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2019 (6) TMI 1243 - CESTAT NEW DELHIClassification of manufactured goods - cosmetic or a medicine? - Area Based Exemption - benefit of N/N. 49/2003-CE dated 10.06.2003 - manufacture of talcum powder, “Himgange Cool Talc” - it was alleged that they intentionally mis-classified their product as a pharmaceutical product, which is a talcum powder with intention of wrongly availing the benefit of the Notification - HELD THAT:- From the perusal of the provision of D & C Act, it is observed that the license under Rule 140 of the Act is granted on an application in Form 31 praying for license to manufacture cosmetics. Thus, it becomes, clear that irrespective appellants were initially involved in manufacture of pharmaceutical products classifiable under Chapter 30 of Central Excise Tariff Act, 1985, but they subsequently started manufacturing the talcum powder not as a pharmaceutical product of Chapter 30 but as cosmetic product classifiable under Chapter 33. Their application in form 31 under Rule 138 of D & C Act is opined to be an admission on their part to seek permission/license to manufacture the cosmetic product. Admissions are relevant unless and until rebutted. The ingredients lose their individual existence and the outcome product of those ingredients has to be considered in respect of its complete or precise description and in terms of the essential character being given by the components. Thus, irrespective menthol and camphor are Ayurvedic medicament products but their combination is giving rise to a product admittedly known as talcum power. The mere fact that the talcum powder is providing the refreshing and the cool feeling, the mere application thereof does not make it a pharmaceutics product/ medicament. In general, parlance, it is a talcum power. Apparently and admittedly, the same can be applied without any medical prescription. Also the same is not the cure for any of the specific medical condition. Thus the product is manufactured not under drug license but under cosmetic license. The cosmetic license was obtained when assessee was already engaged in manufacture of pharmaceutical products. Had this talc been a pharmaceutical product only, there was no need for the assessee to have a cosmetic license for the manufacture thereof. Apparently, in common parlance the product is a talcum powder, which can be used irrespective of any prescription about the dozes to be used thereof - the talcum powder except providing a cooling and refreshing effect on body is not providing any therapeutic value nor any treatment to any specific skin condition. The effect of the talcum powder is opined to be more of a cosmetic product that is the product for a better feel and look of body and skin - issue decided against the assessee in favour of the Department holding that the adjudicating authorities below have rightly classified the impugned “Himgange Cool Talc” as a product classifiable under Chapter 33 of CETA, 1985 i.e. as a cosmetic product. Whether the appellant had the malafide intention, while declaring its product as pharmaceutical product, while claiming the exemption of Notification No.49/2003? - HELD THAT:- Irrespective of the classification, which otherwise has been held for the talcum powder to be a cosmetic rather than to be a pharmaceutical product, the assessee was bound by his own act and conduct and was in fact, estopped from claiming the said talcum powder as a pharmaceutical product. These observations are sufficient to hold that despite the conscious knowledge of the impugned products to be a mere talcum powder a mere cosmetic, the benefit of Notification No.49/2003 was availed - Though the said benefit, the assessee would have been claiming with respect to his pharmaceutical product in manufacture whereof he was already involved but for taking the same benefit for a cosmetic product despite the above said conscious knowledge, the mis-declaration has been done with a malafide intention to take wrong benefit of the impugned Notification with the sole intention of evading duty. Penalty - HELD THAT:- The mis-declaration definitely invites penalty under Section 11AC of Central Excise Act, 1944 - penalty upheld. Appeal allowed in part.
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