TaxTMI 
TaxTMI 
2024 (3) TMI 625
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....uch 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 giving the ruling observed that a product cannot b....
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....missioner 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 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 co....
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....hat '...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 question is thus clearly a herbal oil, intended to cure dry skin, heal wounds, reduces chronic muscle pain and joint pain but also have anti-ageing and anti-wrinkling properties which is consequential to the predominant purpose. (xi) That the appellant has ....
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.... 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 the following:- (i) The ingredients of the instant products were clearly depicted during obtaining the Drug licence issued in accordance with the decision of drug controller and a committee of, deputy drug controller. (ii) This committee ensured that the ingredients were combined in accordance with the principles of AYUSH (the Indian system of med....
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....esent 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 (OTHER THAN MEDICAMENTS), INCLUDING SUNSCREEN OR SUNTAN PREPARATIONS; MANICURE OR PEDICURE PREPARATIONS. 12.6 The dictionary defines "therapeutic" as a treatment intended to enhance an individual's health or treat an illness, rather than preventing it. Conversely, "prophylactic" is defined in the dictionary as "something intended to prevent diseases." 12.7 It has been further noted that there are numerous ruling....
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....ains 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 ".... In our view, as we have already stated, the combined factor that requires 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." (vii) CCE v. Hindustan Lever Ltd., (2015) 10 SCC 742: holding that "....the effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, the....
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....' 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 the use to which it is put, we do not find that the claim of the appellant is acceptable that it is primarily for therapeutic use. What we find from the material produced before the Tribunal is that essentially the product is a protective/preventive preparation for chapping of lips. It is not a curative product maybe that incidentally on cracked and chapped lips, it has some curative effect. It is also not denied that the product 'Lip Salve' is not suitable for use only for soldiers operating in high altitude areas but it is of use for every o....
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....eferred 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, whereas medicinal products are used to treat or cure some medical condition. 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. " 12.10 The judgements and arguments presented to the Appellate Authority have been examined and the followings are determined: (i) The WBAAR, in rendering its decision, has relied on the common parlance test as one of the twin tests to determine whether a product qualifies as a medicament or a cosmetic. WBAAR has considered this test to be widely recognised and used to determine whether a product falls....
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....ded 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 classifying a product. Furthermore, it cannot be maintained that a product should be deemed cosmetic if there is rightful claim to believe that it is an Ayurvedic product containing medicinal Ayurvedic medicament, even in miniscule percentage. 12.12 The appellant's has submitted during the course of hearing, that Disprin tablets, which contain aspirin, are frequently dissolved in water prior to optimise the drug's effectiveness and facilitate a more rapid onset of action. Water serves as a medium in this instance to facilitate the absorption of the dissolved tablet into the body. Despite the extremely minute volumetric concentration of the drug in comparison to water, the medicinal proper....
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....hen 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 products that are sold over across the counter are cosmetics. There are several products that are sold over-the-counter and are yet, medicaments. Therefore, how the instant product has been categorised by different online platform, becomes redundant while deciding its classification. Also, 12.18 The judgment in the case of The Commissioner Commercial Tax Uttarakhand Vs Perfetti Van Melle India Pvt Ltd holding that only for the reasons these items (Chlormint, Happydent) are also purchased by some customers for taste also, does not make them confectionary items particularly when the same are manufactured under a valid drug licence. Based on this decision, it can be deduced that the perceived utility of a product does not necessarily serve as a....
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....mes, 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 and Dadima or Pomegranate which are commonly savoured as fruit and nut, Iksu or Sugarcane which is mainly used for production of sugar all through the world. 21. The appellant while presenting his case before this Bench argued that in most part of our country, people have been applying mustard oil to keep the skin hydrated but that does not make mustard oil a cosmetic product. 22. In similar line, if it is asked whether in common parlance, whether applying mustard oil to keep the skin hydrated make it a medicine, it will land into an answer as per common parlance that mustard oil is primarily a cooking medium. 23. The appellant has stated that the instant product can be used for treating minor burns and prevents blisters. Now, in light of 'common parlance'....