TMI Blog2023 (8) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion that they are cosmetics - A product used mainly in curing or treating ailments or diseases and containing curative ingredients, even in small quantities, is to be branded as a medicament. The dominant use to which the product is being used certainly has a bearing. It is also to be seen that whenever a product has curative or prophylactic value as well, but the revenue still wants the said product to be brought under a different Chapter, the onus is on the revenue to show that it is not a medicament; the revenue will have to demonstrate that curative or prophylactic value is only subsidiary in nature or that the description covers the product under the Chapter wherein it is sought to be excluded. The product in the instant case normally should have come under Chapter 30 but for the specific exclusion under Note to Chapter 30 - it is also found that if a product is registered as a medicament by the Drugs Controller, that would be a strong factor to consider it as having curative or prophylactic value as a medicament. The department also did not discharge its onus of proving that the product cannot be classified as a medicament, though it certainly has attributes of a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally come under Serial No. 92(6) of SRO 82/2006 under 'Mouthwash' and they should be assigned HSN Code 3306.10.90, and the dealer had wrongly included them under the group 'medicaments.' In the said circumstances, the petitioner filed an application for clarification under Section 94 of the KVAT Act, which this Court directed the authority to consider. 3. The authority passed an order dated 9.01.2015 holding that two of the products, Clohex and Clohex Plus, are to be treated as medicaments and hence, would attract tax only at 5% as they are classifiable under HSN Code 3004.9099. However, in the case of one product, namely Senquel-AD, it was held that it cannot be classified as a medicament and, therefore, will attract tax at the rate of 14.5% by virtue of entry No.92(6) of SRO 82/2006. The instant appeal is against that part of the order of the clarificatory authority that did not classify Senquel-AD as a medicament. 4. We have heard Sri. P.R. Venkatesh, the learned counsel appearing for the appellant and Sri. Mohammed Rafiq, the learned Special Government Pleader (Taxes). 5. Sri. Venkatesh argues that the authority erred in finding that the literature in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise, Mumbai IV and another v. CIENS Laboratories, Mumbai and another [(2013) 14 SCC 133] to argue that the conclusion arrived by the clarificatory authority is clearly wrong. The learned counsel also cited the decision in ICPA Health Products (P) Ltd. v. Commissioner of Central Excise, Vadodara, reported in [(2004) 4 SCC 481] and argues that if a product comprises of two or more constituents that have been mixed together for therapeutic or prophylactic uses, then it would be a medicament. According to the learned counsel, since the product in question has both therapeutic properties and prophylactic uses, they are to be treated as medicament falling under Chapter 30. He also argued that Clohex and Clohex Plus were considered by the clarificatory authority as medicaments, and the reason stated for not giving the same treatment to Senquel-AD is clearly wrong. It is also his contention that if two interpretations are possible, one in favour of the assessee ought to have been preferred more so when there is a specific entry dealing with medicament, it could not have been treated as coming under any other entry. 6. On the other hand, Sri. Mohammed Rafiq argues that the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counter and are yet, medicaments (CIENS Laboratories) 3) Before adjudicating whether a product is a medicament or not, courts have to consider what the people who use the product understand it to be. If a product's primary function is care and not cure, it is not a medicament. Cosmetic products are used to enhance or improve 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 (CIENS Laboratories) 4) Products cannot be classified as cosmetics solely on the basis of their outward packing. [ Meghdoot Gramodyog Sewa Sansthan, UP. v. Commissioner of Central Excise Lucknow [(2005) 4 SCC 15]] 5) Mixing medical ingredients with other products or preservatives does not alter its character as a medicament [ Amrutanjan Ltd. v. Collector Central Excise [1996 (9) SCC 413]] 6) That a licence under the Drugs Act is necessary is not a determinative or decisive factor always. 8. Likewise, in Puma Ayurvedic Herbal Private Ltd. v. Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redominantly pharmaceutical value has also to be considered, notwithstanding the Note to Chapter 30. In this context, the judgment of the Supreme Court in Commissioner of Customs, Central Excise and Service Tax, Hyderabad v. Ashwani Homeo Pharmacy [JT 2023 (6) SC 324] is of relevance. In the case on hand, the reason for holding against the appellant was that the appellant did not produce any material and that the product was not one treating a specific disease condition. We cannot accept the said finding, which did not consider the impact of either the literature produced by the appellant or the principles laid down in the above-mentioned judgments. The department also did not discharge its onus of proving that the product cannot be classified as a medicament, though it certainly has attributes of a medicament. We also find that the clarification order accepts the classification accorded to the other products Clohex and Clohex Plus by the assessee, as medicament based on the fact that they were manufactured under a drug licence. However, there is no reason discernible from the clarification order as to why Senquel-AD Mouthwash which is presented in a similar form cannot also be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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