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2024 (3) TMI 625 - AAAR - GSTClassification of JAC OLIVOL BODY OIL - classifiable under HSN 3004 as a medicament Or under HSN 3304 (cosmetic) - GST at the rate of 12% (6% CGST & 6% WBGST) - twin tests of classification - ''the Common Parlance test and the Ingredients test-to-determine whether a product qualifies as a medicament under Chapter 30'' - Difference Of opinion between members - HELD THAT:- In this particular instance, the appellant accompanied their additional written submission with a certificate from the Directorate of ISM Drugs Control, Government of West Bengal, which granted approval for the drug formulation of "JAC OLIVOL" Herbal Body Oil. The certificate detailed the constituents of the product, including their respective quantities and names, and included Haridra, Manjistha, Arjuna, Daruharidra, Karpoor, Nimba Oil, Badam Oil, and Oilve Oil, among others. The assertion that all of these constituents possess medicinal properties has not been contested by WBAAR. Therefore, it appears that the instant product satisfies the second criterion of the twin test that is "the Ingredients test". The judgment in the case of The Commissioner Commercial Tax Uttarakhand Vs Perfetti Van Melle India Pvt Ltd [2008 (7) TMI 870 - UTTARAKHAND HIGH COURT] 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 determining factor in its classification. WBAAR's classification of the product, which was predicated primarily on the Common Parlance test and neglected a number of previously discussed factors and cited decisions of the Honourable Courts, is therefore rejected. Thus, it is held that the product JAC OLIVOL BODY OIL intended to be manufactured & sold by the applicant would be covered under Heading 3004 of THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT and would be taxed accordingly under the GST Act. As per Mr. Devi Prasad Karanam, Member - Whether the instant product is to be classified as a cosmetic or a medicine mainly rests on the twin tests - HELD THAT:- Appellant has stated that the instant product can be used for treating minor burns and prevents blisters. Now, in light of 'common parlance', if we ask - what will be the requirement of someone in case of treating a minor burn - an anti-burn ointment or the instant product, the answer would tend to the former option. Now, the issue of therapeutic i.e. relating to the healing of disease or prophylactic i.e. intended to prevent disease of the product comes in question. Also, a valid question comes regarding the issue of cure vs. care. As submitted by the appellant, Jac Olivol Body Oil has certain skin care properties. It can be used in winter for curing dry skin and also has its use for curing body ache. Now, dry skin can occur normally due to loss of skin moisture in winter season or misuse of external agents like soap. At the same time it can occur due to skin diseases like atopic dermatitis (eczema) or psoriasis. Now, as we all know any body-oil like mustard oil, coconut oil or olive oil has a natural property to retain skin moisture resulting in minimization of dry skin. But that does not necessary imply that mustard oil, coconut oil or olive oil can cure skin diseases like eczema or psoriasis. In the same way, as claimed by the appellant, the product Jac Olivol Body Oil can be used to relieve body ache, joint & knee pains. It is a well-accepted fact that a body massage using any body-oil like mustard oil, coconut oil or olive oil can give relief to body spasm and ache. But at the same time, pain and ache arising out of arthritis, tendinitis, gout, spondylitis etc demand specified medical treatment with medicines. Thus, there is a wide gap between the word 'cure' and 'care' so far as the instant product is concerned. Thus, it can be opined that the product Jac Olivol Body Oil intended to be manufactured & sold by the applicant shall not be covered under Heading 3004 of the First Schedule to the Customs Tariff Act as appealed for. Instead, it would get covered under Heading 3304 of the First Schedule to the Customs Tariff Act and would be taxed accordingly under the GST Act. The WBAAR Ruling is confirmed and the Appeal stands rejected. As the members of the West Bengal Appellate Authority for Advance Ruling differ on the classification of the instant product i.e. 'JAC OILVOL BODY OIL', it is deemed that no Advance Ruling can be issued in respect of the questions under appeal as per the provisions of Section 101 sub-section (3) of the GST Act. Thus the Advance Ruling No. 19/WBAAR/2023-24 dated 10.08.2023 is deemed to be not in operation.
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