TaxTMI 
TaxTMI 
2000 (8) TMI 777
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....roduct was admittedly declared and sold as hair oil and hence it fell under Chapter 33 of Central Excise Tariff Act. Reliance was also placed on Chapter Note 1(d) of Chapter 30 and Note 2 of Chapter 33 in support of the plea that the product in question has to fall under Tariff Heading 33.05. It was also submitted by Revenue before Collector that even if such preparations are having therapeutic or prophylactic values, it will still be classifiable under Chapter 33. 2. The assessee on the other hand submitted that they do not hold out their product to be a cosmetic. They had a drug licence in their favour. The Arnica hair oil cannot be said to be having subsidiary prophylactic or therapeutic value but it is pre-dominantly having such values. These are sold only at the drug stores and not in the cosmetics shops. Therefore, they contended that the provisions of Chapter Note 2 of Chapter 33 will not be applicable to this product. The trade parlance is also a relevant factor in deciding the classification and accordingly this will not fall under Chapter 33. They placed the reliance on the judgment rendered in the case of Richardson Hindustan Ltd. v. Collector of Central Excise, ....
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....facturing licence or that the product is sold only at the drug store will not make any material difference in so far as classification of the product is concerned and also rejected the plea of trade parlance raised by the assessee. He has observed that from Chapter Note 1(d) under Chapter 30 of the Central Excise Tariff it is noticed that this chapter does not cover inter alia preparations of Chapter 33 even if they have therapeutic and prophylactic properties. He has held that this also supports the view that the item in question will go out of the scope of Chapter 30. He has held that this view also finds support from the note below the Heading 33.05 of the HSN where it has been clearly mentioned therein that this heading will cover, inter-alia hair oils. Therefore, he has held that Arnica hair oil has to necessarily fall under Tariff Heading 33.05 unless it is specifically excluded from there. 4. Appeal No. E/3429/91-C arises from order-in-original No. 22/91, dated 19-7-1991 passed by Collector of Central Excise, New Delhi confirming the demand of Rs. 13,13,477.95 under Rule 9(2) of the Central Excise Rules, 1944 on the ground that M/s. Bakson Homeo Pharmacy have wilfull....
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....ll aware of the fact that they were engaged in the manufacturing of hair oil. In support they enclosed a letter dated 9-5-1985 of the Supdt. Central Excise MOR-VIII, MOD I, Rajendra Place, New Delhi and their reply to the letter date 1-6-1985. They also enclosed letter dated 1-7-1985 of Supdt. Central Excise having jurisdictional charge of the unit. They also pleaded that in February, 1988, they were issued show cause notice upon submission of classification list in November, 1987 of Arnica hair oil as medicament. The Asstt. Collector vide his order dated 22-9-1988 accepted their contentions by classifying the product as a homeopathic medicine. They had pleaded that since the department had not filed the appeal against the orders passed by the Asstt. Collector, the current show cause notice is bad in law. They also submitted that in the event of change of classification list, it cannot be given retrospective effect and can be applied prospectively only. 5. They also contended that all the three concerns are independent of each other. Mrs. Kulwant Kaur is the sole proprietor of M/s. Bakson Laboratories and Dr. Anil Baweja is the independent proprietor of M/s. Neha Cosmetics.....
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....es was on a principal to principal basis. They also denied the allegation that there was suppression of facts. They pleaded that they were holding a Central Excise licence that there is no requirement under the law to intimate to the department that an agreement existed between them and M/s. BHPL that there is no suppression with regard to the selling price because there is no law which states that the assessable value of such items would be the price at which such goods are supplied by the manufacturer/seller to their customers. The agreement entered into by them has been stated to be a legal agreement and the goods manufactured by them do not tentamount to manufacturing goods for on behalf of the customer. They pleaded that as there was no suppression on the their part and therefore the extended period beyond six months cannot be invoked. Ld. Principal Collector had decided the issue which on appeal to Tribunal was remanded for de novo consideration. On de novo consideration, the Principal Collector rejected their pleas and upheld the allegations made in the show cause notice and confirmed the duty amount. In view of the issue being common in all the cases, the appeals were he....
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....her submits that merely because some pharmacopieal ingredients are added in the oil that by itself does not make it or preparation of a perfumed oil. He submits that addition of perfumary ingredients does not decide the item to be a medicine or not. It is his submission that even the item shampoo is not a preparation for use on hair but it is meant to wash of the dandruff as a cure for skin disease. Therefore, Hon'ble Supreme Court has held that the shampoo is required to be considered as a medicament. He points out that all the ingredients are all exclusively homeopathic in nature therefore, it satisfies the terms exclusively appearing in sub-heading 3003.20. 9. Ld. DR arguing for the revenue reiterates the findings given by the Collector and stated that the item is only a preparation for use as a hair oil and nothing beyond that. It is not a homeopathic medicine and the party himself is claiming it so in the advertisements. He also pointed out that party had made a false claim in the advertisement that the item helps in growth of the hair in bald people which is scientifically impossible. He pointed out that they are using "Black Heena", which gives the colour to the hair....
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....c or prophylactic properties. It is the contention of the appellants that the item is a medicament in terms of Note 2 of Chapter 30 and as all the ingredients are used are natural substances and find place in the Homeopathic Pharmacopia of India and it has been certified to have curative and prophylactic properties for skin disease, therefore, they are required to be classified under TI 14F of erstwhile tariff as a medicament and under sub-heading 3003.30 of new tariff. In this regard reliance has been placed on technical literature as well as certificates issued by the Homeopaths & Drug Licence. 12. We notice from the record that the appellants have produced certificates from Dr. Anil Kumar Sharma, B.Sc., D.H.M.S.(DLI). Ex-Senior Physician, Nehru Homeopathic Medical College & Hospital, New Delhi, Examiner : Board of Homeopathic System of Medicine, Delhi and Treasure of All India Homeopathic Research Foundation, New Delhi who has certified that Arnica Hair Oil (Sunny) manufactured by M/s. Bakson Homeo Pharmacy is prescribed by him to his patient and it has been found to have effect in combact dandruff and in preventing loss of hair. On the same lines, the certificate has be....
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....oling agent. Ref: Indian Materia Medica Vol. Ist 6. SANDAL WOOD (Official in HPI) Refereshes and excellent subtle perfume 7. BHRINGRAJ Whole plant Extract. (a) Good for hair and skin. It is believed that the herb taken internally and applied externally will not only promote hair growth but also restore grey hair to the original colour Ref: Satish Chandra Auart 3, Crude Drug Res. 9(4): 1461, 1969 8. NEEM (Official in HPI) Essential Oil used as a hair tonic Ref : Martindale the extra pharmacopeia pg. 317 9. HEENA Its action is to coat the hair follicles temporarily. Acts as a conditioner to thicken the hair follicles and give more body and lustre to the hair. Ref: Meer C. Gotanicals for drige & cosmetics. Drug and Cosmetic 131 (1) : 36-38.40 1962 10. BRAHMI (Official in HP!) Extract of the whole plant helps in stimulating hair growth and functions as an antiseptic and antidandruff agent. Ref : Indian Materia Medica Vol. 1st. pg. 662. The definition of "Homeopathy" in Dictionary of Nursing at page 228 states that "HOMEOPATHY (Homoeopathy) (hoh-mi-op-a-thi) n. a system of medicine based o....
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.... homoeopathy was a German physician Samuel (Thristian Friedrich "Hahnemann (1755-1843) who stated the principle similia similibus curantur ('like is cured by like') although this phrase had been used by "Paraeelsus in 1658. First, various single drugs (not mixtures) are proved', that is they are given to normal persons and the symptoms produced are noted. The remedy for that symptom in a patient is a very small dose of the drug in question. Moreover, it is held that the smaller the dose, the greater the effect. This may seem strange when in the highest "potencies' the patient may not receive a single molecule of the drug, but as Hahnemann himself said'.......only by the spiritual operation of medicines can health be restored'. There is no doubt that the first beneficial effect of Hahnemann's work was to save patients from the gross over prescribing then prevalent. There are different sects of homoeopathies; some adhere strictly to the founder's principles, while others allow ordinary doses of drugs in certain circumstances. Homoeopathy is more popular in continental Europe and the USA than in the U.K. As C.E. Wheeler in his book The Case for Homoeopathy has said, the medical pro....
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....sed by them in the manufacture of Arnica hair oil, are nothing but medicament and their references are found in the respective books and in the Homoeopathic Pharmacopia of India. It is their contention that these ingredients are manufactured under the Drug Licence issued by the Drug Controller and it is a product which has been mixed together for therapeutic and prophylactic use and they satisfy with the definition of medicaments. On a careful consideration and examination of the materials produced and referred to above, we notice that the ingredients utilised in the manufacture of Arnica Hair Oil are exclusively natural substances and their reference has been found in Homoeopathic Pharmacopia of India. The manufacturers have obtained drug licence and the use of the Hair oil, as a medicament, has been recommended by the Homeopaths. The appellants have shown that the ingredients are homoeopathic in nature and having therapeutic and prophylactic. Therefore, their contention cannot be rejected in the light of the evidence produced. In the case of B.P.L. Pharmaceuticals Ltd. the question of classification of "Selsun", an anti-dandruff preparation containing 2.5% selenium sulfide wit....
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....d, it is intended to cure certain disease as mentioned. The item included for the purpose of classification was "Selsun shampoo". In the present case, we are concerned with Arnica Hair Oil, which is claimed to be medicament in terms of the ingredients having necessary antiseptic, antiphlogistic action for dermatological diseases. It is also used for treatment of baldness and acts as an anti-dandruff agent and as cooling agent. In view of each of the ingredients having one or the other therapeutic or prophylectic functions in terms of homoeopathic science, therefore, it has to be held that the Arnica Hair Oil is not a cosmetic preparation or for use on hair under sub-heading 3505.90 of the Central Excise Tariff, as they are not intended for cleansing, beautifying, promoting attractiveness or altering appearance in terms of the Hon'ble Supreme Court judgment in the case of B.P.L. Pharmaceuticals Ltd. but they are meant for specific treatment for dandruff of other skin and hair problem. Therefore, the appellant's contention for treatment as a medicament having homoeopathic ingredients and considered as homoeopathic medicine is required to be accepted for classification under TI 14E of....
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....me Court is clearly distinguishable. We also notice that even the lower authorities have not examined the ingredients of Arnica Shampoo to reject their claim. Therefore, the aspect pertaining to classification of "Arnica Shampoo" is required to be remanded to the original authorities for de novo consideration. The appellants shall disclose the evidence including the details of its preparation and other technical details to support their claim. The authorities shall redetermine the question of classification and also the aspect pertaining to demands on this item being time barred. The present findings pertains to only "Arnica Hair Oil". 15. In view of the classification having been held in their favour, the question of clubbing of the clearances of three units does not arise. However, we have examined the issue also. It has been held time and again by the Tribunal that there has to be financial flow back or the units should be dummy ones. We do not notice such a situation in the present case. All these three units are admittedly owned by different persons and the manufacturer of the items are on the basis of principal to principal and hence the question of clubbing the clear....
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....ings and the Chapter Notes of the rival Chapters which we are concerned. Thus in order to classify the goods in question under Chapter Heading:3003.20, it is necessary inter alia to show and see that it is 'a medicament used in Homoeopathic System' whereas for classification under 30.05, it must be 'a preparation for use on the hair' and therefore, in cases where a preparation or the product in question has both prophylactic or therapeutic properties and is also (simultaneously) a preparation for use on the hair, merely showing that it has some prophylactic or therapeutic properties and is being also prescribed by some doctors or that it was a preparation for use of the hair because this by itself does not resolve the problem. Whether the product in question is being sold from this shop or that shop also does not matter because these days, many shops sell both cosmetics as well as medicaments. There are many hair oils which are preparations made according to the ayurvedic formula, which are available on all sorts of shops including those dealing with cosmetics and at the same time they are also being prescribed by Vaidyas. The same is true of homoeopathic as well as other modern pr....
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....mitted to the President for reference to a Third Member on the following point : "Whether in view of the findings of the Hon'ble Member Judicial the impugned orders are required to be set aside and the appeals are required to be allowed in so far as "Arnica Hair Oil" are concerned and the matter is required to be remanded in respect of "Arnica Shampoo" or the entire case as regards both the items is required to be remanded in view of the observations and findings of the Vice President." Sd/- (S.L. Peeran) Member (J) Sd/- (S.K. Bhatnagar) Vice President 19. [Order per : P.G. Chacko, Member (J)]. - Third Member on Reference, agreering with Member (J)] - I have carefully examined the records. The dispute in appeal No. E/379/91-C is one of classification simpliciter. The appellants wanted to classify their product "Arnica Hair Oil" as Homoeopathic medicament under Chapter Sub-Heading 3003.30 of the Schedule to the Central Excise Tariff Act, while the department required it to be classified as "other preparations for use on the hair" under Chapter Sub-Heading 3305.90 of the said Schedule. The Assistant Collector adjudicated the dispute in favour of the asses....
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....phylatic properties mentioned in the Homeopathic Pharmacopoeia of India; that on account of such properties the item is used for treatment/prevention of various skin diseases; that the item has been manufactured under Drug Licence; that it is marketed through medical shops only and that the hair oil is a "medicament" in terms of Chapter Note (2) to Chapter 30 of the Central Excise Tariff. Technical literature and certificates from Homoeopathic experts are available on record to substantiate the facts pleaded by the appellants. In their memo of appeal, the appellants have mentioned the names, uses etc. of the various ingredients of the hair oil. On a careful examination of all these materials on record (the authenticity of which is not challenged) I am inclined to accept the product viz. Arnica Hair Oil as a homeopathic medicament classifiable under Tariff Item 14F/Chapter Sub-Heading 3003.30. I have also found that the product did not satisfy the requirements of Chapter Note (2) to Chapter 33 of the Central Excise Tariff. Learned SDR's arguments in this connection are not supported by the facts and evidence on record. He has not been able to disprove the appellants' case that thera....
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....or of the manufacturers having held out the product in market as "perfumed" hair oil. In CCE v. Kesavardhini Products [1996 (81) E.L.T. 527 (T)] cited by learned SDR, the earlier decision in Veto Company was followed. My observations on the applicability of the ratio of the decision in Veto Company to the instant case would equally apply to Kesavardhini Products. 26. Learned SDR has submitted that Arnica Hair Oil is a perfumed hair oil and must, therefore, belong to Chapter Heading 33.05 in terms of Chapter Note (6) to Chapter 33 of the Tariff. Learned Advocate has, in his rejoinder, countered this contention by submitting that the Department has not shown that any perfume was deliberately added to the product to make it a "perfumed" hair oil. He has also drawn support from the Bombay High Court's decision in Ramtirth Yogashram v. State of Maharashtra [1968 (22) STC 76] wherein it was observed that the expression perfumed oil must connote an oil to which perfume had been added by way of a positive and deliberate act and not as meaning an article which just happened to have a perfume. I have already noted that the respondents have not proved any deliberate act (on the part o....