Tariff classification of medicated hair preparation favoured Chapter 33, while confiscation and penalty were set aside on factual non-manufacture grounds.

Selenium Sulphide Lotion USP marketed as Selsun was held classifiable as a preparation for use on hair under Chapter 33, not as a patent or proprietary medicine under Chapter 30, because the specific tariff entry for shampoos and cosmetic hair preparations prevailed and Chapter 30 excluded Chapter 33 products even if they had therapeutic value. The Tribunal also found that drug licence and medical literature were not conclusive for central excise classification. On confiscation and penalty, the goods were treated as not fully manufactured for excise purposes because required particulars such as batch number were not stamped on the bottles, so confiscation and penalty were set aside.

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Issues: (i) Whether Selenium Sulphide Lotion USP marketed as Selsun was classifiable as a cosmetic under sub-heading 3305.90 or as a patent or proprietary medicine under sub-heading 3003.19. (ii) Whether confiscation of the bottles and imposition of penalty were sustainable.

Issue (i): Whether Selenium Sulphide Lotion USP marketed as Selsun was classifiable as a cosmetic under sub-heading 3305.90 or as a patent or proprietary medicine under sub-heading 3003.19.

Analysis: The product was found to be a medicated shampoo / preparation for use on hair, used for dandruff control and not a pure medicament. The Tribunal held that Chapter 33 specifically covered preparations for use on hair, including shampoos, and Chapter Note 2 to Chapter 33 brought within that chapter products put up for cosmetic use even if they contained subsidiary pharmaceutical or curative value. It further held that Note 1(d) to Chapter 30 excluded preparations of Chapter 33 even if they had therapeutic or prophylactic properties. Applying the interpretative rules, the more specific and later heading under Chapter 33 prevailed over the more general medicament heading under Chapter 30. The drug licence and medical literature were held not conclusive for central excise classification.

Conclusion: The product was rightly classifiable as a cosmetic under sub-heading 3305.90 and not as a patent or proprietary medicine.

Issue (ii): Whether confiscation of the bottles and imposition of penalty were sustainable.

Analysis: The Tribunal accepted the contention that the goods were not fully manufactured for excise purposes as batch number and other required particulars had not been stamped on the bottles. On that factual basis, the seizure, confiscation, and penalty could not be sustained.

Conclusion: The confiscation and penalty were set aside.

Final Conclusion: The classification in favour of the Department was upheld, but the confiscation and penalty were annulled, resulting in only partial relief to the assessee.

Ratio Decidendi: For central excise classification, a preparation specifically falling under a later and more specific tariff entry for hair-use preparations is classified under that entry notwithstanding its medicinal or therapeutic qualities, and drug-law treatment of the product is not for tariff classification.

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