TMI Blog2012 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 – Decided in favor of assessee. - Civil Appeal Nos. 783-803 OF 2004 - - - Dated:- 22-2-2012 - H L Dattu and Anil R Dave, JJ. For Appellants: Mr R P Bhatt, Sr Adv. Ms Arti Singh, Adv. For Mr A K Sharma, Adv. For Mr B Krishna Prasad, Adv. For Respondents: Mr Ajay Aggarwal, Adv. Ms Mallika Joshi, Adv. Ms Amrita Chatterjee, Adv. For Mr Rajan Narain,Adv. JUDGEMENT 1. These appeals are directed against the judgment and order passed by the Customs, Excise and Gold (Control)Appellate Tribunal, West Zonal Bench at Mumbai in Appeal Nos.E-1252-1271/02-MUM and E/3630-01-MUM dated 18.6.2003. By the impugned judgment and order, the Tribunal has reversed the findings and conclusions reached both by the Adjudicating Authority and the appellate authority. 2. The primary issue that falls for our consideration in these appeals is the classification of two products viz.`Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub for the purpose of levy of duty under the provisions of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a human-being. The assessee had also placed reliance on the Indian Pharmacopoeia, the United States Pharmacopoeia and the International Pharmacopoeia. The assessee had also contended that the `Neutronix and Superamide' are other two products with which Povidone Iodine is mixed to contend that they are in the nature of vehiculars for the spreading of the medicament. 6. After receipt of the reply so filed, the adjudicating authority has proceeded to conclude, that, since the contents of Neutronix and Superamide are more than the medicament, namely; Povidone Iodine, the product in question requires to be classified as detergent and therebY, would fall under chapter sub-heading 3402.90 and it has also observed in its order that the product in question is primarily used as a cleansing solution and, therefore, cannot fall in the description of the medicament. Accordingly, had confirmed the show cause notices issued earlier and, thereby, had directed the assessee to pay the difference in duty and also the penalty. 7. Aggrieved by the aforesaid order passed by the adjudicating authority, the assessee had carried the matter in appeal before the First Appellate Authority, who by his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidone Iodine and, the test laid down for classification of the product as medicament: has concluded that the product is purchased primarily for its therapeutic or prophylactic qualities and not for its qualities as organic surface active preparation. In conclusion, the Tribunal, while allowing the appeal, has held that the product in question is, primarily intended and also actually, used for its antiseptic properties, therefore, it is classifiable as medicament under Chapter 30 of the Schedule to the Act. It is the correctness or otherwise of the findings and conclusions reached by the Tribunal is the subject matter of these appeals before us. 9. We have heard Shri R.P. Bhatt, learned senior counsel appearing for the Revenue and Shri Ajay Aggarwal, learned counsel appearing for the Assessee. Both the learned counsel have dealt with the matter in detail and have also relied upon some of the decisions of this Court to buttress their submissions. 10. Shri R.P. Bhatt, learned senior counsel for revenue would submit that the product in dispute, namely; Povidone Iodine Solution or its patent and proprietary equivalent Wokadine surgical scrub, contains only 80 kg of Povidone Iodine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will fall under Chapter Sub- heading 3003 and not under Chapter 34. 13. In order to resolve the controversy that is raised before us, we need to notice first the entries which the revenue and the assessee relies upon to drive home their point of view. The Tariff Items under Chapter sub-heading 3003 and chapter sub-heading 3402.90, at the relevant time, are extracted. The same reads as under: Heading No. Sub-heading No. Description of goods Rate of duty 30.03 Medicaments (including veterinary medicaments) 3003.10 Patent or proprietary medicaments, other than those medicaments which are exclusively Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic. 15% 3003.20 Medicaments (other than patentor proprietary) other than those which exclusively used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems including those in Ayurvedic, Unani, Siddha, Homeopathic or Bio- chemic systems. 8% 34.02 Organic Surface active agents (other than soap): surface-active preparations, washing preparations (including auxiliary washing preparations and cleanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion USP "Povidone Iodine Cleansing Solution USP to be used as a surgical scrub. Broad Spectrum topical microbicidal effective against bacteria, fungi, protozoa, yeasts and viruses. Formula: Povidone-Iodine I.P. 7.5. w/v (Available Iodine 0.75% w/v) Phosphate Free" Store in a cool place For External use only Usage: 1. For preoperative cleansing and degerming of surgeon's and operating team's hands a) Wet hands and forearms with water. Pour about 5 ml of surgical scrub with the help of the `elbow dispenser' on the palm and spread over both hands and forearms scrubbing thoroughly over all areas for about 5 minutes. Add little water to develop copious suds. Rinse thoroughly under running water. b) Complete the cleansing with another 5 ml of surgical scrub in the same way. 2. For preoperative uses on Patients. After the skin area is shaved, wet it with water. Apply Povidone Iodine surgical scrub on the skin and scrub, thoroughly for about 5 minutes. Rinse off by aid of sterile gauze saturated with water. Now paint the skin with Povidone-Iodine solution and allow to dry before incision." 18. The composition of the product per 1000 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ... A standard surgical scrub with a 10% solution (1% available iodine) will decrease the usual cutaneous bacterial population by about 85%...... When the hands are contaminated by gram-negative bacteria, povidone-iodine is more effective scrubbing disinfectant." 24. Remington's Pharmaceutical Sciences records that Povidone Iodine USP is a virtually non-stinging, film forming, water soluble iodine compound used as a topical antiseptic that essentially retains the non-selective broad range microbicidal activity of iodine. Povidone Iodine will rapidly kill bacteria (both Gram positive and Gram negative as well as antibiotic resistant organisms), fungi, viruses,protozoa and yeasts, to cause a substantial reduction of the microorganisms on the skin. Preoperatively, or as a post surgical antiseptic scrub, its microbicidal action is fast acting and is effective for a period of 6 to 8 hours. It is further stated that povidone-iodine antiseptic preparations are clinically indicated for the prevention and treatment of surface infections as well as to degerm the skin prior to injection and hyperalimentation procedures, for pre and post operative scrubbing and washing of hospital operatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating authority that the products in question are primarily used for external treatment of the human-beings for the purpose of the prevention of the disease. This is not disputed by the revenue, but their stand appears to be since the products in question are primarily used as detergents/cleansing preparation, they cannot be brought under the definition of medicaments. As we have already noticed, medicaments are products which can be used either for therapeutic or prophylactic usage. Since the product in question is basically and primarily used for the prophylactic uses, in our view the Tribunal was justified in coming to a conclusion that the adjudicating authority and the first appellate authority were not right in classifying the products under chapter sub-heading 3402.90 and, therefore, had classified those products under chapter sub- heading 3003. 30. There is no fixed test for classification of a taxable commodity. This is probably the reason why the 'common parlance test' or the 'commercial usage test' are the most common [ see A. Nagaraju Bors. v. State of A.P., 1994 Supp (3) SCC 122 ]. Whether a particular article will fall within a particular Tariff heading or not has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary entry, in the presence of a specific entry, even if such specific entry requires the product to be understood in the technical sense [see Akbar Badrudin v. Collector of Customs, (1990) 2 SCC 203 ) ; Commissioner of Customs v. G.C. Jain, (2011) 12 SCC 713 ) ] . A residuary entry can be taken refuge of only in the absence of a specific entry; that is to say, the latter will always prevail over the former [see CCE v. Jayant Oil Mills, (1989) 3 SCC 343 ) ; HPL Chemicals v. CCE, (2006) 5 SCC 208; Western India Plywoods v. Collector of Customs, (2005) 12 SCC 731 ) ; CCE v. Carrier Aircon, (2006) 5 SCC 596 ) ], this Court held: "14... There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the relevant factors inter alia are statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to (sic. produced), the end use to which the product is put to, cannot determine the classification of that product." 34. In our view, as we have already stated, the combined f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medicament as it has therapeutic property to treat dandruff unlike ordinary shampoo which could be of common use by common people. 37. In Alpine Industries v. CCE, New Delhi (Supra), the issue which arose for the consideration of this Court was whether the product 'Lip salve' is classifiable as a medicament under Chapter Sub- Heading 30.03 or as 'preparation for care of skin' under Chapter Sub-heading 33.04. The stand of the assessee was that the product in question was supplied exclusively to the military for use while serving at high altitude. They claimed, by relying on various literatures based on the composition of the product that it was used as "medicament" and therefore, sought classification under Chapter Sub- Heading 30.03. The stand of the revenue was that it was used as "a preparation for care of skin" to protect the skin on the lips against damage by natural factors. This Court after considering the various medical and pharmaceutical literatures held that the Entries are not to be understood in their scientific or technical sense, but by their popular meaning for the purpose of interpretation. This court had observed that for the purpose of classification, the commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shave Lotion (ASL) known as "Old Spice" and "Blue Stratos" are classifiable as toilet preparations or medical preparations. The assessee relying on various pharmacopoeia took the stand that the product was "medicinal preparation" due to the high percentage of alcohol content (above 60%). The revenue contended that the use of after shave lotion was in the form of "toilet preparations" and not "medicinal preparation". The revenue also pointed that the assessee had obtained the license for manufacture of ASL as a cosmetic product and not as a medicinal product. This Court while rejecting the assessee's contention held that the high composition of alcohol in the product is not a relevant factor for ASL to be considered a medicament. This Court further observed that in order to come within the ambit of "medicinal preparations", the article must be used for the purpose of either curing or mitigating the disease after its symptoms have appeared or in prevention of any disease and therefore, on a plain interpretation ASL cannot be considered to be within the ambit of "medicinal preparation". Thus, in that case, this Court did not rely on the composition of the product but relied on the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee, was raised before this Court. The assessee claimed, on the basis of the reports of chemical examiners and the Department of Dermatology and Venereology, that the product is an insecticide and is classifiable under Chapter Sub-heading 3808.10 whereas the Department contended that the product is classifiable as medicament under Chapter Sub-heading 3003.10. This Court after referring to Chapter Note 1(d) of Chapter 38 which excludes "medicaments under Heading 30.03 or 30.04" from its ambit and considering the definition of `medicament' in terms of Chapter Heading 2(i) of Chapter 30, had observed that in normal parlance, a product may be considered to be an insecticide but if that product has any therapeutic and prophylactic use then for purposes of classification that product would fall under Chapter 30 instead of Chapter 38. This Court observed that Licel cures the infection or infestation of lice in human hair which is a disease; therefore, it is thus therapeutic. This Court further observed that Licel is also prophylactic inasmuch as it prevents disease which will follow from infestation of lice. This Court referring to its earlier decision in ICPA Health Product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescription and its availability across the counter in shops is not relevant for its classification as medicament. This Court held that, therefore, the fact that use of medicinal element in a product was minimal does not detract from it being classified as a medicament. This Court concluded that the products in dispute are medicinal products which are intended to treat certain medical conditions of the human body and improvement in appearance is subsidiary, therefore, are liable to be classified as medicaments falling under Chapter 30. This case would not assist revenue as this Court had applied a primary user test of the products in question which has certain medicinal ingredient. 43. In Commissioner of Central Excise, Delhi v. Ishaan Research Lab (P) Ltd. (Supra) , the issue before this Court was whether the products manufactured by the assessee would fall under Sub-Heading 3003.30 as medicament or under Chapter 33 as cosmetics. The assessee contended that each of the products was having ayurvedic medicinal herbs in it and even the labels on these products claim specifically the medicinal properties of the product. The assessee further urged that even if the user of product l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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