TaxTMI 
TaxTMI 
2019 (12) TMI 522
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt, 'the Act') along with interest for the demand confirmed under Section 11AA of the Act. The adjudicating authority has also imposed penalty of Rs. 5,48,61,846/- on the Appellant under the provisions of Section 11AC of the Act read with Rule 25 of Central Excise Rules, 2002 (for short, 'the Rules'). Being aggrieved, the Appellant has filed appeal before this Tribunal. 2. The Excise Appeal No. 51976 of 2018 was decided by this Tribunal vide Final Order No. 50595/2019 dated 30.4.2019 dismissing the appeal filed by the Appellant and sustaining the order of the adjudicating authority. However, the Appeal No. 52657 of 2018 remain undecided and was relisted for fresh hearing. The Appellant filed ROM application against the order of this Tribunal dated 30.4.2019, on the ground that the Tribunal has committed error apparent, while passing the said order to the effect that various case laws, which were cited by the appellant, were not dealt with and the order was passed ignoring those decisions. The said ROM application was allowed vide order No. 50470/2019 dated 21.6.2019 and the Final Order dated 30.4.2019 was ordered to be recalled and further ordered to be heard along with pending Ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....UR - 2005 (183) ELT 432 (Tri.-Del.) as Tribunal has observed that products are not medicine as package carried phrase "not for medical use". Para 6.8 The Tribunal had in addition to this observation, have examined in detail the report of CRCL and authoritative books on Ayurveda to arrive that conclusion that the products in dispute are not medicine. The Commissioner has ignored these observations of Tribunal and relied only a part observation. Further, there is no such remark on the package of the appellant. 3. Relied on the chapter note to chapter 30 which states that chapter 30 does not apply to food preparation containing only nutritional substances. Para 6.10 & 6.11 Appellant has already substantiated in para 1 and 4 that products in dispute have prophylactic value. They are not only nutritional supplements. 4. Stated that due to following packing the product is nutritional supplement: (a)No warning or precautions message. (b)Stated as Nutritional Supplement. (c)No mention that the product can be used for prevention or treatment of any disease. Para 6.12 and 6.13 (a)Not-mention of warning message is not determinative for classification of the products. Most....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmissioner of Central Excise, Kanpur - 2002 (139) ELT 633 (Tri.-Del.). 4.4 Further, it was pleaded that the test report, that has been relied upon by the Department, can only be a suggestion to classify the product in category other than medicament as the chemical examiner is not competent to decide the classification of the product but is only required to give the chemical composition of the samples forwarded for test to CRCL for opinion. The classification of the product is required to be decided on the basis of 'common parlance test' as has been held in the various case laws mentioned hereinabove. 4.5 It was also submitted that the product manufactured by the Appellant cannot be considered as nutritional supplement merely on the basis of license obtained from the Department of Food and Safety. For the classification manufacture of product under CETA drug licence is not a pre-requisite, more so to classify the product under Chapter 30. The reliance was placed in this regard in the following case laws of: (i) Dabur (India) Ltd. Vs. Commissioner of Central Excise, JSR - 2002 (145) ELT 441 (Tri.-Kolkata); (ii) DXN Manufacturing (India) Pvt. Ltd. Vs. CCE & ST, Pondicherry - 201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sted by the Department and the test report of CRCL is as under : "Test Memo No. 02/2016 Report:- On opening the sample packet two samples were found. Out of these are sample is packed in glass bottle kept inside paper cartoon (unit packing) described as "beneficial R Liquid" and registered here as CL-159 (DGCEI)/15.09.16 and second sample is packed in caps kept inside blister strip packing (2 Nos.) bearing described as "DSN capsules" & register here CL-160 (DGCEI)/15.09.16. 1. CL-159(DGCEI)/15.09.16 [Described as Beneficial Liquid] The sample is in the form of light yellow colour liquid packed in a Unit packing (glass bottle). It answers positive test for Vitamin A, Vitamin B1, Vitamin B2, Vitamin B6, Vitamin B12 folic acid, zinc and manganese. It is preparation composed vitamins and minerals needed by the body to remain healthy. It is other than medicament. 2. CL-160 (DGCEI)/15.09.16 [Described as DSN capsules] The sample in the form of light yellow colour powder filled in capsules kept in blister strip packing it answers for Vitamin B1, Vitamin B2, Vitamin B6, Vitamin B12, Vitamin C, Zinc and Folic acid. It is a preparation composed vitamins and minerals needed by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Excise Tariff. It is the contention of the Appellant that their product is covered under the definition of medicament on the ground that these products are used for cure/treatment of diseases and being regularly prescribed by the medical practitioners. The Appellant has also produced the affidavit on this behalf, from the various medical practitioners along with the prescriptions. The prescription indicates that two products in question, namely DSN capsules and Liquid Beneficiale, are being prescribed by the medical practitioners in treatment of diseases to booster immune system. The products are prescribed by the doctors for removal of condition of weakness and also to boost immunity of the patients along with other medicines. The contention of the Department that these products are dietary supplement and not the medicine is not correct in view of that the prescription of these product by the doctors/medical practitioner. In this regard, we find that the learned Advocate has referred the decision of CCE Vs. Wockhardt Life Sciences Ltd. - 2012 (277) ELT 299 (SC). The perusal of the judgement makes it abundantly clear that even the product which have either therapeutic or prophyl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsters New 20th Century Dictionary. In our view, reference to all other dictionary meanings may not be necessary. We intend to confine ourselves only to the aforesaid three dictionaries. In that the meaning of the expression "therapeutic" and "prophylactic" is stated as under: "To prevent, to guard against it, before, in medicine, preventive protecting against disease."; "Guarding against disease, a preventive of disease; a condom; preventive treatment against disease." and; "Serving to cure or heal, Curative concerned in discovering and applying remedies for disease." 30. There is no fixed test for classification of a taxable commodity. This us probably the reason why the 'common parlance test' or the commercial usage test' are the most common [see A. Nagaraju Bors. v. State of A.P., 1994 Supp (3) SCC 122 = 1994 (72) E.L.T. 801 (S.C.)]. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the bases of the tangible material or evidence to determine how such as article in understood in 'common 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he consideration of this Court was whether the product 'Lip salve' is classifiable as a medicament under Chapter Sub-Heading 30.03 or as preparation for care of skin' under Chapter Sub-heading 33.04. The stand of the assessee was that the product in question was supplied exclusively to the military for use while serving at high altitude. They claimed, by relying on various literatures based on the composition of the product that it was used as "medicament" and therefore, sought classification under Chapter Sub-Heading 30.03. The stand of the revenue was that it was used as "a preparation for care of skin" to protect the skin on the lips against damage by natural factors. This Court after considering the various medical and pharmaceutical literatures held that the Entries are not to be understood in their scientific or technical sense, but by their popular meaning for the purpose of interpretation. This court had observed that for the purpose of classification, the commercial parlance theory has to be applied and the chemical ingredients of the product are not decisive. This Court after considering the nature of the product and the use to which it is put had observed that the 'Lip s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inal preparation" due to the high percentage of alcohol content (above 60%). The revenue contended that the use of after shave lotion was in the form of "toilet preparations" and not "medicinal preparation". The revenue also pointed that the assessee had obtained the license for manufacture of ASL as a cosmetic product and not as a medicinal product. This Court while rejecting the assessee's contention held that the high composition of alcohol in the product is not a relevant factor for ASL to be considered a medicament. This Court further observed that in order to come within the ambit of "medicinal preparations", the article must be used for the purpose of either curing or mitigating the disease after its symptoms have appeared or in prevention of any disease and therefore, on a plain interpretation ASL cannot be considered to be within the ambit of "medicinal preparation". Thus, in that case, this Court did not rely on the composition of the product but relied on the principal use and the common understanding of the product in the market as the test for classification, in other words, the classification of commodity does not depend on the incidental character that the commodity ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eology, that the product is an insecticide and is classifiable under Chapter Sub-heading 3808.10 whereas the Department contended that the product is classifiable as medicament under Chapter Sub-heading 3003.10. This Court after referring to Chapter Note 1(d) of Chapter 38 which excludes "medicaments under Heading 30.03 or 30.04" from its ambit and considering the definition of "medicament' in terms of Chapter Heading 2(i) of Chapter 30, had observed that in normal parlance, a product may be considered to be an insecticide but if that product has any therapeutic and prophylactic use then for purposes of classification that product would fall under Chapter 30 instead of Chapter 38. This Court observed that Licel cures the infection or infestation of lice in human hair which is a disease; therefore, it is thus therapeutic. This Court further observed that Licel is also prophylactic inasmuch as it prevents disease which will follow from infestation of lice. This Court referring to its earlier decision in ICPA Health Products (P) Ltd. v. C.C.E. (supra) has concluded that this product for its therapeutic and prophylactic usages would be classified as medicament under Chapter Sub-heading....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t use of medicinal element in a product was minimal does not detract from it being classified as a medicament. This Court concluded that the products in dispute are medicinal products which are intended to treat certain medical conditions of the human body and improvement in appearance is subsidiary, therefore, are liable to be classified as medicaments falling under Chapter 30. This case would not assist revenue as this Court had applied a primary user test of the products in question which has certain medicinal ingredient. 43. In Commissioner of Central Excise, Delhi v. Ishaan Research Lab (P) Ltd. (supra), the issue before this Court was whether the products manufactured by the assessee would fall under Sub-Heading 3003.30 as medicament or under Chapter 33 as cosmetics. The assessee contended that each of the products was having ayurvedic medicinal herbs in it and even the labels on these products claim specifically the medicinal properties of the product. The assessee further urged that even if the user of product leads to improvement in appearance of a person that by itself cannot bring it into the category of "cosmetics" if otherwise the product is having a medicinal value ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use by medical practitioners. This gives the pharmacology of the ingredients in the product; under the heading, "Indications & usage", it is stated that Moisturex cream is indicated in dryness of skin associated with winter, fissure feet, cracked nipples, in the treatment of pathological dry skin conditions like ichthyosis and it is also indicated in dryness associated with leprosy and clofazimine. It contain a precaution and warning against application in large quantities as it contains keratolytic moisturing agent that have potential to cause irritation and stinging sensation; it is not to be used near eyes and mucous membranes. The dosage and administration is indicated that thin layer of the cream should be applied to the affected area (emphasis supplied) once or twice daily and in case of severe dry skin conditions three times application may be required." (Emphasis supplied) It is brought to our notice that the said decision has attained finality qua the assessee therein since the Special Leave Petition filed by the Central Excise was dismissed. 12. Thus, if a product comprises of two or more constituents which have been mixed or compounded together for therapeutic or pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion, does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumarn that merely because the percentage of medicament in a product is less, does also ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda text books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it. ..." (Emphasis supplied) 19. Thus, the following guiding principles emerge from the above discussion. 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 ingredien....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g agent which helps easy penetration of topically applied cream into the skin and it hydrates the skin. The therapeutic properties of urea and lactic acid have been useful in treatment of disease such as ichthyosis and dry skin condition. Similar affidavits have been filed from two other Doctors who also say that the product is not cosmetic. The affidavits have to be given due consideration as they are from medical practitioners in dermatology and certain authorities have also be cited for the averments made therein. The Supreme Court in the BPL case (supra) has also observed in that case that affidavits cannot be discarded by saying they are identically worded. It cannot be said in this case that all the 3 Affidavits are identically worded. The affidavits serve the purpose of showing that the product has properties which would differentiate it from ordinary moisturising cream. The Commissioner (Appeals) has referred to Hawley's Condensed Chemical Dictionary' to say that urea finds other uses including in cosmetics. He has also found from a paper furnished by the appellants, `Uses of Urea in Cosmetology' as indicating use of urea in cosmetic preparation like moisturising cream. How....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3(c) of Interpretation Rules of the Tariff, does not arise. In the result, it is held that it will be appropriate to classify product moisturex under sub-heading 3003.10 of CETA, 1985. The impugned order is set aside, and the appeal is allowed." 14. We also find that the classification has to be done on the basis of 'common parlance test', that is, as to how the product is understood by the user/customer or medical practitioner. In the case at hand, the produce under question as has been referred above is being regularly prescribed by the medical practitioner for cure of ailment even though the products are available over counter. This issue has been decided in a number of case such as: (a) Honda Siel Power Products Ltd. Vs. Commissioner of Income Tax, Delhi - 2008 (9)STR 117 (SC); (b) Commissioner of Service Tax, Bangalore Vs. Yokogawa Blue Star Ltd. - 2010 (19) STR 482 (Kar); (c) Abhay Industries Vs. Union of India - 2011 (269) ELT 330 (Bom.); (d) Schenck Rotech India Ltd. Vs. Commissioner of Cus., C. Ex. & S.T. Noida- 2017 (3) GSTL 425 (Tri.-All.); (e) GTL Infrastructure Ltd. Vs. Commissioner of Central Excise, Mumbai - 2016 (45) STR 389 (Tri.-Mumbai). 15. The releva....