1995 (12) TMI 130 - AT - Central Excise

Summary

Issues Involved:

1. Correct classification of "Siloderm Ointment" under the Central Excise Tariff Act, 1985.
2. Determination of whether "Siloderm Ointment" is a medicament or a cosmetic barrier cream.
3. Applicability of Chapter Notes 1(d), 2, and 5 of Chapters 30 and 33 of the Central Excise Tariff Act.

Detailed Analysis:

1. Correct Classification of "Siloderm Ointment" under the Central Excise Tariff Act, 1985:

The primary issue in these appeals is the correct classification of the product "Siloderm Ointment." The appellants sought classification under sub-heading 3003.10 of the Central Excise Tariff Act, 1985, while the department classified it under sub-heading 3304.00, attracting duty at 110% ad valorem. The department's classification was based on the product's ingredients and its description as a skin protective barrier ointment, which, according to Chapter 33 Note 5, should be classified under sub-heading 3304.00.

2. Determination of Whether "Siloderm Ointment" is a Medicament or a Cosmetic Barrier Cream:

The Assistant Collector initially approved the classification under sub-heading 3003.10, but this was challenged by the Revenue. The Revenue argued that the product contains ingredients used to protect the skin from irritants and disinfect wounds, thus meriting classification under Chapter 33. The Collector (Appeals) upheld this view, referring to the Tribunal's judgment in the case of M/s. Espi Industries & Chemicals Pvt. Ltd., which classified a similar product as a barrier cream under Chapter 33.

The appellants contended that "Siloderm Ointment" is a medicament used for healing and curing skin conditions, not merely for protection. They argued that Chapter 33 deals with cosmetics, and "Siloderm Ointment" is far more advanced than a barrier cream, used for therapeutic treatment of conditions like bed sores, skin diseases, and nappy rash. They provided evidence from the Drug Commissioner, New Delhi, and the Food and Drug Administration, Maharashtra, recognizing "Siloderm Ointment" as a drug.

3. Applicability of Chapter Notes 1(d), 2, and 5 of Chapters 30 and 33 of the Central Excise Tariff Act:

The Collector (Appeals) relied on Chapter Notes 1(d), 2, and 5 of Chapters 30 and 33. Note 1(d) of Chapter 30 excludes preparations of Chapter 33, even if they have therapeutic or prophylactic properties. Note 2 of Chapter 33 includes products with subsidiary pharmaceutical or antiseptic constituents, held out as having subsidiary curative or prophylactic value. Note 5 of Chapter 33 lists barrier creams among products classified under this heading.

The appellants argued that Note 1(d) of Chapter 30 is not applicable as "Siloderm Ointment" is a medicament, not a mere barrier cream. They provided technical literature and certificates from doctors to support their claim. They referred to Note 2 of Chapter 30, which defines "medicaments" and includes products with therapeutic or prophylactic uses. They also highlighted that "Siloderm Ointment" is sold under a registered brand name, satisfying the definition of "patent or proprietary medicaments" under Chapter sub-heading 3003.10.

Conclusion:

The Tribunal concluded that the Revenue erred in classifying "Siloderm Ointment" as a barrier cream under Chapter 33. The product is a medicament used for treating skin conditions, supported by technical literature and doctor certifications. Therefore, it should be classified under Chapter sub-heading 3003.10 as a patent or proprietary medicament. The appeals were allowed, and the impugned orders were set aside, with consequential relief granted to the appellants.