TMI Blog2015 (11) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are involved in the proceedings before us are basically treated as drugs and medicines although they have ancillary use as cosmetics and toilet products, and as such, the respondent-authorities herein were not right in treating those articles as cosmetics and toilet products for the purpose of levy of tax at 12.5 per cent in terms of entry No. 1 of the Fifth Schedule to the Act of 2003. Rather, tax on those products was to be levied at per cent in terms of entry No. 21 of the Fourth Schedule to the aforesaid Act. - notification/letters/orders classification in so far they relate to the impugned goods, so specified in the writ petitions aforesaid are hereby quashed and set aside - Decided in favour of assessee. - W. P. (C) Nos. 3023, 3500, 3599, 4330, 5622 of 2008 - - - Dated:- 20-3-2015 - SREEDHAR RAO K. ACTG. C. J. AND SAIKIA P. K. J. Dr. Ashok Saraf, Senior Advocate, D. Baruah, Ms. N. Hawelia, Ms. M. L. Gope, S. Chetia, A. Goyal, M. Khan, O. P. Bhati, M. K. Jain, T. C. Das, R. L. Yadav, Ms. K. Yadav, Ms. A. Barua, A. Kabra and J. Choudhury for the petitioners. The SC. Finance and Taxation and D. Saikia for the respondents. ORDER Since all these proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut then, the said Explanation did not exclude goods which are basically drugs and medicines inasmuch as entry 21 of the Fourth Schedule to the Act of 2003 itself relates to drugs and medicines. 6. In that connection, it has been argued that only for some drugs and medicines capable of being as cosmetics and toilet preparations, it cannot be concluded that such products cease to become drugs and medicines as contemplated under the law since decisive test is what is main use of such products. According to Dr. Saraf, learned senior counsel, the aforesaid articles are basically used for medicinal purpose. 7. In support of such contention, the decision of Puma Ayurvedic Herbal (P.) Ltd. v. Commissioner, Central Excise, Nagpur reported in [2006] 145 STC 200 (SC) : [2006] 3 SCC 266 as well as the decision of V.C. Ramalingam and Sons v. State of Tamil Nadu reported in [2002] 127 STC 382 (Mad.) were relied on. 8. It has also been contended that percentage of medicinal components in such drugs and medicines is immaterial. The fact that percentage of medicament in a product is less does not ipso facto mean that the product is not medicament. In support of such contention, the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2007/146 passed by the Commissioner of Tax on July 3, 2008 whereby product 'Aspoline' manufactured by the petitioners-company had been classified as cosmetic falling outside the scope of entry 21 of the Fourth Schedule to the Act of 2003 and as such, liable to be taxed at 12.5 per cent in terms of entry 1 of Fifth Schedule of the said Act. 13. In W.P. (C) No. 3500 of 2008, the petitioner is Shalimar Chemical Works Pvt. Ltd., (hereinafter referred to as petitioner No. 5), questioned the order dated December 1, 2008, clarification dated May 31, 2008 and July 3, 2007, passed by the Commissioner of Tax whereby product Navaratna Ayurvedic oil manufactured by the petitioner-company had been classified as cosmetic falling outside the scope of entry 21 of the Fourth Schedule of the Act of 2003 and as such, is liable to be taxed at 12.5 per cent in terms of entry 1 of the Fifth Schedule to the said Act. 14. Dr. Saraf, learned senior counsel in all those proceeding being a counsel for the petitioners, advanced arguments, similar to the arguments in W.P. (C) No. 3023 of 2008 to contend that the products in all those proceedings cannot be assessed at 12.5 per cent in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sifiable under the Central Excise Tariff Act, 1985 as cosmetics under Chapter 33 or as medicaments under section 30 thereof. 18. Relying on the opinion of Directorate of Ayurveda and some other evidence including the licence granted by the Drugs Controller, the Collector of Appeals decided in favour of the aforesaid company. However, CEGAT reversed the decision for which the appellant preferred an appeal before the apex court of the country which is decided in favour of the company in the following manner (pages 208 and 209 in 145 STC):- 19. The word 'medicament' is not defined anywhere while the word 'cosmetic' is defined in the Drugs and Cosmetics Act, 1940 as under:- '3A. Cosmetic means any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic' 20. It will be seen from the above definition of 'cosmetic' that the cosmetic products are meant to improve appearance of a person, that is, they enhance bea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis on the term shall not include and the same is designed to exclude the goods which are primarily cosmetic in use but have a subsidiary use as drugs and medicines. However, when some goods which are drugs and medicines in their primary use but have cosmetic use as well cannot be treated as product covered by entry 1 of the Fifth Schedule. 22. We have also found that when a product in common parlance and on user perception is found to be a drug, the same needs to be concluded as drug although it can be used in ancillary measure as cosmetic product as well. The decisions referred to above make such position clear. 23. Coming back to our case, we have found that products which are involved in the proceedings before us are basically treated as drugs and medicines although they have ancillary use as cosmetics and toilet products, and as such, the respondent-authorities herein were not right in treating those articles as cosmetics and toilet products for the purpose of levy of tax at 12.5 per cent in terms of entry No. 1 of the Fifth Schedule to the Act of 2003. Rather, tax on those products was to be levied at per cent in terms of entry No. 21 of the Fourth Schedule to the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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