Full Judgment Text
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CASE NO.:
Appeal (civil) 4589 of 1995
Appeal (civil) 138 of 1989
PETITIONER:
M/s Sunny Industries Private Ltd.
RESPONDENT:
Collector of Central Excise, Calcutta
DATE OF JUDGMENT: 25/03/2003
BENCH:
M.B. SHAH & ARUN KUMAR.
JUDGMENT:
J U D G M E N T
Shah, J.
It is the contention of the appellant Company that it is
engaged in manufacture inter alia of Ad-vitamin Massage Oil forte
(Patent or Proprietary Medicines) since 1949 on the basis of sanction
accorded by the Drug Control Authorities. This preparation was
brought and classified for levy of duty of Excise with effect from
1.3.1961 falling under Tariff Item No.14-E of the First Schedule to the
Central Excise and Salt Act, 1944 (hereinafter referred to as "the
Act"). By order dated 26.12.1985, the Assistant Collector classified
the said product under Tariff Item No.14-F (Heading 3304.00)
excisable as cosmetics goods. Collector (Appeals) also affirmed the
order of the Assistant Collector by order dated 29.4.1986. Against
that order, appellant preferred appeal No.E-2226/86-C before the
Customs, Excise and Gold (Control) Appellate Tribunal ("Tribunal"
for short) which was also dismissed by order dated 26.10.1988.
Aggrieved thereby, appellant filed Civil Appeal No.138 of 1989
before this Court.
In the meanwhile, the Central Excise Tariff was reconstituted
with effect from 28.2.1986 as follows: -
(i) 14E is equivalent to T.I. 30.03 of the Central Excise
Tariff Act, 1985. (Medicaments)
(ii) 14-F is equivalent to Tariff Item No. 33.04 of the Central
Excise Tariff Act, 1985. (Cosmetic Goods)
On re-construction of the tariff as aforesaid, the appellant
submitted its classification list No. 2/86 dated 3.3.1986 claiming
classification of its product under heading 3003.19 as patent and
proprietary medicine. Upon receipt thereof, the Assistant Collector
issued notice to the appellant to show cause as to why the product
should not be classified under sub-heading No.3304.00 in view of the
change of Tariff description after 1985 budget. Being not satisfied
with reply of the appellant, the Assistant Collector modified the
classification of the said product from Chapter 30 to Chapter 33 and
approved classification heading 3304.00. Appeals filed by the
appellants before the Collector (Appeals) and the Tribunal were also
dismissed.
The Tribunal observed that the vitamins are added in several
cosmetic preparations, skin care lotion etc. but mere addition of
vitamins would not render the product as a drug. The product has to
be judged entirely in the light of the words in tariff and not with
reference to the licence under the Drug Control Act. After detailed
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scrutiny of the documents filed by the appellant and the contentions
raised by the parties, the Tribunal arrived at the conclusion that the
classification done by the authorities below under sub-heading
3304.00 is correct and the product in question is clearly a massage oil,
intended for care of the skin but possibly having some marginal
medicinal properties.
Aggrieved by the order of the Tribunal, the appellant has
preferred Civil Appeal No.4589 of 1995.
It is contended by the learned counsel for the appellant that the
product Ad-vitamin massage Oil Forte was considered as medicine
and it would be covered under heading 3003.19 as patent and
proprietary medicine. It is submitted that the product is primarily a
drug. This is because:
(i) It contains a drug or medicinal preparation in Oil
form;
(ii) It is used for massage;
(iii) It prevents the ailment or rickets and treats the
same;
(iv) It has a trade mark and symbol including that it is a
proprietary.
The question that arises for consideration in these appeals is
whether the product in question can be classified as a cosmetics and
toilet preparation falling under Tariff Item 33.04 or as patent or
proprietary medicine under Tariff Item No.30.03?
For this purpose, we would refer to the relevant part of tariff
entries as under:
Old Tariff Entries:
Item No.14EPatent or Proprietary Medicines.
Item No. Tariff Description Rate of Duty
14E. Patent or Proprietary medicines Twelve and a half
not containing alcohol, opium per cent ad
Indian hemp or other narcotic valorem.
drugs or other narcotics other
than those medicines which are
exclusively Ayurvedic, Unani
Sidha or Homoeopathic.
Item No.14FCosmetics and Toilet Preparations.
Item No. Tariff Description Rate of Duty
14F. Cosmetics and toilet preparations One hundred per
not containing alcohol or opium, cent ad valorem.
Indian Hemp or other narcotic
Drugs or narcotics, namely
(i) Preparations for the care of
the skin including beauty creams,
vanishing creams, cold creams,
make-up creams, cleansing creams,
skin foods and tonics, face powders
baby powders, toilet powders, talcum
powders and lipsticks.
(ii) (iii) "
By introduction of Finance Bill, 1985, explanations II and III
were added to the said tariff item No.14-F of the Central Excise
Tariff. Relevant Explanation II reads as under:
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Explanation-II: This item includes cosmetics
and toilet preparations whether or not they contain
subsidiary pharmaceutical or antiseptic constituents, or
are held out as having subsidiary curative or prophylactic
value."
Equivalent Tariff Items After Reconstitution w.e.f. 28.2.1986
Entry No. Description of Goods
30.03 Medicaments (including veterinary medicaments)
33.04 Beauty or make-up preparations and preparations
For the care of the skin (other than medicaments),
including sunscreen and suntan preparations,
manicure or pedicure preparations.
Chapter Notes 1(c) and (d) of Chapter 30 coupled with Chapter
Notes 2 and 5 of Chapter 33 would clearly reveal that the product in
question cannot be termed as medicaments. The aforesaid Chapter
Notes are as under:
Chapter 30 (Pharmaceutical Products)
Note:
1. This Chapter does not cover:
(c) Aqueous distillates or aqueous solutions of
essential oils, suitable for medicinal uses (Chapter
33);
(d) Preparations of Chapter 33 even if they have
therapeutic or prophylactic properties."
Chapter 33 (Essential Oils and Resinoids; Perfumery,
Cosmetic or Toilet Preparations):
"2. Heading Nos.33.03 to 33.07 apply, inter alia, to
products, whether or not mixed (other than aqueous
distillates and aqueous solutions of essential oils),
suitable for use as goods of these headings and put up in
packings with labels, literature or other indications that
they are for use as cosmetics or toilet preparations or put
up in a form clearly specialised to such use and includes
products whether or not they contain subsidiary
pharmaceutical or antiseptic constituents, or are held out
as having subsidiary curative or prophylactic value.
5. Heading No.33.04 applies, inter alia, to the
following products: beauty creams, vanishing creams,
cold creams, make-up creams, cleansing creams,
skinfoods, skin tonics, face powders, baby powers, toilet
powders, talcum powders and grease paints, lipstics, eye
shadow and eyebrow pencils, nail polishes and varnishes,
cuticle removers and other preparations for use in
manicure or chiropody and barrier creams to give
protection against skin irritants."
From the aforesaid Chapter notes, it is clear that heading 33.03
would include products whether or not they contain subsidiary
pharmaceutical or antiseptic constituents, or are held out as having
subsidiary curative or prophylactic value and heading 33.04 would
inter alia include the products specified therein and other preparations
for use in manicure or chiropody and barrier creams to give protection
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against skin irritants. Therefore, the product mainly oil containing
some A&D vitamins which is used for massage, even if it prevents
ailment of rickets and treats the same, it cannot be held to be
medicaments.
Hence, in our view, after verification of the entire evidence and
the certificates produced on record as well as the report of the
Chemical Analyser, the Tribunal rightly arrived at the conclusion that
the product in question is oil used for massage and would be covered
by heading 33.04. Similar contention was raised in M/s Alpine
Industries v. Collector of Central Excise, New Delhi [JT 2003 (1) SC
130]. The Court observed that ’Medicament’ has been defined in note
No.2(i) to mean ’goods which are either products comprising two or
more constituents which have been mixed or compounded together for
therapeutic or prophylactic use.’ On a reading of note No.1(d) with
note No.2(i) of Chapter 30 under Heading ’Pharmaceutical Products’,
it is clear that preparations which fall under Chapter 33 even if they
have therapeutic or prophylactic properties are not covered under
Heading 30.03 as ’medicaments’. The Court thereafter held thus:
"The certificate issued by the Army Authorities
and the chemical ingredients of the product are not
decisive on the question of classification of the product
for levy of excise duty. It is firmly established that on
the question of classification of the product under Central
Excise Tariff Act, "commercial parlance theory" has to
be applied. It is true that the entry supply by the
appellant of its product ’Lip Salve" has been to the
Defence Department for use of military personnel but
that would also not be determinative of the nature of the
product for classifying it. 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."
The same would be the position in the present case. The oil is
not used for cure of skin but is oil for massage and it takes care of the
skin.
In this view of the matter, we find no substance in these appeals
and they are accordingly dismissed. There shall be no order as to
costs.