TMI Blog2015 (8) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... rate that curative or prophylactic value is only subsidiary in nature or that the product is covered by the description under chapter notes 5, namely, either it is chiropody or barrier cream to give protection against skin irritants. If the Department fails to discharge this onus, the product has to be treated as medicament and would be covered under Chapter 30. Tribunal, while deciding that the aforesaid product is a medicament, pointed out that the product was formulated and essentially used for treatment of 'cracked heels', protection from further cracks in the human heels due to extreme climatic conditions and low humidity, constant exposure of feet to water and due to absence of shoe or other protection while walking. It also found that this product was manufactured under a drug licence as drug authorities had treated the same as a medicament. The Tribunal found that the usage of this product was related to the effect of therapeutic or mitigating substance of prophylactic substances added. Thus, the effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparations are specifically included, meaning thereby they are to be treated as beauty or make-up preparations or preparations for care of the skin. At the same time, medicaments are specifically excluded therefrom. We would also like to point out here certain chapter notes of Chapter 30 which are pressed into service by the Revenue in order to claim that VHG is nothing but preparation for the care of the skin. These are chapter notes 2 and 5 and we reproduce the same as under: 2. Heading Nos. 33.03 to 33.07 apply, inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings with labels, literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialized to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value. 5. Heading No. 33.04 applies, inter alia, to the following products : beauty creams, vanishing creams, cold creams, make-up creams, cleansing creams, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tic or prophylactic properties; (e) Soap or other products of Chapter 34 containing added medicaments; (f) Preparations with a basis of plaster for use in dentistry (Chapter 34); (g) Blood albumin not prepared for therapeutic or for prophylactic uses (Chapter 35). 2. For the purposes of heading No. 30.03- (i) 'medicaments' means goods (other than foods or beverages such as dietetic, diabetic or fortified foods, tonic beverages) not falling within heading No. 30.03 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; (ii) 'Patent or proprietary medicaments' means any drug or medicinal preparation, in whatever form, for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph, in a Pharmacopoeia, Formulary or other publications, namely:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the skin diseases. That is the clear intent of chapter note 5 of Chapter 33. This is made further clear with the heading of chapter note no. 1(d) of Chapter 30 which specifically excludes preparation of Chapter 33 even if they have therapeutic or prophylactic properties. However, a conjoint reading of note 5 of Chapter 33 and note 1(d) of Chapter 30 needs us to clarify that in order to see as to whether a particular preparation falls under Chapter 33 or not (or gets excluded from Chapter 30), such therapeutic or prophylactic properties have to be subsidiary in nature. Further, medicaments are specifically defined in note 2 of Chapter 30 and the attributes of this definition are to be kept in mind in order to decide whether a particular product is a medicament or not. To put it in a nutshell, if a particular product is substantially for the care of skin and simply because it contains subsidiary pharmaceutical or antiseptic constituents or is having subsidiary curative or prophylactic value, it would not become medicament and would still qualify as the product for the care of the skin. There would be certain products which would be purely for the care of skin and certain other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Tinea Versicolour 2.5% of this compound is the therapeutic quantity. xx xx xx 24. Elaborating the above submissions, the learned counsel for the respondents invited our attention to chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting attractiveness or altering appearance. On the other hand it is intended to cure certain diseases as mentioned supra. xx xx xx 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 are filed to show that the product is sold under prescription only in chemists shops unlike shampoos sold in any shop including provision shops. This conclusion, namely, that the product is understood in the common and commercial parlance as a patent and proprietary medicine was also found by the Central Board of Excise and Customs as early as in 1981 and accepted by the Excise authorities and in the absence of any new material on the side of the respondents there is no difficulty in accepting this contention without referring to decision cited by the counsel for the appellants. 8) The aforesaid case draws and delineates a clear distinction between a 'cosmetic' and a 'drug'. It further lays down that essential characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese products is much higher in hot summer months when this disease frequently erupts. 10) Accepting the aforesaid case set up by the assessee therein, the Court held that the said prickly heat power was a medicament for treatment of red rashes, itching and burning and not merely a powder for care of skin or for the purpose of beauty. The Court was greatly influenced by the fact that a department like Drug Controller and Central Sales Tax authorities had accepted the product in question as medicinal preparation. The discussion which is relevant for our purposes is contained in paras 11 and 12 of the said judgment and we reproduce the same hereinbelow: 11. But in the present case when throughout the meaning given to products in question not only by the department itself but also by other departments like Drug Controller and Central Sales Tax authorities is that the product in question is a medicinal preparation should be accepted. 12. Applying the principles enunciated in BPL Pharmaceuticals Ltd. case and taking into consideration various circumstances as to the manner in which the goods had been treated on the earlier occasions by the department and the product having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CCE, (2006) 3 SCC 266, State of Goa v. Colfax Laboratories Ltd., (2004) 9 SCC 83, and B.P.L. Pharmaceuticals Ltd. v. CCE, 1995 Supp (3) SCC 1]. 35. However, there cannot be a static parameter for the correct classification of a commodity. This Court in Indian Aluminium Cables Ltd. v. Union of India, (1985) 3 SCC 284, has culled out this principle in the following words: (SCC p. 291, para 13): 13. To sum up the true position, the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff. 36. Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance. [See O.K. Play (India) Ltd. v. CCE, (2005) 2 SCC 460, Alpine Industries v. CCE, (2003) 3 SCC 111, Sujanil Chemo Industries v. CCE Customs, (2005) 4 SCC 189, ICPA Health Products (P) Ltd. v. CCE, (2004) 4 SCC 481, Puma Ayurvedic Herb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inant or primary usage of the commodity that is to be taken into account while classifying the product. Another important aspect which needs to be noted is that the combined effect of the aforesaid factors is to be taken into consideration, which would include composition, the product literature, the label, the character of the product and the user to which the product is put. It was also clarified that miniscule quantity of the prophylactic ingredient is not a relevant factor. 13) Discussion on this aspect was again revisited in the case of Commissioner of Central Excise, Mumbai IV v. Ciens Laboratories, Mumbai (2013) 14 SCC 133. In that case, a moisturising cream sold under the brand name 'Moisturex' was the product and it was to be determined as to whether it was used simply for care of the skin or was intended for treating or curing dry skin complaints like fissure feet, dry scaly skin conditions, ichthyosis etc. and, therefore, was a medicament. The argument of the Revenue that this cream was used merely for softening the skin was rejected in the following manner: 15. The contention that Moisturex is a moisturising cream used for softening the skin cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product understand the product to be. If a product's primary function is care and not cure , it is not a medicament. Cosmetic products are used in enhancing or improving a person's appearance or beauty, whereas medicinal products are used to treat or cure some medical condition. A product that is used mainly in curing or treating ailments or diseases and contains curative ingredients even in small quantities, is to be branded as a medicament. 15) After straitening the position in law, we now proceed to apply this principles to the present case. 16) As pointed out above, the product in question, Vaseline Intensive Care Heel Guard, is marketed as a solution for cracked heels and it is claimed that this solution is specially developed by the scientists at Vaseline Research. The composition of this product includes salicylic acid I.P. 1.5% w/w. lactic acid 8.0% w/w. Triclosan 0.1% w/w. Cream base q.s. Salicylic acid is described as keratolytic substance having bacteriostalic and fungicidal properties used in the treatment of fungus infection of the skin. The Tribunal, while deciding that the aforesaid product is a medicament, pointed out that the product was form ..... X X X X Extracts X X X X X X X X Extracts X X X X
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