TMI Blog2017 (6) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with subclause (b) which pertains to cosmetics and toilet preparations including tooth paste, tooth powder, hair oil, face and body lotions, creams and soaps. When a product is manufactured from medicinal drugs, be it Ayurvedic or homeopathic, is used under medical advice for specific disease, merely because it may have an element of improving appearance of the human beings, would not mean that the same is not a drug or a medicine, but a cosmetic. The Tribunal therefore correctly held that the products in question were drugs and medicines and not cosmetics or toilet preparations. If that be so, the consequential effect of the items being included in entry 28A(i) becomes simple. The exclusion clause cannot be applied by simply holding that the product in question is a toothpaste or a tooth powder whether it is a cosmetic or toilet preparation or not. Appeal allowed - decided in favor of assessee. - TAX APPEAL NO. 250 of 2013, TAX APPEAL NO. 357 of 2013, TAX APPEAL NO. 358 of 2013, TAX APPEAL NO. 765 of 2013, CIVIL APPLICATION (OJ) NO. 530 of 2013, And TAX APPEAL NO. 765 of 2013 - - - Dated:- 9-6-2017 - MR. AKIL KURESHI, AND MR. BIREN VAISHNAV, JJ. For The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured by using scientific methods and Ayurvedic products. It was pointed out that all the four items are registered under the Drugs and Cosmetics Act and the assessee has the license to produce and sell them under the said Act. In short, the contention of the assessee before the said authority was that the products in question are pharmaceutical drugs and not cosmetics. 4. The competent authority by an order dated 30.11.2009, passed its determination order, holding that the products in question being hair oil or tooth paste, they would fall under the exclusion clause provided under section 28A of the Schedule II to the VAT Act. The authority was of the opinion that these products may be drugs or medicines, but the exclusion clause contained in section 28A would take them out of such entry since they happened to be used as hair oil and tooth paste. According to the authority therefore these products will fall under residuary entry and invite higher duty. 5. The assessee carried the matter in appeal before the Tribunal. Tribunal by a detailed judgment, held that the products being drugs or medicines, they would fall under entry 28A, and would not be covered in the exclusion clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations would not fall within entry 28A which pertained to drugs and medicines. According to them for exclusion to apply, the item must be cosmetic or toilet preparation and it would not be enough that incidentally it happened to be a toothpaste, tooth powder or a hairoil. 9. Our attention was drawn to the legislative changes and certain judicial pronouncements in support of such contentions. It was contended that all the products are registered under the Drugs and Cosmetics Act and the manufacturers are enjoying necessary licenses for such purpose. These drugs are used under medical advice and are ordinarily not available without prescription. 10. From the above, it can be seen that the central issue is of the correct interpretation of entry 28A, particularly after its amendment with effect from 01.08.2009. For proper understanding, we may reproduce the said entry before and after its amendments. Prior to the amendment of 01.08.2009, entry 28A(i) reads as under: Entry 28A(i) Drugs, medicines vaccines including (Bulk Drug) 11. This entry was substituted by the Government Amendment Act, 2009, which came into effect from 01.04.2009 and reads as under: Entry 28A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered under the exclusion clause introduced in entry 28A(i) of Schedule II. 15. We may notice that the Drugs and Cosmetics Act, 1940, makes a clear distinction between drugs and cosmetics. The term 'drug' has been defined in section 3(b) of the Act which includes all medicines for internal or external use to humans or animals. Term 'cosmetic' is defined under section 3(aaa) as to mean 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 or cosmetic. The Drugs and Cosmetics Act, 1940, thus makes a clear distinction between which product can be classified as drug and a product which can be treated as cosmetic. The standard quality parameters for manufacturing drugs and cosmetics are also separately laid down. It is undisputed that the products in question have been treated as drugs and medicines for the purpose of the Drugs and Cosmetics Act, 1940, and the manufacturers have necessary licenses for manufacturing the same. 16. In cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic. The Tribunal therefore correctly held that the products in question were drugs and medicines and not cosmetics or toilet preparations. If that be so, the consequential effect of the items being included in entry 28A(i) becomes simple. Entry 28A(i) as noted, prior to its amendment, contained only the words Drugs, medicines vaccines including (Bulk Drug) . Post amendment, the exclusion clause provided that after amendment, following words were added but including (b) cosmetics toilet preparations including toothpaste, tooth powder, hair oil, face and body lotions, creams and soaps . For the said inclusion to apply therefrom, a product has to be a cosmetic and toilet preparation. The later portion of the amendment that is including toothpaste, tooth powder etc. would not govern the interpretation of the main portion of the exclusion clause viz. the cosmetics and toilet preparations. In other words, the exclusion clause cannot be applied by simply holding that the product in question is a toothpaste or a tooth powder whether it is a cosmetic or toilet preparation or not. We may refer to the statements of objects and reasons for introducing the said amendment which provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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