TaxTMI 
TaxTMI 
2024 (3) TMI 625
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....nless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the SGST Act, 2017. 1. This Appeal has been filed by Indranil Chatterjee (hereinafter referred to as "the Appellant") on 07.09.2023 against Advance Ruling Order No. ZD 1908230145559 (19/WBAAR/2023-24 dated 10.08.2023), pronounced by the West Bengal Authority for Advance Ruling (hereinafter referred to as the WBAAR'). 2. The applicant intends to produce JAC OLIVOL BODY OIL classified as Ayurvedic patent & proprietary Medicine and inter alia the applicant is in advanced stages of entering in to contract manufacturing agreement with the trade name owners of the said product. 3. The Appellant sought an advance ruling under section 97 of the West Bengal Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017, (hereinafter collectively referred to as "the GST Act") seeking as to the classification of the namely JAC OLIVOL BODY OIL which as per the appellant is classifiable under HSN 3004 as a medicament attracting GST at the rate of 12% (6% CGST & 6% WBGST). 4. The WBAAR while g....
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....those using the product." and that of Hon'ble Allahabad High Court in Ponds India Ltd. vs Commissioner of Trade Tax, U. P., Lucknow [(2006) 147 STC 442 (All)] where Hon'ble High Court found following aspects to be relevant for the classification of product under the entry -cosmetic or toilet preparation and medicine:- (i) How the product is known in common parlance and in commercial sense, (ii) The mere fact that the product has some curative effect is not enough to classify the product as a medicament. (iii) The mere fact that the product is being manufactured under a drug licence is not enough to classify the -product. (iv) The language of the entry has to be given effect. (v) How the product is known in scientific sense or technical sense is not much relevant. (vi) The dictionary meaning is a good guide but not conclusive. (vii) For being a medicine a product must have the effect either of curing the disease or preventing it and the intended use must be for treatment, mitigation or -prevention of disease and in common parlance and commercial sense known as medicine. (viii) Cosmetic and toilet preparations ar....
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.... how the common man who uses it or comprehends it. (vi) That the appellant relied on the judgment of the Hon'ble court in the matter of Collector of Central Excise vs. CIENS Laboratories, wherein it has been held that '...A product that is used mainly in curing or treating ailments or diseases and contains curative ingredients even in small quantities, is to be branded as a medicament." (vii) That the authority has wrongly interpreted the primary use of the product as 'care' because all the components of the product have medicinal curing properties intended to be used for treatment of diseases or disorder in human being. (viii) That the WBAAR has not given any basis of its findings that the product is commonly used in the market and used by the people not for medicinal benefits of the product but for soft skin and other anti-ageing capabilities. (ix) That JAC OLIVOL is made of the ingredients which has been used extensively in Ayurvedic medicine for centuries, as it is nontoxic and has a variety of therapeutic properties including antioxidant, analgesic, anti-inflammatory and antiseptic activities. (x) The product in ques....
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.... Heading 3004 unless it is meant for therapeutic or prophylactic uses; (iii) that the aforementioned product is being used as a proprietary medicine protected by an ayurvedic patent, and all constituents employed in its production are specified in authoritative Ayurvedic textbooks (Bhavprakash) and the Ayurvedic pharmacopoeia; (iv) that the Drug Controller has granted approval for the product; (v) that the oil is formulated using an assortment of ayurvedic herbs, which are specified in various volumes of The Ayurvedic Pharmacopoeia of India, published by the Government of India; (vi) that the product possesses significant curative or preventive value. Its primary manufacturing objective is to address muscle and joint aches and pains, disease control, and prevention. However, consumers also use it as a pain relief oil and for the treatment, mitigation, cure, or prevention of skin ailments. (vii) that as per the prevailing rate structure, the best classification of the product has to be done under HSN 3004 thereby attracting tax @ 12%. 10.1 The appellant also had made Additional Submissions before this authority, inter alia submitting t....
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....included in the authoritative books as specified in Clause (a) ..." 12.4 The Ayurvedic Pharmacopoeia of India, Part I Vol. I and Part I Vol. II, which were attached to the additional submission by the appellant have been acknowledged. These publications were published by the Department of Ayush, Ministry of Health and Family Welfare, Government of India. From the soft copies, it appears that several ingredients present in the instant product, including Haridra, Manjistha, Arjuna, Daruharidra, Karpoor, Neem Oil, and others, are included in the Ayurvedic Pharmacopoeia of India. 12.5 It is noted that the Heading 3004 of the Customs Tariff covers 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 ADMINISTRATION SYSTEMS) OR IN FORMS OR PACKINGS FOR RETAIL SALE. Further, note 1(e) of Chapter 30 excludes preparations of headings 3303 to 3307 even if they have therapeutic or prophylactic properties. On the other hand, heading 3304 of the Customs Tariff covers BEAUTY OR MAKE-UP PREPARATIONS AND PREPARATIONS FOR THE CARE OF THE SKIN....
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....h 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. (iv) The Commissioner of Customs, Central Excise and Service Tax, Hyderabad Versus Ashwani Homeo Pharmacy [Civil appeal No. 9525 of 2018 dated 03.05.2023]: Stipulating that "Heading 3004 pertains to the medicaments consisting of mixed or un-mixed product for therapeutic or prophylactic uses put up in measured doses or in form of packing for retail sale. Viewed thus, we are inclined to accept the submissions on behalf of the respondent that even with reference to its packaging, the product AHAHO would remain a homeopathic medicament and would be covered under Chapter 30...". (v) G.D. PHARMACEUTICALS LTD versus Union of India 1992 (60) E.L.T. 205 (Cal.) [12-02-1992] which held that "... it prima facie appears that Boroline contains certain medicines. Boroline is, therefore a drug." (vi) CCE v. Wockhardt Life Sciences Limited (2012) 5 SCC 585: wherein the Hon'ble Court has held that ".... ....
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....er's understanding is a strong factor in determination of classification of the products." (ii) Alpine Industries vs Collector of Central Excise, New Delhi, (2003) 3 SCC 111 where the issue before the Hon'ble Apex Court was to decide classification of the product 'Lip Salve', manufactured in accordance with the defence services specifications and supplied entirely to military personnel. The Hon'ble Supreme Court, while held the item as a preparation for protection of lips and skin and is not a 'medicament' observed as follows: "....The terms and expressions used in tariff have to be understood by their popular meaning that is the meaning that is attached to them by those using the product. " "....It is firmly established that on the question of classification of product under Central Excise Tariff Act, "commercial parlance theory" has to be applied. " "....It is not disputed that the product 'Lip Salve' is used for the care of the lips. It is a product essentially for "care of skin" and not for "cure of skin". It is, therefore, classifiable as a skin care cream and not a medicament. From the nature of the product and t....
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....not conclusive. (vii) For being a medicine, a product must have the effect either of curing the disease or preventing it and the intended use must be for treatment, mitigation or -prevention of disease and in common parlance and commercial sense known as medicine. (viii) Cosmetic and toilet preparations are products which are used for beautification or care of face, skin, hair, nails, eyes or brow and are known as cosmetic and toilet preparations in common parlance and commercial sense. (ix) The onus lies on the Revenue to prove that the product falls under a particular entry. (v) WBAAR has also referred the Ciens Laboratories (supra), as in the said judgement the Hon'ble Apex Court has also formulated following guiding principles in addition to what has already been referred by the appellant: "....prior to adjudicating upon whether a product is a medicament or not, 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, wherea....
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....he Apex Court has observed that: "Our attention was also invited to various orders as also to the literature and it was tried to be suggested that these products were treated to be the cosmetic products, if not by the assessee, at least by the customers. We have already pointed out that the common parlance test is not be all and end all" of the matter on the basis of which the case of Shri Baidyanath Ayurved Bhavan's case (supra) was decided. We have further pointed out that thereafter firstly the entry was amended and in series of decisions this Court has held that merely because the product could be put to cosmetic use that would not by itself make it a cosmetic product provided there was a rightful claim made that it was an Ayurvedic product on the factual basis, and it contained the medicinal Ayurvedic medicament. The miniscule percentage used is also not a deciding factor and this court has, in series of decisions, held that the miniscule percentage does not change the nature of the product from medicament to the cosmetic products." In view of the aforementioned judgement, it is evident that the "Common parlance test" cannot be the exclusive criterion for class....
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....nother relevant portion of the said judgement which observes that: "...that merely because the product could be put to cosmetic use that would not by itself make it a cosmetic product provided there was a rightful claim made that it was an Ayurvedic product on the factual basis, and it contained the medicinal Ayurvedic medicament. The miniscule percentage used is also not a deciding factor and this court has, in series of decisions, held that the miniscule percentage does not change the nature of the product from medicament to the cosmetic products." 12.17 In the judgement passed in the case of Commissioner of Central Excise, Mumbai IV Vs Ciens Laboratories (2013) 14 SCC 133, it is directed that: (i) 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. (ii) Secondly, though a product is sold without a prescription of a medical practitioner, it does not lead to the immediate conclusion that all produ....
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....e. Haridra, Manjistha, Arjuna, Daruharidra, Karpoor, Neem Oil etc. are covered under such Ayurvedic Pharmacopoeia of India as Ayurvedic ingredients. 19. Now, comes the first leg of the afore-stated 'twin test' i.e. whether in common parlance the item is accepted as a medicament? 20. Taking the example of Haridra or Turmeric - the same goods are used for therapeutic or prophylactic purposes but at the same time it is widely used all over the India as spice and condiment being one of the primary ingredients of cooking. Similarly, Karpoor or Camphor not only has its uses to treat skin conditions, improve respiratory function, and relieve pain but also as an insect repellent and moreover for the purposes of puja and aarti. So, here naturally the question comes, what is the identity of these goods in the minds of general people in common parlance? As for example, The Ayurvedic Pharmacopoeia of India, Part I Vol. I and Part I Vol. II as referred to by the appellant even has entries like Atasi or Linseed whose oil is primarily used in artists' oil paints, Dhanyaka or Corriander, Jatiphala or Nutmeg and Hingu or Asfoetida which are widely used in cooking, Aksoda or Walnut....