AI Drafter 
TaxTMI 
TaxTMI 
2015 (8) TMI 1012
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....le depends on the said classification. 2) Chapter 33 under which the Revenue wants to cover VHG pertains to 'essential oils and resinoids; perfumery, cosmetic or toilet preparations' and, therefore, 40% duty is paid. Entry 33.04 thereof, which is specifically sought to be attracted by the Revenue, reads as under: "33.04 Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen and suntan preparations; manicure or pedicure preparations" 3) If a particular product is to be covered under the aforesaid Entry, the basic trait of the said product is that it is beauty or make-up preparations and preparations for the care of the skin. Some products like sunscreen and suntan preparations; manicure or pedicure preparations are specifically included, meaning thereby they are to be treated as beauty or make-up preparations or preparations for care of the skin. At the same time, medicaments are specifically excluded therefrom. We would also like to point out here certain chapter notes of Chapter 30 which are pressed into service by the Revenue in order to claim that VHG is nothing but preparation for the care of....
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....ot bearing a brand name. 3003.39 - Other" 5) The position which is taken by the assessee is that VHG is patent or proprietary medicament and is, therefore, classifiable under Chapter Heading 3003.10 and only 15% duty is paid. There are certain chapter notes attached to Chapter 30 as well and first two notes are relevant for our purposes which we reproduce below: "1. This Chapter does not cover: (a) Foods or beverages (such as, dietetic, diabetic or fortified foods, food supplements, tonic beverages and mineral waters) (Section 1V); (b) Plasters specially calcined or finely ground for use in dentistry (Chapter 25); (c) Aqueous distillates or aqueous solutions of essential oils, suitable for medicinal uses (Chapter 33); (d) Preparations of Chapter 33 even if they have therapeutic or prophylactic properties; (e) Soap or other products of Chapter 34 containing added medicaments; (f) Preparations with a basis of plaster for use in dentistry (Chapter 34); (g) Blood albumin not prepared for therapeutic or for prophylactic uses (Chapter 35). 2. For the purposes of heading No. 30.03- (i) &#....
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....The obvious purpose is that if it is a medicament, it has to fall under Chapter 30. Because of this specific exclusion of medicament from Chapter Heading 3304.00, necessary consequence is that if the Revenue wants to cover it under 3304.00, the onus is on the Revenue to show that the particular product is not a medicament. At the same time, reading of this Entry along with chapter notes 2 and 5, already extracted above, would indicate that if pharmaceutical or antiseptic constituents contained in the product are only subsidiary in nature, or having subsidiary curative or prophylactic value, then that would not make the product as medicament. Again, certain preparation for skin like preparations for use in manicure or chiropody and barrier creams which give protection against skin irritants are still to be treated as preparations for care of the skin and would not be treated as curing the skin diseases. That is the clear intent of chapter note 5 of Chapter 33. This is made further clear with the heading of chapter note no. 1(d) of Chapter 30 which specifically excludes preparation of Chapter 33 even if they have therapeutic or prophylactic properties. However, a conjoint reading of ....
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....ions, 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 issued by the Food and Drug Administration. The assessee, thus, wanted the product to be classified under heading 3003.19 as Pharmaceutical Product under Chapter 30. However, the Revenue took the plea that it would fall under sub-heading 3305.90 i.e. under Chapter 33. Thus, the respective contentions of the Department as well as the assessee were almost on the same lines as in the present case, namely, whether the said product was Pharmaceutical product or it was a cosmetic/toiletry preparation. The only difference was of sub-headings under those Chapters. This Court went into the essential characteristics of the product and found it that dominant use of the product was medicinal, as it was sold only on medical prescription as a medicine for treatment of disease known as Seborrhoeic Dermatitis, co....
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....inguish 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 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." 27. We cannot ignore the above broad classification while considering the character of the product in question. Certainly, the product in question is not intended for cleansing, beautifying, promoting attractiveness or altering appearance. On the other hand it is intended to cure certain diseases as mentioned supra. xx xx xx 35. The learned counsel also placed reliance on a number of judgments to support his argument that in common and commercial parl....
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....s a drug or medicament and not as a cosmetic. From 1970 till 1985, prickly heat powders have been classified and assessed under Tariff Item 14E of the old tariff as 'Patent or Proprietary Medicines'. It was also contended that prickly heat power not only relieves prickly heat faster but actually helps prevent it. When a person perspires profusely the sweat stays on the skin too long and the person becomes a potential victim of prickly heat. This specially formulated prickly heat powder absorbs the sweat better and faster and prevents the build up of bacteria on the skin. Therefore, the person avoids getting a red rash, itching and burning. No person who requires ordinary talk for the purposes of beautifying her or himself would use the said products which contain the aforesaid active therapeutic ingredients. These products are known as, as already mentioned above, prickly heat/ Milaria Rubra. The sale of these products is much higher in hot summer months when this disease frequently erupts. 10) Accepting the aforesaid case set up by the assessee therein, the Court held that the said prickly heat power was a medicament for treatment of red rashes, itching and burning and ....
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....ommon parlance" or in "commercial world" or in "trade circle" or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention, when the statute was enacted (see Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan, (1980) 4 SCC 71). 34. One of the essential factors for determining whether a product falls within Chapter 30 or not is whether the product is understood as a pharmaceutical product in common parlance (see CCE v. Shree Baidyanath Ayurved Bhavan Ltd., (2009) 12 SCC 419, and CCE v. Ishaan Research Lab (P) Ltd., (2008) 13 SCC 349). Further the quantity of medicament used in a particular product will also not be a relevant factor for, normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. [Puma Ayurvedic Herbal (P) Ltd. v. CCE, (2006) 3 SCC 266, State of Goa v. Colfax Laboratories Ltd., (2004) 9 SCC 83, and B.P.L. Pharmaceuticals Ltd. v. CCE, 1995 Supp (3) SCC 1]. 35. However, there cannot be a static parameter for the correct classification of a commodity. This Cour....
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....y stated, the combined factors that require to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the user to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the surgeons for the purpose of cleaning or degerming their hands and scrubbing the surface of the skin of the patient before that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under Chapter Sub-Heading 3003 which is a specific entry and not under Chapter Sub-Heading 3402.90 which is a residuary entry." 12) It is required to be noted that in para 36 quoted above, the Court also laid importance to the functional utility and predominant or primary usage of the commodity that is to be taken into account while classifying the product. Another important aspect which needs to be noted is that the combined effect of the aforesaid factors is to be taken into consideration, wh....
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.... kept in mind while determining the classification. These principles are formulated in the following manner: "22. Thus, the following guiding principles emerge from the above discussion: 22.1. Firstly, when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive. What is of importance is the curative attributes of such ingredients that render the product a medicament and not a cosmetic. 22.2. Secondly, though a product is sold without a prescription of a medical practitioner, it does not lead to the immediate conclusion that all products that are sold over/across the counter are cosmetics. There are several products that are sold over the counter and are yet, medicaments. 22.3. Thirdly, prior to adjudicating upon whether a product is a medicament or not, the courts have to see what the people who actually use the product understand the product to be. If a product's primary function is "care" and not "cure", it is not a medicament. Cosmetic products are used in enhancing or improving a person's appearance or beauty, whereas med....