Drug or cosmetic classification turns on dominant use, composition and label claims under sales tax entries.

Product classification under the Andhra Pradesh General Sales Tax Act turned on composition, label claims, licence status and intended use. Sonachandi Chavanprash, Boroplus Antiseptic Cream and Boroplus Prickly Heat Powder were treated as drugs because their predominant character was medicinal or therapeutic, not cosmetic or toilet use. Navaratan Oil and Gold Turmeric Ayurvedic Cream were also treated as drugs because their ingredients, ayurvedic references and marketed uses showed curative, antiseptic and anti-inflammatory purpose rather than beautifying or complexion-enhancing use. The classification issue was therefore determined product-wise by the dominant nature and primary use of each preparation.

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Issues: (i) Whether Sonachandi Chavanprash, Boroplus Antiseptic Cream and Boroplus Prickly Heat Powder were classifiable as drugs under Entry 37 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957, or as cosmetics/toilet preparations under Entry 36. (ii) Whether Navaratan Oil and Gold Turmeric Ayurvedic Cream were classifiable as drugs under Entry 37 or as cosmetics under Entry 36.

Issue (i): Whether Sonachandi Chavanprash, Boroplus Antiseptic Cream and Boroplus Prickly Heat Powder were classifiable as drugs under Entry 37 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957, or as cosmetics/toilet preparations under Entry 36.

Analysis: The products were examined on the basis of their composition, labels, licence position and intended use. Sonachandi Chavanprash was found to be an edible ayurvedic preparation with references in classical texts and internal-use medicinal attributes, not a beautifying or external-use article. Boroplus Antiseptic Cream was found to be a fully medicated preparation with predominant ayurvedic ingredients and curative use for skin disorders, not an ordinary cosmetic or toiletry cream. Boroplus Prickly Heat Powder was held to have therapeutic and prophylactic ingredients such as zinc oxide, boric acid and salicylic acid, and its primary use was medicinal rather than cosmetic; the words capable of being used as cosmetics were treated as meaning primarily so used.

Conclusion: These three products were correctly classified as drugs under Entry 37 and not as cosmetics under Entry 36. The Department's challenge failed.

Issue (ii): Whether Navaratan Oil and Gold Turmeric Ayurvedic Cream were classifiable as drugs under Entry 37 or as cosmetics under Entry 36.

Analysis: The products were assessed by their label claims, composition, ayurvedic references and licensing as ayurvedic drugs. Navaratan Oil was accepted as a medicinal ayurvedic oil used for headache relief, cooling effect, sound sleep and allied therapeutic purposes, with ingredients drawn from ayurvedic texts and no material showing it to be a perfumed hair oil or cosmetic. Gold Turmeric Ayurvedic Cream was found to be marketed as an ayurvedic medicine for cracked skin, pimples, boils and other skin ailments, with its composition and use indicating medicinal, antiseptic and anti-inflammatory character rather than beautifying or complexion-enhancing use.

Conclusion: These two products were wrongly treated as cosmetics and were held to fall under Entry 37 as drugs. The assessee's challenge succeeded.

Final Conclusion: The classification dispute was resolved product-wise in favour of the Department for the three medicated preparations that were upheld as drugs, and in favour of the assessee for the two remaining products that were held to be drugs rather than cosmetics. The common order of the Tribunal was sustained in part and set aside in part.

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