TaxTMI 
TaxTMI 
2015 (8) TMI 250
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....f Act, 1985 on the ground that it is basically a medicine. However, as per the appellant/Revenue, the appropriate classification of this product is under CSH 3305.99 as it perceives the product as 'preparation for use on on hair'. 2) Chapter 30 under which CSH 3003.10 falls deals with Pharmaceuticals products and the aforesaid entry thereof reads as under: "Patent or proprietary medicaments, other than those medicaments which are exclusively Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemic." On the other hand, Chapter 33 deals with the products which fall under the nomenclature 'Essential Oils and Resinoids ; Perfumery, Cosmetic or Toilet Preparation'. The entry CSH 3305.99 thereof is as under: "Preparations for use on the hair -Perfumed hair oils - Other : --Hair fixer --Other" 3) It becomes clear from the reading of the aforesaid two entries that the respondent claims that the product in question belongs to the specie of Pharmaceutical products i.e. medicinal product and is covered by the expression 'patent or proprietary medicaments'. On the other hand, the case of the Revenue is tha....
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....phylactic properties imparted to it with the presence of an anti-fungal agent known as 'Ketoconazole', this would not change the basic character of the product viz. shampoo, which is meant for the use of cleaning hair. It was argued that such a classification was in conformity with Chapter Note (6) to Chapter 33 which specified 'shampoos' whether or not containing soap or organic surface active agent. He further submitted that as per the packings, labels, leaflet literature, it was apparent that the product in question was held out commercially as having subsidiary curative or prophylactic value with main purpose and the main purpose of the produce was cleaning of scalp and hair. Therefore, Chapter Note (2) of Chapter 33 also got attracted as per which how the product is explained and marketed by the manufacturer itself becomes the determining factor. It was also submitted that HSC of Chapter 33 also includes not only shampoos containing soap and OSAC, but 'other shampoos' as well which would imply that those products which are essentially shampoos would still be treated as shampoos even if the subsidiary benefits of using such a shampoo would be curative in....
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....hose portions of the order of the Commissioner (Appeals) where the aforesaid arguments of the respondent were discussed and discarded. He pleaded that what was to be seen was the pre-dominant use of the product in question; that is to say whether the product 'Nizral Shampoo' was primarily used as a shampoo or as a medicinal product and argued that the dominant purpose of the product was to use it as a shampoo with ancillary/added advantage being prevention of scalp related infection i.e. dandruff. 7) To buttress the aforesaid submissions, Mr. Panda took the aid of certain judgments of this Court. First judgment on which he relied is in the case of Collector of Central Excise, Shillong v. Wood Crafts Products Ltd. (1995) 3 SCC 454, wherein this Court emphasized that the criteria/classification laid down by Harmonised System Committee (HSC), established under Article 6 of the International Convention on Harmonised System, is to be acted upon while deciding the cases of classification inasmuch as it was an expert body which was assigned the main function of preparing explanatory notes, classification opinions or other advice as guides to the interpretation of the Harmonised....
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....ses and Salt Act, 1944. 4. The main features of the Bill are as follows: (i) The tariff included in the Schedule to the Bill has been made more detailed and comprehensive, thus obviating the need for having a residuary tariff Item. Goods of the same class have been grouped together to enable parity in treatment. xx xx xx 5. The Bill seeks to achieve the above objects. (emphasis supplied) 12. It is significant, as expressly stated, in the Statement of Objects and Reasons, that the Central excise tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to "reduce disputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged basis of the structure of Central excise tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the specific p....
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....elow: (i) The medicinal properties of the product were adequately emphasized and the product was sold by the assessee on that basis in the market. (ii) There was a warning to the patients about the adverse reaction of the use of this shampoo, if used for a long period. (iii) The product was essentially described as 'medicine' only and not as a shampoo meant for cleaning the hair. (iv) The literature along with the product sold specifically stated the diseases which could be cured by the use of this shampoo. (v) Limited period use of the product was suggested, unlike a normal shampoo which could be used regularly for infinite period. 11) Mr. Bagaria argued that matter needed to be examined keeping in view the aforesaid essential attributes/characteristics of the product and in this context, the fact that the product was held out by the respondent to the public at large as medicine; availability of the said product with the Chemists; sale of the product on the prescription of a Doctor; assume much relevancy in treating the product as medicament having therapeutic value and not as ordinary shampoo. 12) Mr. Bagaria also pointed....
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....iasis capitis (dandruff). Pharmacokinetics Percutaneous absorption of Ketoconazole shampoo is negligible since blood levels cannot be detected, even after chronic use. Systematic effects, therefore, are not expected. Indications Treatment and prophylaxis of infections in which the yeast pityrosporum is involved, such as Pityriasis versicolor (localized), seborrhoeic dermatitis and pityriasis capitis (dandruff). Contra-indications Known hypersensitivity to Ketoconazole or the excipient." The manufacturer has given clear warning and precautions for the use of this product which are follows: "Warnings and Precautions To prevent a rebound effect after stopping a prolonged treatment with topical corticosteroid it is recommended to continue applying the topical corticosteroid together with Nizral Shampoo 2% and to subsequently and gradually withdraw the steroid therapy over a period of 2-3 weeks. Seborrhoeic dermatitis and dandruff are often associated with increased hair shedding, and this has also been reported although rarely, with the use of Nizral Shampoo 2%." It is further mentioned as to how ....
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....t dandruff is a disorder which affects the hairy scalp. It is generally triggered by a single celled organism which is kind of fungus, with scientific name 'Pityrosporum Ovale'. For treatment of this disease, Nizral Shampoo 2% (i.e. shampoo containing 2% 'Ketoconazole') is shown as 'a new medicine' use whereof cures clears a dandruff. It is suggested that it should be used once a week and on other days, normal shampoos may be used which clearly shows that 'Nizral Shampoo' is to be used like a medicine, unlike other normal Shampoos. 17) We also find that in order to show that the product was used only as a medicament for curing dandruff and not for using the same for the purpose of cleaning hair, the assessee filed affidavits of various Doctors. 18) Having regard to the aforesaid material on record, we find that the case is directly covered by the ratio of this Court's judgment in B.P.L. Pharmaceuticals Ltd. (supra). That was a case where the assessee was engaged in manufacture of Selenium Sulfide Lotion which contained 2.5% selenium sulfide W/V. The assessee was manufacturing this product under a loan licence from Abbott Laboratories in acc....
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....would not fall under Chapter 30. However, he fairly admitted that 'medicaments' are those that have therapeutic or prophylactic uses. Nevertheless those medicaments, if they are classifiable under Chapter 33 or Chapter 34 will not fall under Chapter 30, according to him, if they are more specifically preparations falling under Chapter 33 or Chapter 34. In other words, he wants to equate the product in question to 'shampoo' enumerated under Heading No. 33.05. He also invited our attention to the fact that the appellants before the coming into force of the new Tariff Act described the product as shampoo and they have omitted the word 'shampoo' deliberately only to claim that the product would fall under Chapter 30. 25. We do not think that we can accept all the contentions of the learned counsel for the respondents except certain obvious admitted positions. The submission that the product in question must be equated to shampoo falling under Chapter 33 is not at all correct. 26. It is true that the learned counsel for the appellants have placed reliance on the definition of the words "cosmetic and drug" as defined in the Drugs and Cosmetics Ac....
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....ld be suitable for use as goods under Headings Nos. 33.03 to 33.08 and they must be put in packing as labels, literature and other indications showing that they are for use as cosmetic or toilet preparation. Contrary to the above in the present case none of the requirements are fulfilled. Therefore, Note 2 to Chapter 33 is not attracted. Again it is without substance the reason given by the authorities that the product contains 2.5% w/v of Selenium Sulfide which is only of a subsidiary curative or prophylactic value. The position is that therapeutic quantity permitted as per technical references including US Pharmacopoeia is 2.5%. Anything in excess is likely to harm or result in adverse effect. Once the therapeutic quantity of the ingredient used, is accepted, thereafter it is not possible to hold that the constituent is subsidiary. The important factor is that this constituent (Selenium Sulfide) is the main ingredient and is the only active ingredient. xx xx xx 33. The labels which give the warning, precaution and directions for use do make a difference from that of ordinary shampoo which will not contain such warning or precautions for use. Further no individua....
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.... by the Excise authorities and in the absence of any new material on the side of the respondents there is no difficulty in accepting this contention without referring to decision cited by the counsel for the appellants. 36. Yet another reason given by the CEGAT for not accepting the case of the appellants was that the product is sold with a pleasant odour and, therefore, it must be treated as a cosmetic. Selenium Sulfide has an unpleasant odour and to get rid of it insignificant amount of perfume is used and make it acceptable to the consumers. A medicine, for example, sugar-coated pill will nevertheless be medicine notwithstanding the sugar-coating. Likewise the addition of insignificant quantity of perfume to suppress the smell will not take away the character of the product as a drug or medicine. Again one other reason given by the Tribunal is regarding the packing. The Tribunal has held that the product is cosmetic because it is packed in an attractive plastic bottle. This by itself will not change the character, as cosmetic is put up for sale with some indication on the bottle or label that it is to be used as cosmetic or it is held out to be used as a cosmetic. As al....
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....tion should be considered as a medicament under Sub-Heading 3003.19 of CE Act and not as a cosmetics. In the present case also, same evidence is relied which are identical to the facts of B.P.L. Pharmaceuticals Ltd. The item also acts as an anti-dandruff preparation with 2% Ketoconazole. The same is sold on doctor's prescription and by the chemists and understood as a medicine in common parlance as per the enormous literature and affidavit produced. Therefore, there was no necessity for the Commissioner to have distinguished this Apex Court judgment which applies on all fours to the facts of the present case. We also find that the judgment of the Apex Court rendered in the case of CCE v. Vicco Laboratories, 2005 (179) ELT 17 (SC) also applies to the facts of the case. In this case, the Apex Court has clearly noted that the common parlance test should be applied for determining whether a product is classificable as a pharmaceutical product under Chapter 30 of CET Act or as a cosmetics under Chapter 33 ibid as laid down by the Supreme Court in the case of Shree Baidyanath Ayurved Bhavan Ltd., 1996 (83) ELT 492 (SC). As there is enormous evidence produced by the appellants with re....