TMI Blog2008 (9) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. - 164 of 2007 and 172 of 2008 - - - Dated:- 29-9-2008 - H.L. Dattu, C.J. and A.K. Basheer, J. REPRESENTED BY : Shri A. Kumar, for the Petitioner. Government Pleader, for the Respondent. [Order per : H.L. Dattu, C.J.]. Since the facts and the legal issues are common in these two revision petitions, they are clubbed, heard and disposed of by this common order. 2. The petitioner is a dealer registered both under Kerala General Sales Tax Act and Central Sales Tax Act. The petitioner is engaged in the manufacture of Nycil Prickly Heat Powder . According to the petitioner, the said product is manufactured under a Drug Licence issued under the provisions of the Drugs and Cosmetics Act. The product is also covered by the Drugs (Price Control) Order, 1970 and price of the product is regulated, approved and is capable of being fixed by the Government and the product is stored under a Drug licence. The petitioner further states, that, the key factor which distinguishes the product. Nycil Prickly Heat Powder from Talcum Powder is the constituent Chlorphenesin I.P., base zinc oxide I.P., Starch I.P., and Talcum Purified IP. The content of Chlorphenesin is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in S.T. Rev. Case No. 164 of 2007. 8. For the assessment year 2000-2001, the assessing authority has completed the assessment proceedings by treating the product in question as Medicated Talcum Powder and has levied tax at 20% as an item falling under Entry 127 of First Schedule to KGST Act. The assessment order so passed is confirmed both by the first appellate authority and the Appellate Tribunal. It is the correctness or otherwise of this order, is called in question by the assessee, in S.T. Rev. Case No. 172 of 2008. 9. The assessee has raised identical questions of law in both these revision petitions for our consideration and consequent decision. They are :- (a) Whether the Tribunal failed to see that Sl. No. 127 of the Schedule to the KGST Act should be read as whole cosmetics? (b) Whether the Tribunal committed an error in law in misconstruing Sl. No. 127 by failing to note that the said entry applied only if the goods in question were essentially cosmetics? (c) Whether the Tribunal applied the incorrect test of placing emphasis on the percentage of chlorophenesin while failing to take note that the relevant test to be applied was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The core issue that falls for our consideration and decision is, whether the Nycil Prickly Heat Powder manufactured by the petitioner is a medicine or drug coming under Entry 79 or Medicated Talcum Powder falling under Entry 127 of the First Schedule to KGST Act. 11. The controversy has to be decided with reference to entries in the Schedule to the Act. Therefore, they are extracted. 12. Entry 79 reads as under :- Medicines and Drugs including allopathic, ayurvedic, homeopathic, sidha and unani preparations and glucose IP. 13. Entry 127 of the First Schedule to the Act reads as under :- Shampoo, Talcum Powder including medicated talcum powder, Sandalwood Oil, Ramacham Oil, Cinnamon Oil, other perfurmeries and cosmetics not falling under any other entry in this Schedule . 14. The answer to the question will turn on proper interpretation of Entry 79 and Entry 127 of First Schedule to KGST Act. 15. Entry 79 of the First Schedule speaks of Medicine and drugs including ayurvedic medicine etc. In the instant case, we are concerned only with medicine and drugs and not ayurvedic medicine. Therefore, we need to know only what is a medicine and drug? 16. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, cannot be classified as a drug. 18. The assessee s contention is that the Nycil Powder is the trade name under which the manufacturer markets the substance known as Chlorphenesin . The Nycil powder contains zinc oxide and boric acid and they form 32 per cent of the total contents of Nycil powder, and the rest of the material is starch and the talc. The Nycil Powder is designed to keep the skin clean so as to offer protection against prickly heat and infection besides giving comfort and freshness. Therefore, it would fall under entry 79 of First Schedule to KGST Act. 19. As regards the nature, composition and property of Nycil Powder, we can do no better than to set out the composition noticed by the Gujarat High Court in the case of B. Shah and Company v. State of Gujarat, 28 STC 5. Nycil Powder has the following features and attributes : (1) Chlorphenesin, being a medical substance was introduced as a result of original work in the British Drug House Research Laboratories. Nycil is the trade name under which the British Drug House product of chlorphenesin is manufactured and marketed. (2) Chlorphenesin is a potent antifungal, antibacterial and trichomonicidal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contents are also covered by a small plastic cover which contains spaces for making holes. The powder is white in colour and perfumed and in general appearance is not different from the white talcum or such other powders. (6) The medical substances used as ingredients in the manufacture of Nycil powder are Indian Pharmaceutical or British Pharmaceutical articles for the use of which licence is necessary. Licence is also necessary under the Indian Drugs Control Act for manufacturing, stocking or selling Nycil powder and the licence has accordingly been issued. The Government of India, Ministry of Finance, has held and directed that Nycil powder should be assessed to duty as P. and P. Medicines under item No. 14E of the Central Excise Tariff. 20. The Revenue s contention appears to be that Nycil Prickly Meat Powder is Medicated Talcum Powder and since there is separate entry for the Medicated Talcum Powder, the same requires to be classified under Entry 127 of the First Schedule to KGST Act. 21. Entry 127 of the First Schedule, apart from others speaks of Talcum Powder including Medicated Talcum Powder. The word includes is to indicate that the particular so defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude is used in order to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. In other words, the word in respect of which includes is used, bears both its extended statutory meaning and its ordinary, popular and natural sense whenever that would be properly applicable . 24. The following passage in G.P. Singh s Principles of Statutory Interpretation, 2nd edn. p. 108, highlights as to how an inclusive definition is to be construed :- The definition of a word in the definition section may either be restrictive of its ordinary meaning or it may be extensive of the same, when a word is defined to mean such and such, the definition is prima facie restrictive and exhaustive, whereas when the word defined is declared to include such and such, the definition is prima facie extensive. When by an amending Act, the word includes was substituted for the word means a definition section, it was held that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s drug to mitigate the prickly heat and itching etc. and it is not like an ordinary talcum powder. It is further contended that the product Nycil is not a talcum powder and hence it cannot be considered as a medicated talcum powder. It is further submitted even the Central Excise Department is treating Nycil as Medicine. The learned Counsel would also contend that the intention of the legislature including Medicated talcum powder in Entry 127 of First Schedule is to classify talcum powders which are having medicinal effect. Such item is commercially identified as a talcum powder and used as a face powder or body powder for beautification. Nycil is not a talcum powder used for beautification. Lastly, it is contended that the Hon ble Supreme Court in several decisions has held that Nycil Powder is a medicine. 27. The learned Counsel for the revenue would submit that, it is well established that in interpreting entries in a taxing statute, where the primary object is to raise revenue and for that purpose, various products are differently classified, the entries are not to be understood in its scientific and technical meaning. The terms and the expressions used in the Schedules ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcum powder, including medicated talcum powder. Law is well settled that if there are two entries - one general and the other special, the special entry should be applied for the purpose of levying tax. The general entry should give way to the special entry. 31. The expression talcum powder has been considered by various courts and consistent thinking is that it is cosmetic and not a medicine. The legislature while enumerating the articles in entry 127 of First Schedule to the Act has used the expression talcum powder including medicated talcum powder. When the entry uses the expression include it is prima facie extensive. That only means even the medicated talcum powder is brought under entry 127 of the First Schedule to the Act. The word Medicated has a wide import. In the Dictionary of Medicine by Peter Hodgson Collion, the word Medicated is defined as a product which contains medicinal drug - talcum powder which contains a medicinal drug. 32. In State of Goa and others v. Leukoplast (India) Ltd. - 1997 (92) E.L.T. 19 (S.C.) = [1997] 4 SCC 82, the Apex Court was asked to decide whether plaster, dressings and bandages produced by the assessee under licence from Drugs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is this addition of medicine which changes its basic character. Therefore, the product in question is not mere talcum powder in view of the presence of chlorphenesin though in a small quantity, though base being purified talc. 35. The product literature and advertised use would show that Nycil Powder is used for prickly heat and active skin protection. It is further stated that since Nycil powder contains Chlorphenesin, the antibacterial and antifungal agent, and it actively prevents prickly heat and protects the skin from sores, dhobie itch and athelet foot. The Nycil Powder is designed to keep the skin clean so as to offer protection against prickly heat and infections, besides giving comfort and freshness. It is clear from the composition of Nycil Powder that it is primarily and essentially an article recommended for use to cure a person of certain skin ailments. 36. Nycil Prickly Heat Powder is in the nature of medicament . What is medicament came up for interpretation before the Apex Court in the case of Puma Ayurvedic Herbal Pvt. Ltd. - 2006 (196) E.L.T. 3 (S.C.) = (2006) 145 STC 200. In the said decision, the court has observed, whether the item is commonly under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it fit to include medicated talcum powder under entry 127 of First Schedule to the Act. In view of this inclusive definition, though the nycil powder has all the qualities and ingredients of medicines and since the same is basically a talcum powder which has preventive and curative power, the same requires to be brought under the special entry rather than the general entry. 39. The Apex Court in Ponds India Ltd. s case, 15 VST 256, has stated, that, it is true that the court must bear in mind the precise purpose for which the statute has been enacted, namely herein for the purpose of collection of tax, but the same by itself would not mean that an assessee would be made to pay tax although he is not liable therefor, or to pay higher rate of tax when he is liable to pay at a lower rate. 40. The legislative entry 127 of First Schedule immediately after the expression talcum powder has used the word including . The word include/including, as we have already stated, is used in interpretation clause to enlarge the meaning of the word in the statute. When such word is used in an interpretation clause, it must be construed as comprehending, not only such things as they signify a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel would submit that in view of the decision of Gujarat High Court in the case of B. Shah and Co. v. State of Gujarat, 28 STC 5, the product in question requires to be treated only as Medicine. 43. In the aforesaid decision, the assessee firm was a dealer carrying on business in drugs and medicine. The question which arose for consideration and determination was, whether Nycil Medicated powder is a toilet article within the meaning of Entry 21A of Schedule E or is a Medicine within the meaning of Entry 13 of Schedule C or is it covered by the residuary Entry 22 of Schedule E to the Bombay Sales Tax Act, 1959. The court after detailed consideration of the issue has observed that Nycil Medicated Powder with its special qualities and attributes, its character and composition and its recommended or intended use as advertised by the manufacturers is a medicine within the meaning of the word in Entry 13 of Schedule C of Bombay Sales Tax Act, 1959 and not a toilet article within the meaning of Entry 21A of Schedule E to the Act. 44. In the aforesaid decision, the assessee firm was carrying on business in drugs and medicine and was also a distributor of Nycil Medicated Pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The product is not consumed by consumers as daily use talcum powder. It is a product normally used for specific purpose of treating prickly heat and as soon as the ailment is treated, the use of the product is discontinued. The court has further observed that the product in question contains a particular medicine namely Chlorphenesin I.P. The inclusion of this medicine in the composition makes all the difference as found by HSC. It was because of use of this medicine in Nycil Prickly Heat Powder that the HSC classified it differently as compared to Johnson Prickly Heat Powder and Shower to Shower Powder. The Court has also observed that the submission of the Revenue that the product is basically a powder and will always retain as its basic character as talcum powder even if some medicine is added to it, the base being purified talc. It is the additional of medicines which changes its basic character. 47. In the aforesaid decision the question before the court was whether Nycil is a patent or proprietary medicine or body or make up preparations for cure of the skin. The court applying common parlance test has come to the conclusion, it is a medicine since the product is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rickly heat is a disease of the skin which needs treatment and as a remedial measure it is usual practice to use prickly heat powder as a medicinal product and not a cosmetic. 50. In B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise, 1995 (77) E.L.T. 485 (S.C.), the issue before the Apex Court was, whether Selenium Sulfide Lotion is classifiable as medicine under sub-heading 3003.19 or classifiable as cosmetic under sub-heading 3305.90, this decision was relied on by the learned Counsel for the assessee, for the purpose, firstly, since the respondents had not controverted the affidavits filed by the petitioner, the Appellate Tribunal should have allowed the assessee s appeal. Secondly, for the purpose the product is not a cosmetic, but medicine. This decision is also referred by the Apex Court in the case of Hindustan Ferodo Ltd. v. Collector of Central Excise - 1997 (89) E.L.T. 16 (S.C.) = (1997) 106 STC 214 (S.C.), wherein it is stated, that, it is not in dispute before us, as it cannot be, that, the onus of establishing that the said rings fell within item 22-F lay upon the revenue. The revenue had led no evidence. The onus was not discharged. Assuming therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to make the medicament useful. Therefore, the fact that the use of Medicinal element in a product was minimal does not detract from being it classified as a medicament. In order to be a medicinal preparation or a Medicament, it is not necessary that the item must be sold under a doctor s prescription. Similarly the availability of the product across the counter in shops is not relevant as it makes no difference either way. 53. In Muller and Phipps (India) Ltd. v. Collector of Central Excise, 2004 (167) E.L.T. 374, the court has concluded that, Johnson Prickly Heat Powder is a medicament because it was not an ordinary talcum powder to be used to get rid of problem of prickly heat. The question before the court was whether Johnson s Prickly Heat Powder and Phipps processed talc are patent or proprietary medicines classifiable for the purpose of Excise duty as claimed by the appellants or cosmetics or toilet preparations as claimed by the revenue. In the appeal it was contended that prickly heat powder not only relieves prickly heat faster but actually helps to prevent it; that when a person perspires profusely the sweat stays on the skin too long and the persons potential vic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle, the ingredients thereof, the use to which they were put, with specific reference to the extra information as to how the goods were treated in the market as such, particularly, the circumstances that the manufacturers of the goods in question having applied for a licence under the Drugs Act as an ayurvedic drug and the same having been obtained and the goods marketed as such, the goods having been subjected to an examination by the Technical Committee of the Indian Standards Institution (Specification of Marks) Act, 1952 and the goods having been held not to be a cosmetic or toiletry item, but only as a drug, the goods in question were drug or medicinal preparations. If in truth the said goods are medicinal preparations, then merely because such goods are used for other purposes that would not change their character, while if the goods are in substance toiletry items and if they also have some medicinal ingredients added to them, they would not cease to be so. Though a tooth-paste, a tooth-powder or a skin cream by itself may not be characterised as medicinal preparation, if such goods attract the provisions of the Drugs Act, and are classified as such, certainly they h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal to afford further opportunity to the dealer to produce other evidence because the department had not made any effort to controvert the averments made by the dealer and in view of the licence issued under the Drugs and Cosmetics Act. 57. Reference is made to the decision of the Bombay High Court in the case of Roopkala Industries v. the State of Bombay [1956] 7 STC 557. In the said decision, the question before the court was, whether the powder used for dusting body after bath and also used as face powder should be classified as cosmetics or toilet articles. The court concluded as under : The powders with which we are concerned can no doubt be and are used for dusting the body after bath, etc., but there is nothing to show that they are not used or intended to be used as a face powder as well. One of the tins produced before us is marked Roopkala Toilet Powder, with the words inscribed on it. for beauty, toilet and nursery . The letter-head on the paper used by the appellants says that they are dealers in cosmetics and drugs. It is admitted that they do not deal in any powders other than the kinds of powders mentioned in the order of the Collector of Sales fax. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mischief or defect for which the law had not provided? 3. What remedy Parliament has appointed? and 4. The reason of the remedy. 59. After carefully going through all the decisions on which reliance was placed by learned Counsel for the assessee, we are of the view that none of the decisions would assist him in any manner whatsoever, since those decisions were either rendered while construing entries under different enactments or under different facts and circumstances. We sum up the whole issue by observing that when the legislature has treated Medicated Talcum Powder as different from Medicine for the purpose of taxation, it is not the province of the courts to question the policy of the legislature underlying it. We are, therefore, of the opinion that the Appellate Tribunal has applied the correct principles in concluding that the product in question cannot be classified under a general entry but requires to be classified under special entry, namely entry 127 of the the First Schedule to the KGST Act. We are in agreement with the reasoning and conclusions reached by the Tribunal. We see no reason to interfere with the conclusion reached by the Tribunal and therefore, we dism ..... X X X X Extracts X X X X X X X X Extracts X X X X
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