugs and Cosmetics Act, 1940 are only relevant evidence, not conclusive proof of classification.

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