TaxTMI 
TaxTMI 
2015 (8) TMI 250
X X X X Extracts X X X X
X X X X Extracts X X X X
....cally 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 that it is simply a shampoo which is to be used for cleaning hair and is nothing but a 'toile....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nazole', 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 nature. On that basis, submission was that presence of 'Ketoconazole' which was hardly 2%....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re 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 System and to secure uniformity in the interpretation and application of the Harmonised System. It was so he....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 out that presence of 2% 'Ketoconazole' in the said shampoo could not be treated as something insignificant. On the contrary, it was the maximum percentage required to treate the dandruff inasmuch as presence of more 'K....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 the treatment should be given to a person suffering from various kinds of dandruffs: "Treatment: -Pityriasis versicolor; once daily for maximum 5 days. -Seborrhoeic dermatitis and pityriasis capitis ; twice weekly for 2 to 4 weeks. Prophylaxis: -Pityriasis versicolor: once daily for a maximum 3 days during a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, 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 accordance with Abbott's specifications, raw materials, packing materials and quality control. It was sold under the private name 'Selsun'. The assessee in that case claimed that this product was used in the therapeutic quantity i.e. 2.5% W/ V which was the only active ingredient and other ingredient merely served the purpose of a bare medium. It was also claimed that the product is manufactured under a drug licence iss....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Act, 1940. On a perusal of the definitions, we can broadly distinguish cosmetic and drug as follows: "A '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." and "A 'drug' includes al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lactic 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 individual would be prepared to say in a social gathering that he or she is using Selsun to get rid of dandruff or other similar diseases whereas nobody would hesitate to state in a similar gathering that he or she is using a particular brand of shampoo for beautifying his or her hair. Thus there are lot of favourable materials to treat the product in question as a medicine rather than cosmetic. In this connection the reliance placed by the learned counsel for the appellants on a decision of this Court reported in case Indian ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsumers. 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 already noted the label here gives warnings. The fact that it is packed in a plastic bottle is a wholly irrelevant criteria." 19) The aforesaid judgment not only provides a complete answer to the issue at hand, it also suitably answers the various arguments of the Revenue and the manner in which those arguments were rebutted by the Court in the said case. The Tribunal has summed up the entire legal proposition in para 5 of its judgment with which we entirely agree. This para reads as under: "5. We have carefully considered the submissions made ....