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2018 (4) TMI 811

e and entirely correspond to the description of goods under HSN 3004 - N/N. 1/2017-CT(Rate) dated 28/06/2017. - Held that: - there is no dispute that the products are manufactured under valid drug license and following the formula prescribed in the authoritative textbooks of Ayurveda. A few ingredients may have been added for preservation of the quality of the product, which, as settled by the apex court on several occasions, should not be considered material while ascertaining the underlying Ayurvedic nature of the product. - It appears only the products, Rupam (Pimple pack) and Pailab (Anti-crack cream) of the list of their products are offered for treatment or prevention of specific skin disorders. The products, namely, Swarnajyoti, Sunayana and Tarumitra-60 have not yet come into existence, and, therefore, excluded from the ambit of examination for the purpose of this ruling. The other products are either already specified under heading 3304 (like talcum powder, sunscreen, moisturising lotion etc.) and, therefore, cannot be considered for inclusion under heading 3004. The remaining products mentioned in the list submitted by them are not offered primarily as medicament .....

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atches, ensures dazzling liveliness. Enhances glamour and beauty Rupam Pimple Pack Glossy skin without pimples and rashes Tanurima Baby Skin Care Fair and glossy skin for your baby Romancho (lavender) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and pimples. Romancho (Vanilla) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and pimples. Romancho (Kewra) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and pimples. Swarnabho Skin Polishing and fairness oil Keeps skin soft, fair, glowing, stops pre-mature ageing and wrinkling of skin, pr .....

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and toning of skin along with hydrating the skin to make it glow, fresh and smooth. Helps to skin and tighten skin pores. Make skin soft and more elastic, reduces skin oilyness. Twaka Snigdha (Neem) Skin Toner Helps in the normal firming and toning of skin along with hydrating the skin to make it glow, fresh and smooth. Helps to skin and tighten skin pores. Make skin soft and more elastic, reduces skin oilyness. Twaka Snigdha (Rose) Skin Toner helps in the normal firming and toning of skin along with hydrating the skin to make it glow, fresh and smooth. Helps to skin and tighten skin pores. Make skin soft and more elastic, reduces skin oilyness. Sukhparash Face & Body Cream Prevents from pimples, blemishes and skin rashes. Helps to cure minor and sunburn quantity Namrata Moisturizer for normal to dry skin Helps to moisturize, soften and hydrate the skin. Prevents skin from rashes and burning sensation Pailab Anti-Crack cream antibacterial & anti-septic for removal of cracked feet Aadrita Moisturizer for Oily skin helps to moisturize, soften and hydrate the skin. Prevents the skin from rashes and burning sensation Komal Parash Baby Body Talc Soothing agent having anti-bacte .....

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ses have been obtained are held by the apex court as medicaments notwithstanding the fact that they have cosmetic value too (for example, prickly heat powder, anti-dandruff shampoo, anti-pimple herbal powder etc.). If the product can be used for the treatment of specific ailments and the ingredients used are those specified in the medical or pharmacology books, a strong case exists for it being classified as a medicament. 6. There is an apparent contradiction between Note 1 to Chapter 30 and the language of the heading 3304 in excluding medicaments from the skin care products falling there under. The AAR resolves the contradiction by retaining in 3304 such skin care preparations as having only incidental or subsidiary therapeutic or prophylactic value. Other skin care preparations having substantial therapeutic or prophylactic use should be treated as medicaments under heading 3004. In other words, it is not sufficient that a skin care preparation incidentally or in a small way helps in controlling skin disease. Its curative or preventive value must be substantial, and the product must be manufactured primarily to control or cure a skin-related disease. That is to say, if preparati .....

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eterminative for the issue involved. The tests are I. Whether the item is commonly understood as a medicament which is called the common parlance test (emphasis added). For this test, it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls into the category of medicament, it will not be an item of common use (emphasis added). A user will use it only for treating a particular ailment and will stop its use after the ailment is cured. The approach of the consumer towards the product is very material. One may buy any of the ordinary soaps available in the market. But if one has a skin problem, he may have to buy a medicated soap. Such soap will not be an ordinary cosmetic. It will be medicament falling in Chapter 30 of the Tariff Act. II Are the ingredients used in the product mentioned in the authoritative textbooks on Ayurveda?.........What is to be seen is whether the products are likely to be in common use by normal consumers. Common parlance meaning and understanding is a strong factor in the determination of the classification of products. One need not resort to the scientific or technical meaning of the terms used (emphasis add .....

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using them and not the scientific and technical meaning of the terms and expressions used (emphasis added). The approach of the consumer or user towards the product, thus, assumes significance. What is important to be seen is how the consumer looks at a product and what is his perception in respect of such product. The user's understanding is a strong factor in the determination of the classification of the products. 13. In the light of the above discussion, we should now find out what are parameters and their relative importance in deciding whether a product should fall under subhead 3004 as an Ayurvedic Medicament or be classified as a skin care preparation (other than medicaments) under subhead 3304. Medicaments are not defined under the GST Act or in the First Schedule of the Customs Tariff Act, 1975 (hereinafter the Tariff Act), with which the GST Act has been aligned for the purpose of classification. The methods settled by the apex court for determining whether a product is to be classified as medicaments for fixing the tariff should be followed as the only lawful course. The Apex Court has settled for a twin test method. It means how the product is understood in common .....

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metics 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. On the basis of this Note it was argued that even if a product has some curative or prophylactic value, it will still be cosmetic. We cannot accept this argument. The learned counsel has overlooked the use of the word 'subsidiary' in the said note from which it follows that a subsidiary curative or prophylactic use will not convert a cosmetic into a medicament. We have tried to illustrate this by giving the example of a bald man treating his baldness by use of the Ayurvedic product. The curative use of the product is primary in that example and not subsidiary. The subsidiary result is an improvement in appearance. Therefore, in our view, Note 2 to Chapter 33 does not help the respondent. Rather Note 5 to the said Chapter, makes it clear that the products which fall under heading 33.04 are primarily beauty or make up preparations. They may incidentally help in protection against skin irritants. They may also help as a skin t .....

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hand, if the skincare preparation is specifically included under heading 3304 (for example sunscreen or suntan preparations, talcum powder, face powder, moisturizing lotion etc.), it is not to be classified as a medicament under heading 3004 in terms of Note 1(e) to Chapter 30, even if it has therapeutic or prophylactic properties of whatever degree. 19. It is acknowledged that nearly all proper skin care preparations have therapeutic or prophylactic properties, as they help in maintaining or improving the health of the skin. On the other hand, skin care preparations that are used as medicaments may have the effect of enhancing appearance and beauty by restoring skin health. The essential difference, therefore, lies in the user s perception of a particular product. If the user consumes the product primarily for cure from or treatment or mitigation of or for prevention of a specific skin disease or disorder, it should be treated as a medicament classifiable under heading 3004 (unless, of course, it has been specifically included under heading 3304). The effect of enhancing appearance of the skin or beauty is not what the product is offered for or used by the consumer. 20. In the con .....

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re yet to be manufactured by them and are presently not in existence. This was also admitted by the Applicant during Personal Hearing on 04.04.2018. 23. In light of the above discussion, it appears only the products, Rupam (Pimple pack) and Pailab (Anti-crack cream) of the list of their products are offered for treatment or prevention of specific skin disorders. The products, namely, Swarnajyoti, Sunayana and Tarumitra-60 have not yet come into existence, and, therefore, excluded from the ambit of examination for the purpose of this ruling. The other products are either already specified under heading 3304 (like talcum powder, sunscreen, moisturising lotion etc.) and, therefore, cannot be considered for inclusion under heading 3004. The remaining products mentioned in the list submitted by them are not offered primarily as medicaments and, therefore, not to be included under heading 3004. In view of the foregoing we rule as under RULING 1. Preparations for the care of the skin namely, Rupam (Pimple Pack) and Pailab (Anti-Crack Cream), in the list submitted by the Applicant of the Application are classifiable as Medicament under heading 3004 of the Customs Tariff Act, 1975. Preparat .....

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