TMI Blog2015 (8) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... y a single celled organism which is kind of fungus, with scientific name 'Pityrosporum Ovale'. For treatment of this disease, Nizral Shampoo 2% (i.e. shampoo containing 2% 'Ketoconazole') is shown as 'a new medicine' use whereof cures clears a dandruff. It is suggested that it should be used once a week and on other days, normal shampoos may be used which clearly shows that 'Nizral Shampoo' is to be used like a medicine, unlike other normal Shampoos. - In fact, notwithstanding the fact that the appellants have described the product as Selsun Shampoo, the Central Board of Excise and Customs, as noticed earlier, has classified the same as patent and proprietary medicine. Therefore, there is no force in the submission that the product must be equated with shampoo. - judgment of the Tribunal does not call for any interference - Decision in the case of B.P.L. Pharmaceuticals Ltd. v. CCE, Vadodra [1995 (5) TMI 98 - SUPREME COURT OF INDIA] followed - Decided against Revenue. - Civil Appeal No.4480 of 2005, Civil Appeal No.5752 of 2015 (arising out of SLP (C) No. 1531 of 2015) - - - Dated:- 14-5-2015 - A K Sikri And Rohinton Fali Nariman, JJ. For the Appellant : Mr A K Panda, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Adjudicating Authority, the Adjudicating Authority passed the Order-in-Original dated 18.11.1999 for the period December, 1998 to April, 1999 confirming the differential duty of ₹ 8,12,194 under Section 4A read with Section 11A of the Central Excise Act, 1944. In appeal preferred by the respondent, the aforesaid demand was upheld by the Commissioner (Appeals) vide order in original dated 13.02.2002, resulting in the dismissal of the appeal of the respondent. Next level appeal filed by the respondent before the CESTAT, Bangalore, however, yielded results favourable to the respondent, as this appeal is allowed by the Tribunal vide final Orders dated 18.01.2005 with consequential reliefs, if any. It was held that there is enormous evidence to show that the product in question was used for treatment of several disorders/diseases and it has also been sold by Chemists under the prescription issued by the Registered Medical Practitioners or the Hospitals. Therefore, it is a medicinal product and not simply a shampoo for use of hair. Naturally, the Revenue is not satisfied with the aforesaid view of the Tribunal and, therefore, has preferred the instant appeal in this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflecting that mere 2% of presence of 'Ketoconazole' would not make any difference: It is rather unassailable that active ingredient 'Ketoconazole' is considered to prophylactic in nature for it to treat the cause of dandruff. Admitting that the active ingredient 'Ketoconazole' is for prophylactic for dandruff, it is clear that the product 'Nizral Shampoo' shall stand excluded from the purview of Chapter 30, in view of Chapter Note 1(d) to Chapter 30 which lays down that 'Preparation of Chapter 33 even if they have therapeutic or prophylactic properties' are not covered. On careful reading of the above Chapter Notes, which are statutory in nature and binding, a clear finding emerges that the impugned goods have a specific entry under Chapter 33 in terms of Chapter (6) to Chapter 33. The heading which provides the most specific description, shall be preferred to headings providing a more general description as per Rule 3(a) of Rules for the interpretations of the Schedule. Hence, by all the above statutory accounts the impugned goods would not permit classification under Chapter 30 of Central Excise Tariff Act, 1985 as medicament, but on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied at the rates specified in the First Schedule to the Central Excises and Salt Act, 1944. The Central Excises and Salt Act, 1944 originally provided for only 11 items. The number of Items has since increased to 137. The levy, which was selective in nature, to start with, acquired a comprehensive coverage in 1975, when the residuary Item 68 was introduced. Thus, barring a few Items like opium, alcohol, etc., all other manufactured goods now come under the scope of this levy. 2. The Technical Study Group on Central Excise Tariff, which was set up by the Government in 1984 to conduct a comprehensive inquiry into the structure of the Central excise tariff has suggested the adoption of a detailed Central excise tariff based broadly on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised system) with such contractions or modifications thereto as are necessary to fall within the scope of the levy of Central excise duty. The Group has also suggested that the new tariff should be provided for by a separate Act to be called the Central Excise Tariff Act. 3. The tariff suggested by the Study Group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation of the New Tariff harmonised system of nomenclature and its explanatory notes are relevant. In the case of Collector of Central Excise, Shillong v. Wood Crafts Products Ltd. 1995 (3) SCC 454, this Court, while considering the Central Excise Tariff Act of 1985, has held that looking to the Statement of Objects and Reasons the Central Excise Tariff under the 1985 Act is based on the Harmonised System of Nomenclature (HSN) and the internationally accepted nomenclature has been adopted to reduce disputes on account of tariff classification. Accordingly, for resolving any dispute relating to tariff classification, the internationally accepted nomenclature emerging from the HSN is a safe guide, this being the expressly acknowledged basis of the structure of the Central Excise Tariff in the 1985 Act and the tariff classification made therein. In case of any doubt, the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. 9) Mr. Panda also referred to certain decisions of the Tribunals wherein such shampoos with 2% anti-fungal agents were still treated as shampoos and not a medicinal product. Notably, among these decisions are (i) Amit Ayur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct. He concluded his arguments by submitting that the judgment of this Court in B.P.L. Pharmaceuticals Ltd. v. CCE, Vadodra 1995 Supp. (3) SCC 1 squarely covered the issue involved in this case. 13) We have considered the submissions of counsel for the parties and find ourselves in agreement with the view taken by the Tribunal holding that the product in question 'Nizral Shampoo' is classifiable under CSH 3003.10 and not CSH 3305.99. 14) At the outset, we may mention that the product known as 'Nizral Shampoo' gives the nomenclature of the product as shampoo. However, the respondent claim that it is a patent or proprietary medicament as it's essential characteristics is therapeutic in nature. It is the common case of the counsel for the parties the pre-dominant use of the product in question is to be taken into consideration while deciding the classification issue. Therefore, it is to be determined as to whether the product in question is primarily used as a shampoo or it is used as a medicament. To find answer to this question, it is necessary to keep in mind the essential characteristics of the product. When the matter is examined from the aforesaid pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eactions Topical treatment with Nizral Shampoo 2% is generally well tolerated. As with other Shampoos, a local burning sensation, itching, irritation and oily/dry hair may occur, but are rare, during the period of use of Nizral Shampoo 2%. In rare instances, mainly in patients with chemically damaged hair or grey hair, a discolouration of the hair has been observed. Overdosage Not expected as Nizral Shampoo 2% is intended for external use only. In the event of accident ingestion, only supportive measures should be carried out. In order to avoid aspiration, neither emesis nor gastric lavage should be performed. 15) Thus, not only limited period use is stated, another important feature that appears in the literature supplied by the respondent is the information for the 'patient', describing the user of the product as a 'patient'. It is as under: Patient information Ketoconazole Shampoo 2% Nizral Shampoo 2% You have been advised by your doctor to use this shampoo to treat dandruff. This leaflet gives you some information that you should keep in mine while using Nizral Shampoo. It also gives some background information on dandruff, which is imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department as well as the assessee were almost on the same lines as in the present case, namely, whether the said product was Pharmaceutical product or it was a cosmetic/toiletry preparation. The only difference was of sub-headings under those Chapters. This Court went into the essential characteristics of the product and found it that dominant use of the product was medicinal, as it was sold only on medical prescription as a medicine for treatment of disease known as Seborrhoeic Dermatitis, commonly known as Dandruff. It was manufactured under a Drug Licence; the Food and Drug Administration had certified it as a Drug; and the Drug Controller had categorically opined that Selenium Sulfide present in Selsun was in a therapeutic concentration etc. The relevant passages from the said judgment throwing light on these aspects are reproduced below: 19. So far as medicinal properties of the product are concerned it can be gathered from the technical and/or pharmaceutical references that Selenium Sulfide has anti-fungal and anti-seborrhoeic properties and is used in a detergent medium for the treatment of dandruff on the scalp which is milder form of Seborrhoeic Dermatitis and Tin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng insects. 27. We cannot ignore the above broad classification while considering the character of the product in question. Certainly, the product in question is not intended for cleansing, beautifying, promoting attractiveness or altering appearance. On the other hand it is intended to cure certain diseases as mentioned supra. 28. The fact that the appellants have previously described the product as Selsun Shampoo will not conclude the controversy when the true nature of the product falls for determination. In fact, notwithstanding the fact that the appellants have described the product as Selsun Shampoo, the Central Board of Excise and Customs, as noticed earlier, has classified the same as patent and proprietary medicine. The respondents have accepted the same. Therefore, there is no force in the submission of the learned counsel for the respondents that the product must be equated with shampoo. 29. The contention based on chapter notes is also not correct. One of the reasons given by the authorities below for holding that Selsun would fall under Chapter 33 was that having regard to the composition, the product will come within the purview of Note 2 to Chapter 33 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the interpretation of Item 26-AA. This is not correct. Item 68 was only intended as a residuary item. It covers goods not expressly mentioned in any of the earlier items. If, as assumed by the Tribunal, the poles manufactured were rightly classified under Item 26-AA, the question of revising the classification cannot arise merely because Item 68 is introduced to bring into the tax net items not covered by the various items set out in the Schedule. It does not and cannot affect the interpretation of the items enumerated in the Schedule. This logic of the Tribunal is, therefore, clearly wrong. 34. This judgment supports the case of the appellant when it is contended that there is no good reason to change the classification merely on the ground of coming into force of the new Central Excise Tariff Act, 1985 without showing more that the product has changed its character. 35. The learned counsel also placed reliance on a number of judgments to support his argument that in common and commercial parlance the product is known as medicine rather than cosmetic. As pointed out already and in support of that submission, affidavits and letters from chemists, doctors and customers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims that the item is used for treatment and prophlaxis of infections in which the yeast pityrosporum is involved such as pityriasis versicolor (localized), seborrhoeic dermatitis and pityriasis capitis( dandruff). The procedure for treatment and the adverse reactions on such treatment due to overdose is also stated in the pamphlet. The Apex court, in the case of Muller Phipps (India) Ltd. v. CCE, 2004 (167) ELT 347 (SC) has clearly held that once the item has been manufactured under a Drug licence and the Department has treated the item as a Drug, it would not cease to be one notwithstanding the fact that new Tariff Act has come into force. The Apex Court again held in the case of CCE v. Pandit D.P. Sharma, 2003 (154) ELT 324 (SC) that once in the common parlance the item is treated as a medicament and manufactured under drug licence and the evidence is produced by the party with regard to the item being a medicament, then it should be treated as such and should not treat 'Himtaj Oil' as 'perfumed hair oil'. The Apex Court's ruling in the case of B.P.L. Pharmaceuticals Ltd. v. CCE, 1995 (77) ELT 485 has held that 'Selsun' and anti-dandruff preparatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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