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TMI Blog2023 (5) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ied ........ 72 Conclusion ................................................................................................ 76 Preliminary and brief outline 1. This appeal is directed against the common judgment and order dated 31.01.2018, as passed by the Customs, Excise and Service Tax Appellate Tribunal Hereinafter also referred to as 'the Tribunal', insofar as relating to Appeal No. E/30050/2016 The order bearing No. 30121 of 2018, whereby the Tribunal has disapproved and reversed the order dated 16.10.2015, as passed by the Commissioner of Customs and Central Excise, Hyderabad Hereinafter also referred to as 'the Adjudicating Authority' in HYD-EXCUS-004-COM-042-15-16. 1.1. By the aforesaid order dated 16.10.2015 in relation to the period from December 2013 to November 2014, the Adjudicating Authority held that the product in question, known as "Aswini Homeo Arnica Hair Oil" For short, 'AHAHO' could not be classified as 'medicament' under Tariff Item 3003 90 14 or under any item stated in Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985 Hereinafter also referred to as 'the Act of 1985'- In the discussion hereinafter, reference to the relevant Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, AHAHO, would be classified as 'medicament' under Chapter 30 or as 'cosmetic' under Chapter 33 of the First Schedule to the Act of 1985. The other question is as to whether because of amendment of the entries in the said Chapters 30 and 33 in the year 2012, classification of the product in question required re-examination, even though the same was classified as 'medicament' under the said Chapter 30 since the year 1994. 2.1. With reference to the aforementioned questions, we may take note of the relevant background aspects and stand of the respective parties with reference to the show-cause notice to the respondent and its reply. The Background: Show-Cause Notice and Reply 3. The respondent, having registration number ADHPB1884HEM003 under the central excise, is engaged in the manufacture of the product in question, AHAHO, in its units at Moosapet (since the year 1994), Maheshwaram and Bala Nagar. Further, the respondent had classified the product under Tariff Item 3003 90 14 as 'medicament' and paid the excise duty at concessional rate accordingly. This classification of the product in question was examined as many as four times during the period 1994-2004 and, according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have wrongly classified 'Aswini Homeo Arnica Hair Oil' and short the duty of Rs. 2,72,14,266/- which appears to be recoverable from them under Section 11A of the Central Excise Act, 1944. It also appears that they are liable for payment of interest on the said amount of Central Excise duty under Section 11AA of the Central Excise Act, 1944. It also appears that they are liable for penal action under Rule 25 of the Central Excise Rules, 2002 for adopting incorrect classification and thus resorting to short payment of duty and for contravening the provisions of the Central Excise Act, 1944, and the rules made there under with intention to evade payment of duty. 05. Now, therefore, M/s Aswini Homeo Pharmacy, 6-48,49,6-50 Aswini Homeo Pharmacy Unit, Balanagar Hyderabad are hereby required to show cause to the Commissioner of Customs & Central Excise, Hyderabad-IV Commissionerate, Ground Floor, Posnett Bhavan, Tilak Road, Hyderabad within thirty (30) days of receipt of this notice, as to why; i) Central Excise duty of Rs. 2,72,14,266/ (Rupees Two Crores seventy two lakhs fourteen thousand two hundred sixty six only), should not be demanded from them under sub section (7A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Schedule K to the Drugs and Cosmetics Rules, 1945 Hereinafter also referred to as 'the Rules of 1945'; that the product would cure/prevent the lack of blood circulation to the hair roots, hair fall (alopecia), dandruff, headache and lack of sleep (insomnia); and that healing from the said diseases would lead to good health in terms of growth and maintenance of natural colour in the hair. (iii) That AHAHO was a medicament in terms of market parlance, evidenced by its use over a period of nearly 19 years; by its manufacturing license issued by the Drug Controller and by the Directorate of Ayush; and from listing of the drugs used, in authoritative text books like Materia Medica of Homeopathic Drugs. Thus, the twin tests as accepted by this Court for classification of the product as 'medicament' were duly satisfied. 5.2. The respondent further elaborated in its reply that the product was not 'cosmetic', as the ingredients used had prophylactic properties and it was not applied for cleansing or beautifying or promoting attractiveness or altering the appearance. The depiction of a lady with long flowing hair on its label was only subjective and could be interpreted as indicative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3003.20 - Medicaments (other than patent or proprietary) other than those which are exclusively Ayurvedic, Unani, Siddha, Homeopathic or Biochemic systems: 3003.31 -- Manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940) or Homeopathic Pharmacopeia of India or the United States of America or the United Kingdom or the German Homeopathic Pharmacopeia, as the case may be, and sold under the name as specified in such books or pharmacopeia 3003.32 -- Medicaments (including veterinary medicaments) used in bio-chemic system and not bearing a brand name 3003.39 -- Other Chapter 33: 33.05 Preparations for use on the hair 3305.10 - Perfumed hair oils - Other 3305.91 -- Hair fixer 3305.99 -- Other PRESENT TARIFF HEADINGS (as per Central Excise Tariff, 2012); 3003 MEDICAMENTS (EXCLUDING GOODS OF HEADING 3002, 3005 OR 3006) CONSISTING OF TWO OR MORE CONSTITUENTS WHICH HAVE BEEN MIXED TOGETHER FOR THERAPEUTIC OR PROPHYLACTIC USES, NOT PUT UP IN MEASURED DOSES OR IN FORMS OR PACKINGS FOR RETAIL SALE 3003 90 - - Other : - - - Ayurvedic, Unani, Siddha, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to be deleted. Similarly, under Chapter 33 also, the phrase Hair Oil became prominent under which, subsidiary headings of "perfumed hair oil" and "others" came to be specified. All these changes certainly merit interpretation of the new entries vis-à-vis the product in question, than what was decided or settled earlier. Thus, even by applying the very ratio of Vicco Laboratories judgment, a different interpretation of tariff can lead to change of classification of a product even though the constituents and use of the product has not undergone any change. Secondly, the additional evidence adduced in the notices certainly merit consideration. Accordingly, I hold that the impugned notice do not suffer from any imperfection on account of the said judgment. Hence the first question is answered in the negative" 6.4. The Adjudicating Authority also observed that the impugned notice had been issued in the normal period and it was not a case where issue was sought to be reopened for the period for which it was settled. However, according to the learned Adjudicating Authority, the criteria and ideology in the matter of classification of such products was dynamic in character and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter note under Chapter 33, goods falling under sub-headings 3303 to 3307 would merit classification under these headings, irrespective of the subsidiary therapeutic properties of the product." 6.6. The Adjudicating Authority was of the view that AHAHO did not qualify the first criteria as specified by the Board as, though availability of AHAHO in General Stores cannot be sole criteria but, it was common knowledge that one was not required to go to Homeo Stores or Homeo Physician to buy AHAHO; it did not contain the mandatory conditions as prescribed under the Drugs and Cosmetics Act, 1940 Hereinafter also referred to as 'the Act of 1940' on contents of the label; there were no specifications relating to its dosage and duration of use and no contra-indications were stated irrespective of quantum or duration of use, which was against the basic concept of a medicament whose overdose result in contra-indications like diarrhoea, acidity, ulceration, rashes, etc.; and it did not claim to cure any particular diseases like alopecia or insomnia but only claimed to be able to prevent and control such diseases. 6.7. The analysis of the learned Adjudicating Authority in relation to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, by mentioning that there are no contra indications, it implies that irrespective of the quantum or duration of usage, there is no adverse effect on the scalp or skin, which is against the basic concept of a medicament, which is prescribed or used for a limited period and overdose of a medicament is known to result in contra indications like diahorrea, acidity, ulceration, rashes etc. Even a medically prescribed skin cream or ointment has a limited use for the particular indication or symptom. We normally find a warning on such creams that prolonged usage will result or cause irritational symptoms, which if persist, should be remedied by a consultation with the Doctor. Nothing of that sort is found herein. In any case, the point that becomes clear is that AHAHO is a neither a prescribed medicament of a medical practitioner nor it is claimed to have any substantial therapeutic or prophylactic properties. I also find that as regards labels, Hon'ble Supreme court observed in the case of Ishaan Laboratories (supra) that "Further it was obvious from the labels of the products which we have ourselves inspected in the court that there is a claim made in each of the label of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... headings of Chapter 3303 to 3307, even if they have therapeutic or prophylactic properties. 6.11. The Adjudicating Authority also referred to the Board Circular No. 890/10/2009-CX dated 03.06.2009, clarifying its stance that coconut oil packaged in containers up to 200ml had to be classified as "Hair oil" due to the general view of public; and observed that AHAHO packed in bottles of 50ml, 100ml and 200ml, was to be treated as "Hair oil" and the 400ml pack cannot surpass this classification, merely because it was not fast-moving. 6.12. Hence, the Adjudicating Authority was of the view that the product in question could not be classified under Tariff Item 3003 90 14 or under any item stated in Chapter 30. The Adjudicating Authority further observed that when the intention of the framers of the legislation was to tax "Hair oil" at a particular rate, any attempt to evade the same would result in disregarding the law. Accordingly, the Adjudicating Authority, by its order dated 16.10.2015, confirmed the demand and levied interest and penalty on the respondent, as noticed hereinbefore. 6.13. It may be observed, in all fairness to the learned Adjudicating Authority, that in his elabor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition of sale by the authorized medical distributor or retailer under prescription from medical practitioner even though it is mandatory requirement under section 97 (1) of the Drugs & Cosmetic Act, 1940. It also does not contain the dosage to be used or that the dosage as directed by the physician. That it does not contain any that it can cure any particular disease like alopecia (loss of hair) or insomnia (sleep loss). Further he also held that previous orders passed by the Appellate Authority were on the basis of tariff entry before 2012 and after the said period the entries has changed hence needs relook." 7.3. Having taken note of the background aspects of the case, the findings of the Adjudicating Authority, and various decisions cited by the parties in support of their respective contentions, the Tribunal found no reason for which the classification of the product in question was sought to be changed by the Adjudicating Authority. 7.4. In the course of its analysis, the Tribunal, inter alia, observed and held that only for the reason of being sold over the counter and not on a medical prescription would not take the product out of the category of medicine; that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the adjudicating authority cannot take a different view which is not recognized by the branches of medicine. Secondly the product clearly mentions that the product in question is used for other ailments also such as sleep loss, increase of blood circulation and it nowhere depicts itself as for hair care or enhancing beauty of hair. The label indicates the product as Homeoptahic medicine under schedule K, ingredients and their composition, indications, contra indications and mode of application. The content of label thus itself shows that even in common parlance it is understood by the users and the traders as Homeopathic medicine. There is no advice on the label nor does it suggests that it can be used as hair oil. It is not disputed about the fact that the product is made of four Homeopathic medicines as ingredients namely Arnica Mount, Cantharis, Pilocarpin and Cinchona and is used to treat the hair loss, insomnia, dandruff, headache and other ailments. It is manufactured under Drug Licence issued under Rule 25 C of Drugs & Cosmetic Rules 1945 and in terms of Rules 85D by the Director, Indian Medicine & Homeopathy. The licence has been renewed from time to time by the Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect as in said case the product Forest Flower was sold as nourishment to the scalp and hair roots as per the matter mentioned on the packing and it also helped control hair loss and prevents scalp infection, encourages luxurious growth of hairwhereas in the present case the Drug/ licensing Authorities and even the Honble High Court, the Vat authorities and the medical practitioners all have certified the product to be falling under the category of schedule K as Drug and even the product is sold as medicine as known as medicine in common parlance, The judgment of Alpine Industries 2003 (152) E.L.T. 16 (S.C.) as relied upon by the revenue is also not applicable as in the said case the drug licence obtained by the assessee under the Drugs and Cosmetics Act, 1940, itself mentioned that it is a licence for ointment and cream for external application as a non-pharmacopoeia item whereas in the present case the product is registered as Homeoptahic Medicine by the Additional Director, Indian Medicine and Homeopathy Department, Government of Andhra Pradesh. Even the Hon'ble High Court of Andhra Pradesh held the product to be falling under the category of Drug and Medicine and is sold a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above approach and views of the adjudicating authority. We find that the Appellant were earlier issued demand notice on four different occasions and on each occasion the issue stands decided in favour of Appellant by the Appellate Authorities holding the goods to be Homeopathic medicine and liable to duty accordingly. The revenue has placed its reliance upon the judgment of Hon'ble Apex Court in case of M/s Shree Baidynath case supra to confirm the demands. However it is to be observed that the Honble Apex Court in said case has relied upon its judgment in case of B.P.L. PHARMACEUTICALS LTD. Vs. COLLECTOR OF C. EXCISE, VADODARA 1995 (77) E.L.T. 485 (S.C.). wherein it was held that Merely because there is some difference in the tariff entries, the product will not change its character. Something more is required for changing the classification especially when the product remains the same. In the present appeals the product has remained same and the classification issue stands decided in favour of the Appellant in all four previous proceedings against the Appellant. In case of CCE Nagpur Vs. Vicco Laboratories 2005 (179) ELT 17, the Honble Apex Court has held that classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory. 8.2. Learned ASG has strenuously argued that the product in question does not meet the criteria laid down under Chapter 30. It has been submitted that on a reading of the relevant Notes, even if the product is stated to possess certain curative or prophylactic value, it would still be cosmetic, as it excludes those with subsidiary curative and prophylactic value. The learned ASG would submit that the respondent has classified the product under Tariff Item 3003 90 14 but, the said entry provides for medicaments not put in measured doses or packaging whereas, AHAHO is admittedly sold in packaging of 50ml, 100ml, 200ml and 400ml bottles. According to learned ASG, Tariff Item 3305 90 19, specifically meant for "Hair oils", directly covers the product in question, AHAHO. 8.3. Learned ASG has also argued that a specific entry would take precedence over a general entry, as held by this Court in Commissioner of Central Excise, Nagpur v. Shree Baidyanath Ayurved Bhavan Ltd.: (2009) 12 SCC 419; and when "Hair oil" is specifically mentioned in Chapter 33 and when AHAHO's common parlance is that of a general cosmetic requisite, classifying it as a 'medicament' is a far-fetched propositi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been licensed for manufacture and sale as a homeopathic medicine by the Director, Indian Medicines and Homeopathy, Government of Andhra Pradesh; it cures/prevents alopecia, dandruff, hair fall, etc., due to its therapeutic and prophylactic properties; and its label indicates the nature of the product as a homeopathic medicine under Schedule K to the Rules of 1945 with ingredients, composition, indications, contra-indications and mode of application. 9.1. Learned senior counsel would submit that although there were changes in the tariff structure in the year 2012 but then, notwithstanding the amendments, AHAHO has remained classifiable under Chapter 30, as its ingredients or manufacturing process did not undergo any change warranting its classification as a cosmetic under Chapter 33. Elaborating on these aspects, learned senior counsel has submitted that until 2004-05 the tariff entry was only 3003 39 for Homeopathic medicines and from 2005-06, 3003.39 was divided into 3003 for wholesale and 3004 for retail sale. Consequent to amendment of the First Schedule to the Central Excise Tariff Act, 1985 during the year 2005-06 introducing eight-digit classification system, the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Pharmacy: Civil Appeal No.9494-9495 of 2011. 9.3. Learned senior counsel has submitted that there is no need for invoking the common parlance test as the nature of the product is certified by competent authority as a medicament and that the appellant had not made any market enquiries to establish that the product is a cosmetic besides not disproving the factual evidence in favour of the respondent. 9.4. Learned senior counsel has relied upon the decision in Commissioner of Central Excise, Calcutta v. Sharma Chemical Works: (2003) 5 SCC 60 to submit that merely because a product is sold across counters and without a prescription, it would not per se lead to the conclusion of it being not a medicament. The method of usage of AHAHO is clearly stated on its label; and Materia Medica clearly states the therapeutic properties of ingredients used. It has also been submitted that several drugs like Anacin, Dolo 650, Cough syrups, etc. are available across the counter; and none of the Homeo drugs require any prescription for purchasing. Another decision of this Court in the case of Meghdoot Gramodyog Sewa Sansthan, U.P. v. Commissioner of Central Excise, Lucknow: (2005) 4 SCC 15 has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o placed reliance on the decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra) wherein a similar product marketed in the name of "Sunny Arnica Hair Oil" was held to be medicament, covered under Chapter 30. However, the Department attempted to rely on the amendment of the tariff entries in the year 2012 as its justification for re-examination of the classification of the product in question. 12. We have closely examined the divergent findings recorded by the Adjudicating Authority and the Tribunal and have also taken note of the competing stands taken by the parties. In order to examine the root question as to whether the product in question is classifiable as 'medicament' under Chapter 30 or would fall in the classification of 'cosmetic or toilet preparations' under Chapter 33 as also the other question as regards justification for re-examination of the previous classification of the product in question, we may, in the first place, take note of the principles discernible from the cited decisions. The principles in the cited decisions 13. As regards justification for re-examination of the classification of the product in question, the Adjudicating Authority observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... character, common and commercial parlance, the product was liable to be classified as a medicament. Further, this Court accepted the submission on behalf of the assessee that merely because of some difference in the tariff entries, the product will not change its character; and something more is required for changing the classification, especially when the product remains the same. The relevant observations and expositions of this Court read as under: - "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 the Schedule to Central Excise Tariff Act, 1985 is without substance. According to the authorities the product contains only subsidiary pharmaceutical value and. Therefore, notwithstanding the product having medicinal value will fall under Chapter 33. We have already set out Note 2 to Chapter 33. In order to attract Note 2 to Chapter 33 the product must first be cosmetic, that the product should be suitable for use as goods under Headings Nos. 33.03 to 33.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 are filed to show that the product is sold under prescription only in chemists' sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radanti toothpaste and tooth powder as under Chapter 30 with pharmaceutical products or as under Chapter 33 with essential oils and resinoids, perfumery, cosmetics or toilet preparations. After applying the common parlance test of classification, and while relying on BPL Pharmaceuticals (supra) and other decisions, this Court held against the attempt at re-classification in the following words: - "4. The mere decision of a court of law without more cannot be justification enough for changing the classification without a change in the nature of a product or a change in the use of the product, or a fresh interpretation of the tariff heading by such decision." 14. At this juncture, it shall be apposite to refer to the two decisions pertaining to the assessee Shree Baidyanath Ayurved Bhavan Ltd. 14.1. In the decision rendered on 13.04.2009, which has been referred to by the learned counsel for the parties [reported in (2009) 12 SCC 419], extensive reference has been made to the previous decision rendered on 30.03.1995 in relation to the same assessee and concerning the classification of the same product namely Dant Manjan Lal 'DML', for short. In the said previous decision, being t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of any evidence on record to show and prove that the common man who uses this Dant Manjan daily to clean his teeth considers this Dant Manjan as a medicine and not a toilet requisite." It is this line of reasoning with which we are in agreement. The Tribunal rejected the claim of the appellant holding that ordinarily a medicine is prescribed by a medical practitioner and it is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes. We are, therefore, of the opinion that the Tribunal applied the correct principles in concluding that the product in question was not a medicinal preparation ('Ayurvedic') and, therefore, the appellant was not entitled to the benefit of the exemption notification. Having heard the learned counsel at length and having perused the line of reasoning adopted by the Tribunal with which we are in general agreement, we see no reason to interfere with the conclusion reached by the Tribunal and, therefore, we dismiss these appeals, but make no order as to costs." 14.2. The aforesaid case related to the Rules framed under the Act of 1944 and the Notification issued thereunder. During the pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in order to determine whether a product is a cosmetic or medicament, a twin test (common parlance test being one of them) has found favour with the courts. This is what this Court observed: (SCC pp. 269-70, para 2) "2. ... In order to determine whether a product is a cosmetic or a medicament a twin test has found favour with the courts. The test has approval of this Court also vide CCE v. Richardson Hindustan Ltd. [(2004) 9 SCC 156] There is no dispute about this as even the Revenue accepts that the test is determinative for the issue involved. The tests are: I. Whether the item is commonly understood as a medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it will not be an item of common use. 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 a soap will not be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court. *** *** *** 56. There is no doubt that a specific entry must prevail over a general entry. This is reflected from Rule 3(a) of the general Rules of interpretation that states that Heading which provides the most specific description shall be preferred to Headings providing a more general description. DML is a tooth powder which has not been held to be ayurvedic medicine in common parlance in Baidyanath I [(1996) 9 SCC 402]. 57. We have already observed that common parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosmetic. There being no change in the nature, character and uses of DML, it has to be held to be a tooth powder - as held in Baidyanath 1. DML is used routinely for dental hygiene. Since tooth powder is specifically covered by Chapter Sub-Heading 3306, it has to be classified thereunder. By virtue of Chapter Note 1(d) of Chapter 30 even if the product DMLhas some therapeutic or medicinal properties, the product stands excluded from Chapter 30. 58. The learned Senior Counsel for Baidyanath relied upon the judgment of this Court in Vicco Laboratories [(2005) 4 SCC 17 : (2005) 179 ELT 17] to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer claimed the product to be an Ayurvedic medicinal preparation product for dental care. The view of the Tribunal was upheld by this Court by holding (at SCC pp. 404-05, para 3) that "ordinarily a medicine is prescribed by a medical practitioner and it is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes". *** *** *** 7. ..... It is firmly established that on the question of classification of a product under the Central Excise Tariff Act, "commercial parlance theory" has to be applied. It is true that the entire supply by the appellant of its product "Lip Salve" has been to the Defence Department for use of military personnel but that would also not be determinative of the nature of the product for classifying it. It is not disputed that the product "Lip Salve" is used for the care of the lips. It is a product essentially for "care of skin" and not for "cure of skin". It is, therefore, classifiable as a skin-care cream and not a medicament. From the nature of the product and the use to which it is put, we do not find that the claim of the appellant is acceptable that it is primarily for therapeutic use. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a "medicament". Such preparations which have a subsidiary curative or prophylactic value clearly fall under Entries 33.03 to 33.07 as per Note 2 under Chapter 33. The product clearly is covered by Entry 33.04 read with Note 5 of Chapter 33, it essentially being a preparation for protection of lips or skin. We have also gone through the minority opinion expressed by one of the members of the Tribunal and the reasoning therein supported before us on behalf of the appellant. For the reasons aforesaid, we are unable to agree with the minority view. In the result, we find no merit in these appeals and the same are hereby dismissed." (emphasis supplied) 15.2. In G.C. Jain (supra), this Court held that the words and expressions have to be construed as per trade and understanding usage, unless defined in the statute. This Court said: - "18. Admittedly, the expression "adhesive" is not defined in the Act. It is now well settled that the words and expressions, unless defined in the statute have to be construed in the sense in which persons dealing with them understand i.e. as per trade and understanding and usage." 15.3. In Wockhardt Life Sciences (supra), this Court further ela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Herbal [(2006) 3 SCC 266] , Ishaan Research Lab (P) Ltd. [(2008) 13 SCC 349] and CCE v. Uni Products India Ltd. [(2009) 9 SCC 295] ] *** *** *** 39. In our view, as we have already stated, the combined factors that require to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the user to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the surgeons for the purpose of cleaning or degerming their hands and scrubbing the surface of the skin of the patient before that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under Chapter Sub-Heading 3003 which is a specific entry and not under Chapter Sub-Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assification of a product under the Central Excise Tariff Act, 'commercial parlance theory' has to be applied. It is true that the entire supply by the appellant of its product 'Lip Salve' has been to the Defence Department for use of military personnel but that would also not be determinative of the nature of the product for classifying it. It is not disputed that the product 'Lip Salve' is used for the care of the lips. It is a product essentially for 'care of skin' and not for 'cure of skin'. It is, therefore, classifiable as a skin-care cream and not a medicament. From the nature of the product and the use to which it is put, we do not find that the claim of the appellant is acceptable that it is primarily for therapeutic use." 13. The same would be the position in the present case. The oil is not used for cure of skin but is oil for massage and it takes care of the skin. 14. In this view of the matter, we find no substance in these appeals and they are accordingly dismissed. There shall be no order as to costs." (emphasis supplied) 15.5. In Sharma Chemicals (supra), this Court was concerned with the issue as to whether the product Banphool Oil could be classified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould remain medicines based on the composition of the items, in the following terms: - "5..... A product may be medicinal without having been prescribed by a medical practitioner. It was also not necessary for a person manufacturing medical products to claim classification under Tariff Sub-Heading 3003.30 without establishing that the product had in fact been tested on patients in controlled situations or that the outcome had not been tested for effectiveness. This would be particularly true in the cases where the products are claimed to be based on traditional Ayurvedic formulae. *** *** *** 7. This Court has in similar matters come to the conclusion that items which may be sold under names bearing a "cosmetic" connotation would nevertheless remain medicines based on the composition of the items in B.P.L. Pharmaceuticals Ltd. v. CCE [1995 Supp (3) SCC 1 : (1995) 77 ELT 485]. 8. As far as the first three items listed earlier are concerned, this Court has in CCE v. Pandit D.P. Sharma [(2003) 5 SCC 288 : (2003) 154 ELT 324] and CCE v. Himtaj Ayurvedic Udyog Kendra [(2003) 5 SCC 290 : (2003) 154 ELT 323] in connection with Banphool Oil and Himtaj Oil held that the Ayurvedic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent for the subsequent assessment years, in view of the amendment effected in the APGST Act." 17. Before concluding this segment pertaining to the decided cases, we may also take note of the decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra) which had all through been relied upon by the respondent for the reason that therein, a substantially similar product was held to be a medicament. In fact, in the said decision, the Tribunal examined the questions relating to two products namely, "Sunny Arnica Hair Oil" and "Sunny Arnica Shampoo". As regards the issue concerning the product shampoo, the Tribunal remanded the matter to the lower authority for decision afresh but, as regards hair oil, the Tribunal upheld the contention of the assessee in terms of the opinion of the majority and held that the said product was answering to the description of Homeopathic medicine while predominantly applying the tests pertaining to the ingredients. In the leading opinion, the learned Member of the Tribunal extensively referred to the individual properties of Homeopathic medicines as also the other natural ingredients of the product. The learned Member further underscored the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together, being the common/commercial parlance test i.e., how the product is understood commonly, including by the persons dealing in the same and by the end-users; and the ingredients test i.e., whether the ingredients used in the product are found mentioned in authoritative textbooks [vide Shree Baidyanath Ayurved Bhavan Ltd. (supra)]. The connotations of common parlance test could further be understood from the case of Alpine Industries (supra), that the primary object of such taxing statute being to raise revenue and various products being differently classified for that purpose, the entries are not to be understood in their scientific and technical meaning; rather the terms and expressions used in tariff have to be understood by their popular meaning, that is the meaning attached to them by those dealing with or using the product. Further, as observed in G.C. Jain (supra), the words and expressions, unless defined in the statute have to be construed in the sense in which persons dealing with them understand i.e., as per trade understanding and usage. Yet further, there is no fixed test or static parameter for correct classification of a product and it essentially depends on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Bakson Homeo Pharmacy (supra) that all the ingredients of the product involved in the present case (AHAHO) were equally the ingredients of the product under consideration therein, namely, Arnica Montana, Cantharis, Pilocarpine, Cinchona. As noticed from the relevant pages of Materia Medica placed before us, in the Homeopathic terminology, Cinchona Officinalis is also termed as China Officinalis; and Pilocarpine is essentially isolated from Jaborandi. The similar product involved in Bakson Homeo Pharmacy (supra) was said to be containing the ingredients Arnica Mont, Jaborandi, Cantharis and China, apart from other ingredients. 18.3. As regards the question of justification for re-classification or re-examination of the classification, this Court has clearly held that there is no good reason to change the classification merely on the ground of change of tax structure or tariff entries without showing a change in the nature and character of a product or a change in the use of the product [vide the decisions in BPL Pharmaceuticals and Vicco Laboratories (supra)]. As noticed in Shree Baidyanath Ayurved Bhavan Ltd. (supra), this Court rejected the contentions seeking reclassifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantum or duration of usage, there was no adverse effect on the scalp or skin, which was against the basic concept of a medicament, which is prescribed or used for a limited period and overdose is known to result in contra-indications like diarrhoea, acidity, ulceration, rashes etc. The Adjudicating Authority further observed that the label neither contained a positive indication that it was a medicament nor a negative indication that it was not a cosmetic but it was certainly labelled as a "Hair Oil"; and if the intention was to identify the product as medicament, there was no need to label it as "Hair Oil". Hence, the Adjudicating Authority held that AHAHO could not be categorized as a medicament but had to be classified as "Hair oil". As regards common parlance test, the Adjudicating Authority observed that AHAHO was accessible in both Medical and General Stores and could be bought across the counter. Moreover, the depiction of a lady with long, black flowing hair on its label indicated its categorisation as cosmetic and not as a medicament. The Adjudicating Authority even proceeded to observe that 'Hair growth is at best a cosmetic necessity rather than a disease requiring i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o what has been observed by the Adjudicating Authority and what has been argued by learned ASG, it is noticed that in the very first response to the show-cause notice, the respondent asserted that the twin tests for classification of the product as 'medicament' were duly satisfied in relation to its product AHAHO in view of the facts and factors: (i) that the manufacturing process, undertaken in terms of the manufacturing license issued by the Drug Controller and by the Directorate of Ayush, would indicate the presence of four homeopathic drugs in the product namely, Arnica Montana, Cantharis, Pilocarpine and Cinchona; (ii) that the drugs so used are mentioned in the authoritative text books like Materia Medica of Homeopathic Drugs; (iii) that its label indicated the words "Homeopathic Medicine" under Schedule K to the Rules of 1945; (iv) that the product is to be applied to the scalp and not consumed orally; it would cure/prevent the lack of blood circulation to the hair roots, hair fall (alopecia), dandruff, headache and lack of sleep (insomnia), and healing from the said diseases would lead to good health in terms of growth and maintenance of natural colour in the hair; and (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving active ingredients upto 3X potency) and the said Schedule covered only drugs and not cosmetics. The Tribunal also observed that the product had already been held to be drug by the Andhra Pradesh High Court in reference to Commercial Taxes; and the Advance Ruling Authority of Commercial Taxes, Government of Tamil Nadu for the purpose of TNVAT Act 2006, held the product to be a Homeopathic medicine. The Tribunal also took note of the fact that even in the past, the respondent was issued show-cause notices for classification of the product as cosmetic and the Appellate Authority, after going into all the aspects of common parlance as well as contents of the product and its usage, held that the product was a Homeopathic medicine. The Tribunal distinguished the case of Shree Baidyanath Ayurved Bhavan (supra) while observing that the product in question therein did not satisfy the common parlance test and the said product DML was known as toilet preparation in common parlance and not as Ayurvedic medicine. The Tribunal further pointed out that the decision of this Court in the case of Alpine Industries (supra) was not applicable as in the said case, the drug license obtained by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th reference to the relevant medical texts.. Be that as it may, the Adjudicating Authority in its elaborate order could not otherwise doubt the recognition of other ingredients of AHAHO as being Homeopathic drugs. The approach of the Adjudicating Authority in his micro analysis of the contents of label had also been in the nature of a fishing inquiry as if only to find some gap or some loophole therein, without looking at the substance of the matter that the product in question was clearly indicated to be a Homeopathic medicine under Schedule K to the Rules of 1945. Looking to the nature of the product and its properties, the relevant indications have also been specified in reasonable terms and looking to its nature and purpose, directions for use have also been given in the manner that it was to be massaged directly on the scalp and should be left overnight for best results. Hence, the Adjudicating Authority's observations about want of specification regarding the dosage to be used and the duration for which it is to be used carry their own shortcomings. As noticed, the product in question is essentially meant for dealing with the conditions arising in and on the scalp with hair b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ingredients test. In other words, on its ingredients, the product is indeed a medicament carrying the combination of Homeopathic medicines. 23. In regard to the overt reliance of the appellant on the expression "Hair Oil" used for the product by the respondent, it may also be observed that small doses of the medicines in question would invariably require some medium of administration. Learned counsel for the respondents has rightly submitted that in relation to the product in question, hair oil is only a medium through which the medicine is to be applied on the scalp, particularly when it is meant for nourishing the hair roots. 23.1. It is also apparent in the present case that the stand of the Department to classify the product in question as 'cosmetic' under Chapter 33 is essentially based on the distinct entry "Hair Oil" occurring therein; and it appears that the expression "Hair Oil" occurring on the label of the product has been taken as decisive by them. For what has been discussed hereinabove, it would also follow as a natural corollary that the expression "Hair Oil" occurring on the label of the product is only indicating the medium through which Homeopathic medicines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r use/administration/application of the medicine, the case would fall in the specific entry pertaining to medicament under Headings 3003 or 3004; and it being of the medicines of Homeopathic system, it would fall either in Tariff Item 3003 90 14 or in Tariff Item 3004 90 14. In any case, the product in question cannot fall under Chapter 33. 24. As observed, we have considered it appropriate to refer to the said decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra), which had all through been relied upon by the respondent for the reason that it related to a similar product marketed in the name of "Sunny Arnica Hair Oil". The said decision clearly makes out the ingredient test in favour of the respondent and we are satisfied with the detailed analysis of the same ingredients by the Tribunal while holding the product to be a medicament. The ingredient test, as extensively dealt with in the leading opinion of majority of the Tribunal in the case of Bakson Homeo Pharmacy (supra), with reference to the fundamental principles of Homeopathy and the medicinal properties and therapeutic/prophylactic use of several of the ingredients, inspires confidence and when AHAHO is fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial as also common parlance, with its name carrying the significant expressions "Homeo" and "Arnica", the product could only be understood as the one carrying predominantly pharmaceutical value and not mere cosmetic value. 27. The other suggestion on behalf of the Adjudicating Authority and the appellant, relating to the common parlance test with reference to the depiction of a lady with long black flowing hair on its label and thereby treating it as cosmetic, is also stretching the matter to the brink of absurdity. When the product in question is intended to control hair fall as also to prevent dandruff and to induce good sleep, which all carry their own therapeutic and prophylactic connotations, the picture of a lady with long black flowing hair cannot be said to be unrelated to the indications related with the product. In any case, such a picture, by itself, cannot make the product in question a cosmetic. Interestingly, right at the top of the said picture and below the name of the product, it proclaims "Controls hair fall. Prevents dandruff". The Adjudicating Authority has taken his process of analysis to further illogical heights by proclaiming that hair growth was at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 957, has been accepted by this Court to be answering the description of a medicine and not being a cosmetic product, after it was found that the respondent-assessee's assertion about its ingredients and thereby the product qualifying to be a drug within the meaning of Section 3 of the Act of 1940 could not be refuted by the Revenue. The said decision of this Court may not have a direct bearing on the question of classification of the product in question for the purpose of the Act of 1985 but, it cannot be denied that the product in question has been found answering to the description of a 'drug' for the purpose of the Act of 1940 as also for the purpose of the said Andhra Pradesh General Sales Tax Act, 1957. Viewed from any angle, it remains a medicament. Whether re-look at classification of the product in question justified 30. For what has discussed hereinabove, it is apparent that the product in question had rightly been classified as 'medicament' in the past and nothing material had changed so as to re-classify the same. However, the Revenue has attempted to rely on the amendment of the tariff structure in the year 2012 as justification for re-look at its classification. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 985. While rejecting such an attempt on the part of the assessee-company, this Court held that since the product in its composition, character and uses continued to be the same, even after insertion of new Sub-Heading 3301.30, change in classification was not justified (vide paragraph 58 of the decision in Shree Baidyanath Ayurved Bhawan, reproduced hereinbefore). Thus, mere broad-basing of the entries in Chapter 30 and Chapter 33 of the First Schedule to the Act 1985, by itself, could not have been the justification for an attempt at re-classification of the product in question. 32. Even as regards the amendment of the entries, as noticed, the stand of the appellant-Revenue has been that Chapter 30 was reworded so as to remove the distinction between patent/proprietary and generic medicaments and to classify them according to whether they are put up in unit containers for retail sales or not. Further, it has been stated that reference to the Act of 1940 and various pharmacopoeia had been deleted. Thirdly, it has been contended that in Chapter 33, the phrase hair oil had become prominent with subsidiary entries of perfumed hair oils and other. We could only reject such an attempt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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