TaxTMI 
TaxTMI 
2017 (1) TMI 1834
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....me Manisha Pharmo Plast Private Ltd, which has obtained licence to manufacture drugs under Rule 154 of the Drugs and Cosmetics Rules, 1945. Ext. P1 is the drug licence. Petitioner also obtained licence under Rule 61 to stock and sell the drug in question which is still in force. Ext. P2 is the licence dated 1/1/2000. Drug is defined under Section 3(b) of the Drugs and Cosmetics Act, 1940 as including 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, medication or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling inspects like mosquitoes, other substances, devices etc. 3. According to the petitioner, the preparation of Nycil is a drug or medicine. It is contended that as far as Central Excise Law is concerned, Nycil prickly heat powder is considered and treated as a drug. Earlier, it fell under tariff item 14E and after amendment to the Central Excise Tariff, Chapter 30 dealt with drugs and medicines and a Division Bench of the Delhi High Court has held that Nycil Heat Prickly powder was a drug or a ....
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....under the special entry rather than general entry. The petitioner had preferred a Special Leave Petition and special leave is already granted as per order dated 8/3/2010 (Ext. P6). Though the petitioner challenged the vires of the 1st schedule under Article 32 of the Constitution of India, the Apex Court did not entertain the same on the ground that the writ petition should be filed under Article 226 of the Constitution of India. It is in the said circumstances that this writ petition is filed. 4. The main contention urged by the petitioner is that while a drug intended for skin care delivered in the form of a cream or an ointment get taxed at the rate of 8% under Sl. No. 79 of the 1st schedule of the KGST Act, a drug for skin care delivered through the medium or vehicle of a powder is taxed at a higher rate of 20%. Therefore the classification is irrational between drugs for skin care delivered through medium of a cream or ointment and that delivered through the medium of powder. It is submitted that clubbing of medicated talcum powder with cosmetics under Sl. No. 144 (previously No. 127) is discriminatory and unconstitutional viewed in the light of the judgment of the Apex Court....
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....under:- "9. After noticing the finding of the Harmonized System Committee the Tribunal noted that the Central Excise Tariff is now based on HSN and the opinion and recommendation of the Committee cannot just be brushed aside simply because similar products are manufactured or sold under drug licence. 10. Indeed, the effect of Harmonised System of Nomenclature (HSN) classification came up for consideration before this Court in Collector of Central Excise, Shillong vs. Wood Craft Products Ltd., 1995 (3) SCC 454. This Court stated therein that when the Central Excise Tariffs are based on internationally accepted nomenclature found in the HSN, any dispute relating to tariff classification must so far as possible be resolved with reference to nomenclature indicated by HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself and it was further emphasised therein that when the Central Excise Tariff Act is enacted on the basis and pattern of HSN the same expression used in the Act must as far as practicable be construed to have the meaning which is expressly given to it in HSN when there is no indication in the Indian tariff of a differ....
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....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. 20. In the case of 'Moisturex', there is no dispute that the said cream is prescribed by the dermatologist for treating the dry skin conditions and that the same is also available in chemist or pharmaceutical shops in the market. The cream is not primarily intended for protection of skin. The ingredients in the cream, the pharmaceutical substances do show that it is used for prophylactic and therapeutic purposes. The Central Excise Tariff Act has unambiguously clarified as to what is a medicament for curing an ailment relating to skin. Heading 33.04 dealing with beauty or make-up preparations and preparations for the care of the skin has specifically excluded medicaments. There is also ....
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....der that the HSC classified it differently as compared to Johnson prickly heat powder and Shower to Shower powder. 18. We also find force in the submission made on behalf of the petitioner that the opinion of the Harmonised Systems Committee has lot of weight and should ordinarily be taken as binding. As its very name suggests, the Committee is meant to harmonise the conflicting interpretations of products and their formulae in the member countries in view of international trade. In the present case it has to be noted that not only the HSC opinion goes against the respondent, the respondents themselves were all along classifying the product in question under the category of medicaments and not as cosmetics. We find no merit in the submission made on behalf of the respondents that the product is basically a powder and will always retain as its basic character as a talcum powder even if some medicine is added to it, the base being purified talc. It is the addition of medicines which changes its basic character. 19. The result is that this petition succeeds. We hold that Nycil prickly heat powder is liable to be classified under tariff heading 33.03 and not under the heading 33.04....
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....vision Bench of this Court in S.T. Revn. Nos. 164/2007 and 172/2008. In the said order, all the judgments cited by the petitioner and also various other judgments on the point had been considered and it was held at para 59 as under:- "59. After carefully going through all the decisions on which reliance was placed by learned counsel for the assessee, we are of the view that none of the decisions would assist him in any manner whatsoever, since those decisions were either rendered while construing entries under different enactments or under different facts and circumstances. We sum up the whole issue by observing that when the legislature has treated Medicated Talcum Powder as different from Medicine for the purpose of taxation, it is not the province of the courts to question the policy of the legislature underlying it. We are, therefore, of the opinion that the Appellate Tribunal has applied the correct principles in concluding that the product in question cannot be classified under a general entry but requires to be classified under special entry, namely entry 127 of first schedule to the KGST Act. We are in agreement with the reasoning and conclusions reached by the Tribunal. ....
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....erpretation clause declares that they shall include. A court of law in construing a statute with an interpretation clause using the expression 'includes' is bound to give effect to the direction in the statute itself, unless it can be shown that the context of that particular passage where the expression is used shows clearly that the meaning is not in this place to be given effect to. The courts have to resort to such interpretation and construction which is reasonable and purposive with the object sought to be achieved by the Act enacted by the legislature, where the primary object is to raise revenue and for that purpose, various products are differently classified, the entries are not to be understood in its scientific and technical meaning, but the terms and expressions used in entries have to be understood by their popular meaning, i.e., the meaning that is attached to them by those using the product. 41. Entry 127 of the first schedule provides a more specific description of the goods than under entry 79 of the first schedule. When there is a particular or specific entry in a fiscal statute, the general entry has to give way to the specific entry. This court in the....