Ayurvedic medicament classification turns on essential character and market presentation, not incidental cosmetic benefits.

Products manufactured from ingredients in authoritative Ayurvedic texts and under an Indian System of Medicine licence were treated as Patent and Proprietary Ayurvedic medicines, not cosmetics or soap. The presence of excipients and fillers did not change their essential character, because such materials are common in pharmaceutical preparations and do not by themselves convert a medicament into a cosmetic. Preparations with therapeutic or prophylactic properties do not lose medicinal character merely because they may also have cosmetic effects; the decisive factors were primary character and market presentation. As the labels and marketing showed Ayurvedic use for specified conditions, the duty, interest and penalties were unsustainable.

---

---

Issues: Whether the disputed products were Patent and Proprietary Ayurvedic medicines or cosmetics and soap, and whether the demand of duty, interest, and penalties could be sustained.

Analysis: The products were found to have been manufactured from ingredients shown in authoritative Ayurvedic texts and under an Indian System of Medicine licence. The presence of excipients and fillers did not alter their essential character, since such materials are routinely used in pharmaceutical preparations and do not by themselves convert a medicament into a cosmetic. The exclusion in Note 1(d) to Chapter 30 was considered, but it was held that preparations with therapeutic or prophylactic properties do not lose their medicinal character merely because they may also have cosmetic effects; the decisive test remained the primary character and market presentation of the goods. The labels and marketing materials showed the products as Ayurvedic preparations intended to treat or improve specified conditions, and the Revenue did not establish that they were sold merely as beauty or personal care products.

Conclusion: The disputed goods were held to be Patent and Proprietary Ayurvedic medicines and not cosmetics. The classification adopted in the impugned orders was unsustainable, and the demand of duty, interest, and penalties could not be upheld.

Final Conclusion: The appeals succeeded and the impugned orders were set aside with consequential relief.

Ratio Decidendi: A product does not cease to be an Ayurvedic medicament merely because it contains excipients or may incidentally have cosmetic benefits if its essential character, composition, and market presentation show that it is manufactured and sold as a Patent and Proprietary Ayurvedic medicine.

---