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TMI Blog2023 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. 1.1 At the outset, we would like to make it clear that the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant intends to produce JAC OLIVOL BODY OIL classified as Ayurvedic patent & proprietary Medicine and inter alia the applicant is in advanced stages of entering in to contract manufacturing agreement with the trade name owners of the said product. 1.3 The applicant submits that JAC OLIVOL BODY OIL is in the market for more than two decades, being granted with a licence under section 3(4) of the Drug and Cosmetic Act, 1940, inter alia, an ayurvedic patent and proprietary medicine. 1.4 The applicant has made this application under sub-section (1) of section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ", As per McMillan Dictionary "medicament" is 'a substance used for treating an illness or injury'. The American Heritage Medical Dictionary defines it as 'An agent that prompts recovery from injury or ailment, a medicine'. 2.5 The Applicant states that the principals have manufactured this body oil using herbal ingredients and is used primarily to cure dry skin, relieves body ache, joint & knee pains, minor burns and prevents blisters. The Applicant further states that this oil has certain skin care properties as well i.e., it helps in softening and moisturizing the skin and also prevents premature ageing and wrinkling. 2.6 The Applicant states that for a product to be classified as a medicament, it is important that the product has either of the two qualities i.e., therapeutic or prophylactic. Even if a product is manufactured using ingredients regulated under the Drugs and Cosmetics Act and according to the formula prescribed in the Pharmacopoeia, it cannot be classified as a medicament under Heading 3004 unless it is meant for therapeutic or prophylactic uses. 2.7 The term therapeutic as defined in the Oxford Dictionary is a treatment designed to help/treat an il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruharidra is mainly beneficial for skin problems like inflammation and psoriasis as it has anti - inflammatory and anti - psoriatic activity. It helps in managing acne by preventing the growth of acne causing bacteria and reducing inflammation due to its antibacterial and anti - inflammatory properties. [Ref : The Ayurvedic Pharmacopoeia of India, Government of India, Vol. 2, Page No. 33-36, Bhavaprakasa, An Authentic Ayurvedic Book, Page No. 119-120] Karpoor - Has a therapeutic property and can help reduce chronic muscle and joint pain over longer periods. Helped relieve lower back pain. [Ref : The Ayurvedic Pharmacopoeia of India, Government of India, Vol. 6, Page No. 210, Bhavaprakasa, An Authentic Ayurvedic Book, Page No. 173.] Neem Oil - Neem oil has a long history of use in Ayurvedic medicine. Neem oil contains fatty acids, antioxidants and antimicrobial compounds and these can benefit the skin in a range of ways. Research shows that these compounds may help fight skin infections, promote wound healing and combat signs of skin aging. [Ref : The Ayurvedic Pharmacopoeia of India, Government of India, Vol. 5, Page No. 124, Bhavaprakasa, An Authentic Ayurvedic Book, Pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unctions. Body oils are simply those oils you can use below your neck or on your body. Body oils penetrate deep into the skin, locking in moisture and preventing dryness. Oils are natural emollients. That means they are formulated to mimic the natural lipids found in our skin, which support the skin barrier. What differentiates the body oil from the face oil, face serums, etc. is the fatty content that the oil contains which is important to prevent skin aging. 2.13 The Applicant further relies on the latest judgment of the Hon'ble Supreme Court of India Commisssioner Of Customs, Central Excise And Service Tax, Hyderabad Versus Ashwani Homeo Pharmacy in Civil appeal No. 9525 of 2018 dated 03.05.2023 wherein in a similar issue at hand regarding the classification of the product as medicament or cosmetic, it was ruled by the Hon'ble Supreme Court as- "103. As noticed, in Chapter 30, apart from Heading 3003 relating to medicaments 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 packing for retail sale, Heading 3004 pertains to the medicaments consisting of mixed or un-mixed product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flavour) to keep the teeth clean, are also not disputed. Only for the reasons these items are also purchased by some customers for taste also, does not make them confectionary items particularly when the same are manufactured under a valid drug licence. As such, having heard learned counsel for the parties, and after going through the principle of law laid down in Puma Ayurvedic Herbal (P.) Ltd. v. Commissioner Central Excise, Nagpur, [2006] 145 STC 200 (SC); (2006) 3 SCC 266 and Naturalle Heath Products (P.) Ltd. v. Collector of Central Excise, Hyderabad, [2003] 1 RC 952; (2004) 9 SCC 136, and for the reasons discussed above, we hold that items-"Chlormint with herbasole" and "Happydent" manufactured by the assessee under valid drug licence are ayurvedic medicines and trade tax payable on said items is four, per cent as provided in clause (b) of sub-section (2) of section 4 of the Uttaranchal Value Added Tax Act, 2005. However, applying the same principles as discussed above, we hold that other items, i.e., "Chlormint candy", "Chlormint ice", "Chlormint gum", "Gum draggy", "chewable gum draggy" and "Chatar patar", manufactured and sold by the assessee/respondent, cannot be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s keratolytic substance having bacteriostalic and fungicidal properties used in the treatment of fungus infection of the skin. The Tribunal, while deciding that the aforesaid product is a medicament, pointed out that the product was formulated and essentially used for treatment of "cracked heels", protection from further cracks in the human heels due to extreme climatic conditions and low humidity, constant exposure of feet to water and due to absence of shoe or other protection while walking. It also found that this product was manufactured under a drug licence as drug authorities had treated the same as a medicament. The Tribunal also found that the usage of this product was related to the effect of therapeutic or mitigating substance of prophylactic substances added. Thus, the effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament and classified under Chapter 30." 2.18 In course of personal hearing, the authorized advocate of the applicant further submits that as per Indian legal system, a separate ministry AYUSH exists under the Ministry of Health, Union o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the medicinal part i.e. Menthol is only 2%. Vicks Vaporub has been held to be medicament by this Court in CCE vs. Richardson Hindustan Ltd. 1989 (42) ELT A100. Therefore, the fact that use of medicinal element in a product was minimal does not detract from it being classified as a medicament." [para 21] "In order to be a medicinal preparation or a medicament it is not necessary that the item must be sold under a doctor's prescription. Similarly availability of the products across the counter in shops is not relevant as it makes no difference either way." [para 22] 2.22 Thus, the Applicant states that on the basis of the above judicial pronouncements and applying the same in the present case of the applicant, the product in question is a medicament and deserves to be classified under Customs Tariff Head 3004 attracting GST @ 12%. 3. Observations & Findings of the Authority 3.1 We have gone through the records of the issue as well as submissions made by the authorised advocate of the applicant during the course of personal hearing. 3.2 The applicant intends to produce JAC OLIVOL BODY OIL claiming that the product is used primarily to cure dry skin, relieves body ache, join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 The meaning of the term 'therapeutic' as referred by the applicant from the Oxford Dictionary is a treatment designed to help/treat an illness and that from the Collins Dictionary, therapeutic treatment is designed to treat an illness or to improve a person's health, rather than to prevent an illness. On the other hand, the dictionary meaning of 'prophylactic' is 'something that is intended to prevent diseases' [Cambridge Dictionary]. Any product can be classified as a medicament under Chapter Heading 3004 provided the product has either of the two uses i.e. therapeutic or prophylactic. Further, as per clause (aaa) of section 3 of the Drugs and Cosmetics Act, 1940, "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. 3.6 Thus, a product cannot be classified as a medicament only for the reason that it is manufactured using ingredients regulated under the Drugs and Cosmetics Act. There must be therapeutic or prophylac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry object of the Excise Act is to raise revenue for which various products are differently classified in New Tariff Act. Resort should, in the circumstances, be had to popular meaning and understanding attached to such products by those using the product and not to be had to the scientific and technical meaning of the terms and expressions used. 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 determination of classification of the products." 3.8 In Alpine Industries vs Collector Of Central Excise, New Delhi, (2003) 3 SCC 111 the issue before the Hon'ble Apex Court was to decide classification of the product 'Lip Salve', manufactured in accordance with the defence services specifications and supplied entirely to military personnel. The Hon'ble Supreme Court, while held the item as a preparation for protection of lips and skin and is not a 'medicament' observed as follows: "It is well established that in interpreting tariff entries in taxation statute like Excise A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edicament'. It is neither prescribed by any doctor nor obtainable from the Chemist for Pharmaceutical shops in the market." 3.9 The applicant, in support of his contention, has relied on a recent judgment of the Hon'ble Supreme Court of India in re Commissioner of Customs, Central Excise and Service Tax, Hyderabad versus Ashwani Homeo Pharmacy (Civil appeal No. 9525 of 2018 dated 03.05.2023). In the aforesaid case, the adjudicating authority held that the product in question, known as "Aswani Homeo Arnica Hair Oil" (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 and that the product in question, being "Hair oil", was required to be classified as 'cosmetic' under Tariff Item 3305 90 19. The appeal preferred by the respondent was allowed by the Tribunal and the order passed by the adjudicating authority was set aside. The Tribunal held that the product in question, AHAHO, fell in the category of 'medicament' and hence, was rightly classified under Chapter 30 of the First Schedule to the Act of 1985. The Hon'ble Apex Court upheld the order of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the entry "cosmetic or toilet preparation" and medicine: (i) How the product is known in common parlance and in commercial sense. (ii) The mere fact that the product has some curative effect is not enough to classify the product as a medicament. (iii) The mere fact that the product is being manufactured under a drug licence is not enough to classify the -product. (iv) The language of the entry has to be given effect. (v) How the product is known in scientific sense or technical sense is not much relevant. (vi) The dictionary meaning is a good guide but not conclusive. (vii) For being a medicine a product must have the effect either of curing the disease or preventing it and the intended use must be for treatment, mitigation or -prevention of disease and in common parlance and commercial sense known as medicine. (viii) Cosmetic and toilet preparations are products which are used for beautification or care of face, skin, hair, nails, eyes or brow and are known as cosmetic and toilet preparations in common parlance and commercial sense. (ix) The onus lies on the Revenue to prove that the product falls under a particular entry. 3.12 We find that in Ciens Laboratori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nique invention. On dry skin this oil is more effective than conventional moisturisers. This oil contains Italian Olive Oil with various other complimentary oils and is enriched with various herbal extracts which gives you lovely supple blemish-free skin. This Oil is totally non-sticky, immediately absorbed in the body, after application it leaves no stain on the dress. On gentle massage of entire body, it gives you a glow all over the body" Product details as submitted in paper copy: "Jac Olivol Herbal Body Oil is a unique invention. On dry skin this oil is more effective than conventional moisturisers. This oil contains Italian Olive Oil with various other complimentary oils and is enriched with various herbal extracts which gives you lovely supple blemish-free skin. This Oil is totally non-sticky, immediately absorbed in the body, after application it leaves no stain on the dress. On gentle massage of entire body, it relieves body ache, on joint pains including knee. It is very effective on minor burns and prevent blister. Tones muscles to prevent premature ageing and wrinkles. Guards against minor rashes, discolouration and dryness." However, both the labels also read "App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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