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TMI Blog2012 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Central Excise Tariff Act, 1985 ('The Tariff Act' for short). 3. The assessee is the manufacturer of Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub. These two products have identical composition. The only difference between these two products is that Wokadine is a branded product whereas Povidone Iodine Cleansing Solution is a generic name. The assessees' claim before the authorities and also before the Tribunal is that the aforesaid products are medicaments and, therefore, require to be classified under Chapter sub-heading 3003 of the Tariff Act, 1985, whereas the revenue's stand was that the products in question are detergents and, therefore, to be classified under chapter sub-heading 3402.90. 4. The Adjudicating Authority had issued nearly 20 show cause notices to the assessee for the period commencing from September, 1992 to December, 1999. In the show cause notices, it is alleged that the assessee has mis- classified the product under chapter sub-heading 3003.10/20, instead of chapter sub-heading 3402.90 of the Act with an intent to evade the payment of the duty by suppressing vital facts regarding usage of the product and the same amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, who by his order dated 29.11.2001 had sustained the order passed by the adjudicating authority. According to the appellate authority, since the product in question is mainly used as a cleansing solution, the proper classification would be as a detergent and would fall under tariff entry 3402.90. 8. The assessee, being aggrieved by the order so passed, had carried the matter in appeal before the Tribunal. Even before the Tribunal, the assessee had produced copious material in the form of product literature and also the dictionary meaning of the expression "medicaments". The Tribunal, while appreciating the rival contentions of the revenue and the assessee, has considered the wide range of literature on the above products, their composition and user and accordingly has concluded that the 'Povidone Iodine Cleansing Solution USP' is used as an antiseptic and disinfectant. The Tribunal has further observed that the main contention of the revenue is that the addition of surface active agent and other substances would result in a product in which 'Prophylactic' qualities of Povidone Iodine would become subsidiary to its primary use as a washing solution. The Tribunal, while rejectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idone Iodine and 250 kg of Neutronix in 1000 litres of demineralised water and is essentially used as a medicated detergent. He would contend that the said product predominantly contain surface active agents which are primarily used as a medicated cleaning agent for removal of dirt, bacteria, fungi etc. In this regard, he would further submit that the said product is admittedly used as an antiseptic agent for washing hands of surgeons and is also applied on the skin of the patients before operation. He would further contend that the said product is not a medicament in terms of Chapter Note 2(i) of the Tariff Act as it neither has "Prophylactic" nor "Therapeutic" usage. He would contend that in order to qualify as a medicament, the goods must be capable of curing or preventing some disease or ailment. Therefore the said products cannot be classified under Chapter Heading 3003 of Tariff Act. 11. Shri Bhatt would further submit that Chapter Note 1(e) of Chapter 30 clearly excludes soap or other products of Chapter 34, containing added medicament, from their classification under Chapter 30. He would, therefore, submit that the product is more appropriately classifiable under the Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % 14. The chapter note 2 (i) of Chapter 30 to the schedule of Tariff Act pertaining to pharmaceutical products, define the meaning of the expression "medicament". It is as under: Medicament" means goods (other than foods or beverages such as dietetic, diabetic or fortified foods, tonic beverages) not falling within heading No. 30.02 or 30.04 which are either: (a) products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic uses; or (b) unmixed products suitable for such uses put up in measured doses or in packings for retail sale or for use in hospitals. 15. Chapter note makes it clear that the products, comprising two or more constituents which have been compounded together either for therapeutic or prophylactic uses, would fall within the meaning of the expression Medicaments. In the present case, it is not in dispute that along with the medicament, namely; Povidone Iodine, the assessee while manufacturing the products in question uses three other constituents, namely; Neutronix, Superamide and Sodium Hydroxide as a preservative. 16. It is also relevant to explore the meaning of the word 'prophylactic' in medic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... content 58%) 250 Kgs 3. Superamide L-9 (foaming agent) 12 Kgs. 4. Sodium Hydroxide (Preservative) 1.46 Kgs 5. Demineralised water Balance quantity 19. The said product contains Povidone Iodine: The 7.5% w/v of Povidone Iodine provides 0.75% w/v of available iodine which is functions as disinfectant. Neutronix: The 25% of composition of the product is Neutronix which is Anionics and used as detergents, wetting, emulsifying and dispersing agents. Further the content of Superamide is just 1.2% in the said product which serves as an excellent booster and stabilizer, viscosity builder and detergent with wetting and soil suspending properties. 20. The assessee has relied on various pharmacopeias to throw light on the essential composition of Povidone Iodine Solution including surface active agents and their respective functions. It is relevant to refer to these pharmacopeias in order to appreciate and analyze the functions of various ingredients contained in a Povidone Iodine Solution. 21. According to the US Pharmacopeia, Povidone Iodine is a complex of Iodine with Povidone. It contains not less than 9.0% and not more than 12.0% of available iodine calculated on the dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-operative preparation of the skin and mucous membranes. It is stated that solutions of Povidone-Iodine gradually release iodine to exert an effect against bacteria, fungi, viruses, protozoa, cysts and spores. 26. In Satoskar and Bhandarkar's Pharmacology & Pharmaco Therapeutics, it reads: "Iodophors are developed by complexing iodine with surfactants like non-ionic detergents. The detergents act as solubilizers and carriers, combining detergent property with anti-bacterial activity. They owe their germicidal activity to the slowly released elemental iodine." 27. The expression "therapeutic" or "prophylactic" is not defined under the tariff entry. Therefore, useful reference can be made to the dictionary meaning to these expressions. In fact the assessee, in his reply to the show cause notices issued, had relied upon the meaning of the expression "therapeutic" and "prophylactic" from Webster's New 20th Century Dictionary, Chambers English Dictionary, Websters New 20th Century Dictionary. In our view, reference to all other dictionary meanings may not be necessary. We intend to confine ourselves only to the aforesaid three dictionaries. In that the meaning of the expression " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand it that constitutes the definitive index of the legislative intention, when the statute was enacted [ see D.C.M. v. State of Rajasthan, (1980) 4 SCC 71 ]. One of the essential factors for determining whether a product falls within Chapter 30 or not is whether the product is understood as a pharmaceutical product in common parlance [see CCE v. Shree Baidyanath Ayurved, (2009) 12 SCC 413 ); Commissioner of Central Excise, Delhi v. Ishaan Research Lab (P) Ltd. (2008) 13 SCC 349] ). Further, the quantity of medicament used in a particular product will also not be a relevant factor for, normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. [Puma Ayurvedic Herbal (P) Ltd. v. CEE, Nagpur (2006) 3 SCC 266 ); State of Goa v. Colfoax Laboratories (2004) 9 SCC 83 ; B.P.L Pharmaceuticals v. CCE, 1995 Supp (3) SCC 1] 31. However, there cannot be a static parameter for the correct classification of a commodity. This Court in the case of Indian Aluminium Cables Ltd. v. Union of India, (1985) 3 SCC 284 , has culled out this principle in the following words: "13. To sum up the true position, the process of manufacture of a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute that this is used by the surgeons for the purpose of cleaning or degerming their hands and scrubbing the surface of the skin of the patient before that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under chapter sub-heading 3003 which is a specific entry and not under chapter sub-heading 3402.90 which is a residuary entry. 35. The learned senior counsel for the revenue has placed reliance on several decisions of this Court in support of his argument that the products requires to be classified as medicament only when they are intended or meant to cure a disease or prevent the occurrence of disease. He further submits that the disease can only be prevented when there are some symptoms of disease. We intend to refer to those decisions relied by learned senior counsel Shri Bhatt to sustain the submissions made before the Court. 36. In B.P.L. Pharmaceuticals Ltd. v. CCE, (Supra) , the issue before this Court was regarding the classification of the "Selenium Sulfide Lotion USP" manufactured and sold by assessee under the brand name "Selsun shampoo". Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore it is not medicament and also needs no prescription from a doctor. This Court also held that it is neither prescribed by any doctor nor obtainable from the chemist or pharmaceutical shops in the market. This decision would not assist revenue as this Court had arrived at a conclusion that the product is not medicament but cosmetic after considering the commercial parlance test and primary user of the product. 38. In ICPA Health Products (P) Ltd. v. CCE (Supra), this Court has considered the issue of classification of surgical scrubs, namely' Hexiprep, Hexiscrub (Surgiscrub) and Hexiaque, manufactured by the assessee which was used as a skin disinfectant to paint the skin before surgery and as a wound disinfectant. It was admitted that Hexiprep is used to paint the skin as required to disinfect the skin before surgery. Hexiaque is used as a skin disinfectant to paint the skin before surgery and as a wound, abrasions and minor cuts disinfectant. Hexiscrub is used on hands and forearms of surgeons for rapid hand disinfection prior to surgery. The assessee claimed the classification of these products as medicament under Chapter sub-heading 3003.10. Whereas, the revenue con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt was that whether the products, namely; Turmeric skin cream, vajradanti toothpaste and tooth powder manufactured by the assessee would be classifiable as Pharmaceutical products under Chapter 30 or cosmetics under Chapter 33 of the Tariff Act. In that case, the assessee's products were classifiable as pharmaceutical products before and after the enactment of the Tariff Act. However, the revenue issued show cause notices on the basis of the decision of this Court in Shree Baidyanath, (1996) 9 SCC 402) alleging that the products are understood as cosmetics in common parlance. The revenue further contended before this Court that the product was classifiable under Chapter 33 as a cosmetic as there was no need for a medical practitioner's prescription and the same was sold in general/departmental store. The assessee took the stand that products were classifiable under Chapter 30 as being pharmaceutical product. This Court held that mere decision of a court of law without more cannot be a justification enough for changing the classification without a change in the nature of a product or a change in the use of the product, or a fresh interpretation of the tariff heading by such decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the lice. 42. In Puma Ayurvedic Herbal (P) Ltd. v. Commissioner of Central Excise, Nagpur (Supra) , the issue before this Court was that whether the ayurvedic goods manufactured by the assessee are classifiable under the Central Excise Tariff Act, 1985 as cosmetics under Chapter 33 or as medicaments under Chapter 30. The assessee contended that their products are manufactured as per the Ayurveda pharmacopoeia and other text books and have curative, therapeutic or prophylactic value which are meant to give relief in body ailments and they are not items of cosmetics. The assessee further relied on the twin test: Whether the product is used as medicament in common parlance; and whether the ingredients used in the product are mentioned in the authoritative ayurvedic textbooks. The assessee further contended that the use of the product by the customers should be taken into account for determining the classification of products as these as the products which have special and distinct use for treating a particular ailment and are not items of common use. The revenue argued that even if a product had some curative or prophylactic value, it will still be cosmetic on the basis of Not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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