TMI Blog2000 (8) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter 33 of Central Excise Tariff Act. Reliance was also placed on Chapter Note 1(d) of Chapter 30 and Note 2 of Chapter 33 in support of the plea that the product in question has to fall under Tariff Heading 33.05. It was also submitted by Revenue before Collector that even if such preparations are having therapeutic or prophylactic values, it will still be classifiable under Chapter 33. 2. The assessee on the other hand submitted that they do not hold out their product to be a cosmetic. They had a drug licence in their favour. The Arnica hair oil cannot be said to be having subsidiary prophylactic or therapeutic value but it is pre-dominantly having such values. These are sold only at the drug stores and not in the cosmetics shops. Therefore, they contended that the provisions of Chapter Note 2 of Chapter 33 will not be applicable to this product. The trade parlance is also a relevant factor in deciding the classification and accordingly this will not fall under Chapter 33. They placed the reliance on the judgment rendered in the case of Richardson Hindustan Ltd. v. Collector of Central Excise, Hyderabad as reported in 1988 (35) E.L.T. 424. 3. Ld. Collector held that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial difference in so far as classification of the product is concerned and also rejected the plea of trade parlance raised by the assessee. He has observed that from Chapter Note 1(d) under Chapter 30 of the Central Excise Tariff it is noticed that this chapter does not cover inter alia preparations of Chapter 33 even if they have therapeutic and prophylactic properties. He has held that this also supports the view that the item in question will go out of the scope of Chapter 30. He has held that this view also finds support from the note below the Heading 33.05 of the HSN where it has been clearly mentioned therein that this heading will cover, inter-alia hair oils. Therefore, he has held that Arnica hair oil has to necessarily fall under Tariff Heading 33.05 unless it is specifically excluded from there. 4. Appeal No. E/3429/91-C arises from order-in-original No. 22/91, dated 19-7-1991 passed by Collector of Central Excise, New Delhi confirming the demand of Rs. 13,13,477.95 under Rule 9(2) of the Central Excise Rules, 1944 on the ground that M/s. Bakson Homeo Pharmacy have wilfully evaded Central Excise Duty and contravened the rules mentioned in the show cause notice. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclosed a letter dated 9-5-1985 of the Supdt. Central Excise MOR-VIII, MOD I, Rajendra Place, New Delhi and their reply to the letter date 1-6-1985. They also enclosed letter dated 1-7-1985 of Supdt. Central Excise having jurisdictional charge of the unit. They also pleaded that in February, 1988, they were issued show cause notice upon submission of classification list in November, 1987 of Arnica hair oil as medicament. The Asstt. Collector vide his order dated 22-9-1988 accepted their contentions by classifying the product as a homeopathic medicine. They had pleaded that since the department had not filed the appeal against the orders passed by the Asstt. Collector, the current show cause notice is bad in law. They also submitted that in the event of change of classification list, it cannot be given retrospective effect and can be applied prospectively only. 5. They also contended that all the three concerns are independent of each other. Mrs. Kulwant Kaur is the sole proprietor of M/s. Bakson Laboratories and Dr. Anil Baweja is the independent proprietor of M/s. Neha Cosmetics. There was a principal to principal relationship between the parties and they referred to Clauses 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. They pleaded that they were holding a Central Excise licence that there is no requirement under the law to intimate to the department that an agreement existed between them and M/s. BHPL that there is no suppression with regard to the selling price because there is no law which states that the assessable value of such items would be the price at which such goods are supplied by the manufacturer/seller to their customers. The agreement entered into by them has been stated to be a legal agreement and the goods manufactured by them do not tentamount to manufacturing goods for on behalf of the customer. They pleaded that as there was no suppression on the their part and therefore the extended period beyond six months cannot be invoked. Ld. Principal Collector had decided the issue which on appeal to Tribunal was remanded for de novo consideration. On de novo consideration, the Principal Collector rejected their pleas and upheld the allegations made in the show cause notice and confirmed the duty amount. In view of the issue being common in all the cases, the appeals were heard together for disposal as per law. 7. We have heard Shri V. Lakshmikumaran, ld. Advocate for the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the item to be a medicine or not. It is his submission that even the item shampoo is not a preparation for use on hair but it is meant to wash of the dandruff as a cure for skin disease. Therefore, Hon ble Supreme Court has held that the shampoo is required to be considered as a medicament. He points out that all the ingredients are all exclusively homeopathic in nature therefore, it satisfies the terms exclusively appearing in sub-heading 3003.20. 9. Ld. DR arguing for the revenue reiterates the findings given by the Collector and stated that the item is only a preparation for use as a hair oil and nothing beyond that. It is not a homeopathic medicine and the party himself is claiming it so in the advertisements. He also pointed out that party had made a false claim in the advertisement that the item helps in growth of the hair in bald people which is scientifically impossible. He pointed out that they are using Black Heena , which gives the colour to the hair but does not prevent the hair from greying. Therefore, the claim that it is a homeopathic medicine for cure of dandruff is belied and there is no basis for their claim. He submits that the item is not an exclusively h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opia of India and it has been certified to have curative and prophylactic properties for skin disease, therefore, they are required to be classified under TI 14F of erstwhile tariff as a medicament and under sub-heading 3003.30 of new tariff. In this regard reliance has been placed on technical literature as well as certificates issued by the Homeopaths Drug Licence. 12. We notice from the record that the appellants have produced certificates from Dr. Anil Kumar Sharma, B.Sc., D.H.M.S.(DLI). Ex-Senior Physician, Nehru Homeopathic Medical College Hospital, New Delhi, Examiner : Board of Homeopathic System of Medicine, Delhi and Treasure of All India Homeopathic Research Foundation, New Delhi who has certified that Arnica Hair Oil (Sunny) manufactured by M/s. Bakson Homeo Pharmacy is prescribed by him to his patient and it has been found to have effect in combact dandruff and in preventing loss of hair. On the same lines, the certificate has been issued by Dr. R.S. Ghai, D.H.M.S., M.H.M. Homeopathic Physician, Specialist in Chronic Female Diseases, Life Member of Homeopathic Medical Association of India. Another certificate has been issued by Dr. (MS) J.K. Narula, D.H.M.S. (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herb taken internally and applied externally will not only promote hair growth but also restore grey hair to the original colour Ref: Satish Chandra Auart 3, Crude Drug Res. 9(4): 1461, 1969 8. NEEM (Official in HPI) Essential Oil used as a hair tonic Ref : Martindale the extra pharmacopeia pg. 317 9. HEENA Its action is to coat the hair follicles temporarily. Acts as a conditioner to thicken the hair follicles and give more body and lustre to the hair. Ref: Meer C. Gotanicals for drige cosmetics. Drug and Cosmetic 131 (1) : 36-38.40 1962 10. BRAHMI (Official in HP!) Extract of the whole plant helps in stimulating hair growth and functions as an antiseptic and antidandruff agent. Ref : Indian Materia Medica Vol. 1st. pg. 662. The definition of Homeopathy in Dictionary of Nursing at page 228 states that HOMEOPATHY (Homoeopathy) (hoh-mi-op-a-thi) n. a system of medicine based on the theory that like cures like . The patient is treated with extremely small quantities of drugs that are themselves capable of producing symptoms of his particular disease. The system was founded by Samuel Hahnemann (1755-1843). See also alternative medicine - homeop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is they are given to normal persons and the symptoms produced are noted. The remedy for that symptom in a patient is a very small dose of the drug in question. Moreover, it is held that the smaller the dose, the greater the effect. This may seem strange when in the highest potencies the patient may not receive a single molecule of the drug, but as Hahnemann himself said .......only by the spiritual operation of medicines can health be restored . There is no doubt that the first beneficial effect of Hahnemann s work was to save patients from the gross over prescribing then prevalent. There are different sects of homoeopathies; some adhere strictly to the founder s principles, while others allow ordinary doses of drugs in certain circumstances. Homoeopathy is more popular in continental Europe and the USA than in the U.K. As C.E. Wheeler in his book The Case for Homoeopathy has said, the medical profession regards Homoeopathy as a poor relation, eccentric and embarrassing, but still lover by some of the best people . He also stated that after 200 years Homoeopathy is left, like Mahomel s coffin, between the heaven of general acceptance and the earth of final confutation . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troller and it is a product which has been mixed together for therapeutic and prophylactic use and they satisfy with the definition of medicaments. On a careful consideration and examination of the materials produced and referred to above, we notice that the ingredients utilised in the manufacture of Arnica Hair Oil are exclusively natural substances and their reference has been found in Homoeopathic Pharmacopia of India. The manufacturers have obtained drug licence and the use of the Hair oil, as a medicament, has been recommended by the Homeopaths. The appellants have shown that the ingredients are homoeopathic in nature and having therapeutic and prophylactic. Therefore, their contention cannot be rejected in the light of the evidence produced. In the case of B.P.L. Pharmaceuticals Ltd. the question of classification of Selsun , an anti-dandruff preparation containing 2.5% selenium sulfide with therapeutic limit permissible as per pharmacopoeia came up for consideration before the Tribunal. The Tribunal rejected the plea of the appellants for classifying the goods under Chapter 30 as medicament and under erstwhile tariff 14E. However, Hon ble Supreme Court on due consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogistic action for dermatological diseases. It is also used for treatment of baldness and acts as an anti-dandruff agent and as cooling agent. In view of each of the ingredients having one or the other therapeutic or prophylectic functions in terms of homoeopathic science, therefore, it has to be held that the Arnica Hair Oil is not a cosmetic preparation or for use on hair under sub-heading 3505.90 of the Central Excise Tariff, as they are not intended for cleansing, beautifying, promoting attractiveness or altering appearance in terms of the Hon ble Supreme Court judgment in the case of B.P.L. Pharmaceuticals Ltd. but they are meant for specific treatment for dandruff of other skin and hair problem. Therefore, the appellant s contention for treatment as a medicament having homoeopathic ingredients and considered as homoeopathic medicine is required to be accepted for classification under TI 14E of erstwhile tariff and under sub-heading 3003.30 of the new tariff. The appellants claim for classification of Arnica hair oil as a homoeopathic medicine is also supported by the judgment rendered by three member bench in the case of Collector of Central Excise v. Pharmasia (P) Ltd. as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. The appellants shall disclose the evidence including the details of its preparation and other technical details to support their claim. The authorities shall redetermine the question of classification and also the aspect pertaining to demands on this item being time barred. The present findings pertains to only Arnica Hair Oil . 15. In view of the classification having been held in their favour, the question of clubbing of the clearances of three units does not arise. However, we have examined the issue also. It has been held time and again by the Tribunal that there has to be financial flow back or the units should be dummy ones. We do not notice such a situation in the present case. All these three units are admittedly owned by different persons and the manufacturer of the items are on the basis of principal to principal and hence the question of clubbing the clearances cannot be done in terms of the judgment rendered in the case of M.G. Shahani Co. (supra), which has referred to previous judgment of the Supreme Court as rendered in the case of Union of India v. Plyworld Electronics Pvt. Ltd. as reported in 1989 (41) E.L.T. 368. 16. In that view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hair and therefore, in cases where a preparation or the product in question has both prophylactic or therapeutic properties and is also (simultaneously) a preparation for use on the hair, merely showing that it has some prophylactic or therapeutic properties and is being also prescribed by some doctors or that it was a preparation for use of the hair because this by itself does not resolve the problem. Whether the product in question is being sold from this shop or that shop also does not matter because these days, many shops sell both cosmetics as well as medicaments. There are many hair oils which are preparations made according to the ayurvedic formula, which are available on all sorts of shops including those dealing with cosmetics and at the same time they are also being prescribed by Vaidyas. The same is true of homoeopathic as well as other modern preparations. The doctors or Vaidyas may prescribe them because of their medicinal content or effect and the general public may purchase them because these are basically hair oils in the nature of preparation for use on the hair. In this type of situation, the problem is rather ticklish and in my opinion, one has to go by pre- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Arnica Shampoo or the entire case as regards both the items is required to be remanded in view of the observations and findings of the Vice President. Sd/- (S.L. Peeran) Member (J) Sd/- (S.K. Bhatnagar) Vice President 19. [Order per : P.G. Chacko, Member (J)]. - Third Member on Reference, agreering with Member (J)] - I have carefully examined the records. The dispute in appeal No. E/379/91-C is one of classification simpliciter. The appellants wanted to classify their product Arnica Hair Oil as Homoeopathic medicament under Chapter Sub-Heading 3003.30 of the Schedule to the Central Excise Tariff Act, while the department required it to be classified as other preparations for use on the hair under Chapter Sub-Heading 3305.90 of the said Schedule. The Assistant Collector adjudicated the dispute in favour of the assessees. The Collector (Appeals) allowed the appeal filed by the Department by holding the product to be classifiable under Chapter Heading 33.05. 20. In appeal No. E/3429/91-C filed by the same assessees, the main dispute is on the classification [under both old and new Tariffs] of their two products, viz. Arnica Hair Oil and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Tariff. Technical literature and certificates from Homoeopathic experts are available on record to substantiate the facts pleaded by the appellants. In their memo of appeal, the appellants have mentioned the names, uses etc. of the various ingredients of the hair oil. On a careful examination of all these materials on record (the authenticity of which is not challenged) I am inclined to accept the product viz. Arnica Hair Oil as a homeopathic medicament classifiable under Tariff Item 14F/Chapter Sub-Heading 3003.30. I have also found that the product did not satisfy the requirements of Chapter Note (2) to Chapter 33 of the Central Excise Tariff. Learned SDR s arguments in this connection are not supported by the facts and evidence on record. He has not been able to disprove the appellants case that therapeutic/prophylatic function of the product is its dominant function and not subsidiary to its cosmetic function. On the other hand the appellants case is one which stands proved substantially by the facts and evidence on record. They have also successfully drawn support from the Tribunal s decision in CCE v. Pharmasia (P) Limited [1994 (47) E.L.T. 658 (T)] as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26. Learned SDR has submitted that Arnica Hair Oil is a perfumed hair oil and must, therefore, belong to Chapter Heading 33.05 in terms of Chapter Note (6) to Chapter 33 of the Tariff. Learned Advocate has, in his rejoinder, countered this contention by submitting that the Department has not shown that any perfume was deliberately added to the product to make it a perfumed hair oil. He has also drawn support from the Bombay High Court s decision in Ramtirth Yogashram v. State of Maharashtra [1968 (22) STC 76] wherein it was observed that the expression perfumed oil must connote an oil to which perfume had been added by way of a positive and deliberate act and not as meaning an article which just happened to have a perfume. I have already noted that the respondents have not proved any deliberate act (on the part of the appellants) of imparting perfume to the product. Learned Advocate s argument, supported by the High Court s decision in Ramtirth Yogashram, has therefore to be accepted. The product in question would not attract Chapter Note (6) ibid. 27. I am in complete agreement with learned Judicial Member s findings on the question of classification of Arnica Hair Oil . Any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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