TaxTMI 
TaxTMI 
2010 (10) TMI 233
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.... 4. Learned counsel for the parties have advanced their submissions by taking Revision No. 99 of 2010 as the leading case. I, therefore, state in brief the facts of the aforesaid case only which may be sufficient for understanding the background leading to the passing of the impugned order in connection with all items involved. 5. In the above revision the tax liability of the assessee-dealer in respect of only two items, namely, Himani Boroplus Antiseptic Cream and Himani Gold Turmeric Cream for the assessment year 1994-95 is involved. The department by the assessment order dated 28-12-1995 subjected the above items to tax at the rate of 7.5% by classifying them as Ayurvedic medicament. Later on, proceedings under Section 21 of the Act were initiated by issuance of a show cause notice dated 6-2-1998 in view of a decision of this Court in the case of Balaji Agency v. Commissioner of Sales Tax, 1994 UPTC 184 and a reassessment order was passed on 19/21-9-1998 classifying the above two items as items of cosmetic taxable at the rate of 15%. The appeal of the assessee before the Deputy Commissioner was dismissed on 31-3-1999. However, further appeal to the tribunal was ....
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....osmetics Act, 1940 as under : 'Cosmetic' means any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic. 13. Its dictionary meaning is, substances used for improving beauty especially that of the complexion or for beautifying skin and hair. 14. The Drugs and Cosmetics Act, 1940 also defines 'drug' under Section 3(b) of the Act to include : "(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes; (ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human being or animals, as ....
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....mes it may be used for medical purposes. A particular Ayurvedic product may be used for the treatment of baldness which is a hair related disease. The use of such Ayurvedic product may not only cure baldness to some extent but may enhance the general appearance of the person using it as with the cure of the disease hairs may grow. 20. In such cases and circumstances it becomes difficult to classify the product either strictly as medicament or cosmetics. In such a situation the primary role and the purpose of use of the product becomes the determining factor for its classification. 21. Law is well settled through various pronouncements of the Supreme Court that the burden/onus probondi to prove the classification of a particular product is upon the revenue. 22. In Union of India and Others v. Garware Nylons Ltd. etc. AIR 1996 Supreme Court 3509) = 1996 (87) E.L.T. 12 (S.C.) it has been held that the burden to prove that a particular item is taxable in the manner claimed is upon the taxing authorities and mere assertion that it falls under a particular clause alone is of no avail. This is particularly necessary when the claim of the assessee is supported by ma....
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.... and the use of ingredients based upon authoritative Ayurvedic text books. 29. In order to determine whether a product is an item of cosmetic or a medicament a twin test as aforesaid had always found favour with the courts. The Apex Court approved the application of the twin test for the first time probably in the case of CCE v. Richardson Hindustan Ltd. (2004) 9 SCC 156 and held that the above two tests to be determinative for classifying the goods for taxation purposes. The above two twin tests, at the cost of repetition are (i) common parlance test i.e. to see and find out how the product in common parlance is understood and accepted; and (ii) whether the ingredients used for making the product find mentioned in the authoritative text books on Aayurved. 30. The aforesaid twin test finds the approval of the Supreme Court in the case of Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise Nagpur 2006 (3) SCC 266 = 2006 (196) E.L.T. 3. 31. The assessee/dealers have adduced enough uncontroverted evidence in the form of affidavits of the following persons : (i) Dr. Hari Shanker Sharma dt 21-7-1996; (ii)  ....
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....e a view that the products in question fail to qualify the twin test for classifying them as medicaments. 37. One of the affidavits of Dr. Hari Shanker Sharma who happen to be in medical profession for the last 45 years on the date of the affidavit i.e. 21-8-1996, clearly states that Himani Boroplus Antiseptic Cream is an Ayurvedic medicine which was prescribed by him to various patients suffering from skin diseases such as minor cuts, burns wounds, chopped skin, scratches etc. and the results were satisfactory and he is regularly prescribing it for cure of skin diseases. To the same effect he has also filed affidavit dated 14-10-1996 in respect of Himani Gold Turmeric Cream. The above affidavits and similar other affidavits of qualified medical practitioners have neither been controverted nor have otherwise been discarded by the tribunal. 38. Besides the above evidence, Drug Licences, authorised texts of Ayurvedic books and labels used on the products were also produced 39. All the aforesaid evidence actually proves that they satisfy the twin test laid down for classifying the goods. The said evidence sufficiently proves that people in general use the above....
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....dicinal preparation or a medicament it is not necessary that the item must be sold under a doctor's prescription and it makes no difference if it is available across the counter in shops. 45. It is common knowledge that paraffin wax is a filler or a vehicle in which Ayurvedic contents are mixed for making a medicine. Therefore, non-mention of paraffin wax in any Ayurvedic text makes no difference and the tribunal manifestly erred in returning a finding that as paraffin wax is not an Ayurvedic material the product made by using it cannot be a medicament. 46. In Union of India and Others v. G.D. Pharmaceuticals Ltd. and Another (2001) 9 SCC 759 Boroline antiseptic cream containing boric acid and zink oxide was held to be a medicament. However, this authority of the Supreme Court has been distinguished by the Tribunal on the ground that Boroline comprises of certain IP (Indian Pharmacopoeia) drugs whereas in the products in question there are no such drugs. The distinction made is not tenable in view of the admitted position that the ingredients used for their preparation have medicinal properties and are contained in the authoritative Ayurvedic texts notwithstanding t....
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.... opposed. Sufficient explanation for the delay in filing the revisions also exists. Therefore, I treat the revision to be within time. 51. Learned Standing Counsel in support of the revisions preferred by the revenue, all of which pertain to classification of Himani Navratan Oil contended that the tribunal has erred in treating the aforesaid product as an Ayurvedic medicine without applying the twin test and despite the fact that it contains 67% liquid paraffin. 52. The submission of learned Standing Counsel is totally misplaced and devoid of any substance. As earlier stated, the burden to prove the classification of any product is upon the revenue. The revenue in connection with Himani Navratan Oil has not produced any evidence to show that it is not an Ayurvedic medicine but an ordinary oil with no medicinal value. On the contrary, again evidence adduced by the assessee-dealers proved that in common parlance people take the above oil for its medicinal value and that it is made out of ingredients mentioned in the authoritative Ayurvedic texts as laid down under the Drugs and Cosmetics Act. Thus, the twin test as laid down in Puma Ayurvedic Herbal (P) Ltd. (supra) s....