TaxTMI 
TaxTMI 
2020 (1) TMI 707
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has also prayed that a writ in the nature of mandamus to be issued for classification of the product odomos as medicine under heading no. 3004 of the Customs Tariff Act, 1975. 3. Sri Atul Gupta, learned advocate for the petitioner contends that the product in question odomos is a medicament and has been incorrectly classified as a mosquito repellent. The Appellate Authority misdirected itself in law by overlooking the fact that the product odomos has all characteristics of a medicine and is used as such. He further submits that the chemical composition of the product in question also establishes that the essential character of the product is that of a medicine. 4. Learned advocate for the Revenue on the other hand submits that the product was correctly classified under the appropriate entry / heading by the Authority for Advance Ruling as well as the Appellate Authority under the Act. Learned advocate for the Revenue also pointed out the process of reasoning adopted by the authorities below and the material in the record, to contend that there was no flaw in the decision making process. 5. Heard the learned advocate for the parties. 6. The controversy will be decided by us in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctor borne diseases. Therefore, the market identity in common parlance of the subject goods is as a mosquito repellent and their usefulness in preventing mosquito borne diseases (again derived from their characteristic quality of being a mosquito repellent) is of a subsidiary/supplementary nature." 9. On the foot the aforesaid enquiry, the Appellate Tribunal held as follows: "13.7. ...However, first of all, as stated hereto before, the primary test of classification is that of common parlance, applying which, we unequivocally arrive at the identity of the product as a mosquito repellent." 10. The Appellate Authority while upholding the conclusions of the Authority for Advance Ruling on the chemical composition of the product in question found as under: "13.7. ...We also observe, that the appellants have stated that the active ingredient in their product is NNDB which is an improved version/formula of DEET, the active component of many mosquito repellents. The substance DEET is mentioned in the schedule to the "Insecticides Act, 1968" as an insecticide and by corollary, its improved version, i.e., NNDB would also be an insecticide. In this context, it is pertinent that mosquit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... perception of the product, the former will yield to the latter. The manner in which the consumers use the product and perceive its nature, is a step in furtherance of the enquiry. The object, characteristics and composition of the product are also factored in determining the classification of the product. 17. The narrative will now be reinforced with good authority. 18. The general rules of interpretation of taxing statutes provide the setting for construing the tariff entries and will guide the judgment of this Court. In Oswal Agro Mills Ltd. and others v. Collector of Central Excise and others, reported at 1993 Supp (3) SCC 716, the Hon'ble Supreme Court summarized the canons of interpretation of taxing statutes thus: "4. The provisions of the tariff do not determine the relevant entity of the goods. They deal whether and under what entry, the identified entity attracts duty. The goods are to be identified and then to find the appropriate heading, sub-heading under which the identified goods/products would be classified. To find the appropriate classification description employed in the tariff nomenclature should be appreciated having regard to the terms of the headings ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the scientific and technical meaning of the terms and expressions used. The approach of the consumer or user towards the product, thus, assumes significance. What is important to be seen is how the consumer looks at a product and what is his perception in respect of such product. The user's understanding is a strong factor in determination of classification of the products." 20. The Courts have consistently adopted the "common parlance test" as the most reliable standard for interpreting terms and entries in taxing statutes. This is ofcourse subject to various exceptions where the statutory text is completely contrary to the "common parlance" context. The common parlance test is also considered an extension of the established canons of statutory interpretation of taxing statutes. 21. The common parlance test was summarized and adopted by the Hon'ble Supreme Court in Dunlop India Ltd. v. Union of India and others, reported at (1976) 2 SCC 241, wherein it was observed as under: "29. It is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should commend itself to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... technical term used under a particular entry, then that article cannot be taken away from that entry and placed under the residuary entry on the pretext that the article, even though it comes within the ambit of the technical term used in a particular entry, has acquired some other meaning in market parlance. For example, if a type of explosive (RDX) is known in the market as Kala Sabun by a section of the people who uses these explosives, the manufacturer or importer of these explosives cannot claim that the explosives must be classified as soap and not as explosive." 24. Similarly, the Hon'ble Supreme Court in Shree Baidyanath Ayurved Bhavan Ltd. v. Collector of Central Excise, Nagpur, reported at (1996) 9 SCC 402 applied the common parlance test to classify the product "Dant Lal Manjan", which was in issue. The Hon'ble Supreme Court held that "Dant Lal Manjan" did not qualify as a medicament under the Central Excise Act, by setting forth the following reasons: "3. ... The Tribunal rightly points out that in interpreting statutes like the Excise Act the primary object of which is to raise revenue and for which purpose various products are differently classified, resor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urvedic Herbal (supra) are as under: "2. ... In order to determine whether a product is a cosmetic or a medicament a twin test has found favour with the courts. The test has approval of this Court also vide CCE v. Richardson Hindustan Ltd. [(2004) 9 SCC 156] There is no dispute about this as even the Revenue accepts that the test is determinative for the issue involved. The tests are: I. Whether the item is commonly understood as a medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it will not be an item of common use. A user will use it only for treating a particular ailment and will stop its use after the ailment is cured. The approach of the consumer towards the product is very material. One may buy any of the ordinary soaps available in the market. But if one has a skin problem, he may have to buy a medicated soap. Such a soap will not be an ordinary cosmetic. It will be medicament falling in Chapter 30 of the Tariff Act. II. Are the ingredients used in the product mentioned in the authoritative textbooks on Ayurveda?" ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roborate the fact that the petitioners pitched the product in their sale material and advertisements as a mosquito repellent. Various mosquito repelling qualities are identified as defining characteristics of the subject goods in the market. 31. The product is not normally prescribed as a medicine by medical practitioner as a drug. There is no restriction on sales. The product is sold on demand at the counters in shops and establishments. Sales are not restricted to chemists/druggists alone. 32. The product is a mosquito repellent by virtue of its mosquito repelling characteristics and is so understood in common parlance. The dealers identify and sell the product as a mosquito repellent. Customers purchase the same and use it in the like manner. 33. These facts were conclusively established before the authorities below. In the wake of the said findings the common parlance test or the market identity test for classification of the product was satisfied. The conclusion that the product is a mosquito repellent is a logical sequitor of the above process of reasoning. 34. The said findings of the authorities below are consistent with the law laid down by the Hon'ble Supreme Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., disinfectants and similar products 3808 91 91 - - - Repellents for insects such as flies and - mosquitoes 43. The tariff/heading being favoured by the respondent - assessee is reproduced hereunder: 3004 Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal adminstration systems) or in forms or packings for retail sale 3004 90 99 --- Other 44. The General Rules For Interpretation of Import Tariff which guided the Appellate Authority in determination of the classification of the goods, will also aid this discussion. The relevant rules are set out hereunder for ease of reference :- "3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the petitioner / asseessee on the judgment of this Court rendered in the case of M/s Balsara Hygiene Products Limited reported at 1986 UPTC 367 (All.) is misplaced. The entry which was under consideration before this Court in M/s Balsara Hygiene Products Limited (supra) issued under Section 3 of the Uttar Pradesh Sales Tax, 1948 and read as "Medicines and pharmaceutical preparations including insecticides and pesticides". The said entry included insecticides and pesticides within the broader category of medicines and pharmaceutical preparations. This is in complete contradistinction to the entry under the tariff heading no.3808 which is in issue in this writ petition. The rival classifications of medicament vs mosquito repellent were not examined by this Court in the case of M/s Balsara Hygiene Products Limited (supra) while the same are directly in issue in the instant writ petition. 53. Before proceeding to the last part of the discussion, the scope and limitation of judicial review, which guide the exercise of discretionary jurisdiction under Article 226 of the Constitution of India may be stated. Judicial review is confined to the decision making process and is not dire....