published in http://judis.nic.in/supremecourt/filename=40649
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6988 OF 2003
Commissioner of Central Excise, Mumbai IV … Appellant (s)
Versus
M/s. Ciens Laboratories, Mumbai … Respondent (s)
WITH
CIVIL APPEAL NO. 4434 OF 2004
Commissioner of Central Excise, Thane-II … Appellant (s)
Versus
M/s. Time Pharma, Mumbai … Respondent (s)
J U D G M E N T
KURIAN, J.:
1. ‘Care or cure’, is the clue for the resolution of the lis arising in
these cases.
If the product by name ‘Moisturex’ is held to be a medicament
for cure, the decision goes in favour of the assessee and if the product is held to be one for care of the skin, the decision benefits the Central Excise.
The Tribunal has held in favour of the assessee and, thus, the Central Excise is in appeals.
2. The Central Excise Tariff Act, 1985 (hereinafter referred to as
‘CETA’) under Chapter 30 of the Schedule (2) deals with pharmaceutical
products for the purposes of tariff. At the relevant time, if a product is
held to be medicament, then, the rate of duty was 15% and, if not, 70%.
Heading 30.03 deals with the medicaments including veterinary medicaments.
The same reads as follows:
|“Heading |Sub-headi|Description of goods |Rate of |
|No. |ng No. | |duty |
|(1) |(2) |(3) |(4) |
|30.03 | |Medicaments (including | |
| |3003.10 |veterinary medicaments) |15% |
| | |-Patent or proprietary | |
| | |medicaments, other than | |
| | |those medicaments which are | |
| | |exclusively Ayurvedic, | |
| | |Unani, Siddha, Homoeopathic | |
| | |or Bio-chemic.” | |
3. ‘Medicaments’ is defined under Note 2(i) under Chapter 30 which reads
as follows:
“2. For the purposes of heading No. 30.03:
(i) ‘Medicaments’ means goods (other than foods or beverages such as
dietetic, diabetic or fortified foods, tonic beverages) not
falling within heading No.30.02 or 30.04 which are either:-
(a) products comprising two or more constituents which have
been mixed or compounded together for therapeutic or
prophylactic uses; or
(b) unmixed products suitable for such uses put up in measured
doses or in packings for retail sale or for use in
hospitals.”
(Emphasis supplied)
4. ‘Patent or proprietary medicaments’ is defined under Note 2(ii) which
reads as under:
“2(ii) ‘Patent or proprietary medicaments’ means any drug or
medicinal preparation, in whatever form, for use in the internal or
external treatment of, or for the prevention of ailments in human
beings or animals, which bears either on itself or on its container or
both, a name which is not specified in a monograph, in a
Pharmacopoeia, Formulary or other publications, namely:-
(a) The Indian Pharmacopoeia;
(b) The International Pharmacopoeia;
(c) The National Formulary of India;
(d) The British Pharmacopoeia;
(e) The British Pharmaceutical Codex;
(f) The British Veterinary Codex;
(g) The United States Pharmacopoeia;
(h) The National Formulary of the U.S.A.;
(i) The Dental Formulary of the U.S.A.; and
(j) The State Pharmacopoeia of the U.S.S.R.;
or which is a brand name, that is, a name or a registered trade mark
under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any
other mark such as a symbol, monogram, label, signature or invented
words or any writing which is used in relation to that medicine for
the purpose of indicating or so as to indicate a connection in the
course of trade between the medicine and some person, having the right
either as proprietor or otherwise to use the name or mark with or
without any indication of the identity of that person.”
5. The Chapter Note has explained Heading No.30.03 as under:
“This heading covers medicinal preparations for use in the
internal or external treatment or prevention of human or animal
ailments. These preparations are obtained by mixing together two or
more substances. However, of put up in measures doses or in forms or
packings for retail sale, they fall in heading 30.04.
The heading includes :
(1) Mixed medicinal preparations such as those listed in an official
pharmacopoeia, proprietary medicines, etc., including those in
the form of gargles, eye drops, ointments, liniments,
injections, counter-irritant and other preparations not falling
in heading 30.02, 30.05 or 30.06.”
Entry 33.04 dealing with cosmetics reads as follows:
|“Heading |Sub-headi|Description of goods |Rate of |
|No. |ng No. | |duty |
|(1) |(2) |(3) |(4) |
|33.04 |3304.00 |Beauty or make-up |70% |
| | |preparations and | |
| | |preparations for the care | |
| | |of the skin (other than | |
| | |medicaments), including | |
| | |sunscreen and suntan | |
| | |preparations; manicure or | |
| | |pedicure preparations.” | |
The Chapter Notes on this Entry has explained the products as under:
“33.04 - BEAUTY OR MAKE-UP PREPARATIONS AND PREPARATIONS FOR THE
CARE OF THE SKIN (OTHER THAN MEDICAMENTS), INCLUDING
SUNSCREEN OR SUN TAN PREPARATIONS; MANICURE OR PEDICURE
PREPARATIONS.
3304.10 - Lip make-up preparations.
3304.20 - Eye make-up preparations.
3304.30 - Manicure or pedicure preparations.
- Other :
3304.91 - - Powders, whether or not
compressed.
3304.99 - - Other
A) BEAUTY OR MAKE-UP PREPARATIONS AND PREPARATIONS FOR THE
CARE OF THE SKIN, INCLUDING SUNSCREEN OR SUN TAN
PREPARATIONS
This part covers:
1) Lipsticks and other lip make-up preparations.
2) Eye shadow, mascara, eyebrow pencils and other eye make-up
preparations.
3) Other beauty or make-up preparations and preparations for
the care of the skin (other than medicaments), such as:
face powders (whether or not compressed), baby powders
(including talcum powder, not mixed, not perfumed, put up
for retail sale), other powders and grease paints; beauty
creams, cold creams, make-up creams, cleansing creams, skin
foods (including those containing bees’ royal jelly) and
skin tonics or body lotions; petroleum jelly, put up in
packings of a kind sold by retail for the care of the skin;
barrier creams to give protection against skin irritants;
anti-acne preparations (other than soaps of heading 34.01)
which are designed primarily to cleanse the skin and which
do not contain sufficiently high levels of active
ingredients to be regarded as having a primary therapeutic
or prophylactic effect against acne; toilet vinegars which
are mixtures of vinegars or acetic acid and perfumed
alcohol.
Sunscreen or sun tan preparations are also included.
B) MANICURE OR PEDICURE PREPARATIONS
This part covers nail polishes, nail varnishes, nail
varnish removers, cuticle removers and other preparations
for use in manicure or pedicure.
The heading does not cover:
(a) Medicinal preparations used to treat certain skin
complaints, e.g., creams for the treatment of eczema
(heading 30.03 or 30.04).
(b) Foot deodorants and preparations for treating nails or claws on
animals (heading 33.07).”
(Emphasis supplied)
6. Entry 30.04 reads as follows:
|“Heading |Sub-headi|Description of goods |Rate of duty |
|No. |ng No. | | |
|(1) |(2) |(3) |(4) |
|30.04 |3004.00 |Wadding, gauze, bandages |15% |
| | |and similar articles (for| |
| | |example, dressings, | |
| | |adhesive plasters, | |
| | |poultices), impregnated | |
| | |or coated with | |
| | |pharmaceutical substances| |
| | |or put up in forms or | |
| | |packings for medical, | |
| | |surgical, dental or | |
| | |veterinary purpose.” | |
7. The pharmaceutical contents of the product ‘Moisturex’ are as
follows:
“Urea I.P. -10%
Propylene Glycol I.P. -10%
Lactic Acid I.P. -10%
Liquid Paraffin I.P. -10%
Cream Base.”
8. It is the contention of the learned counsel for the Central Excise-
appellants herein that the product ‘Moisturex’ is mainly used for care of
the skin and thus, they are to be classified as cosmetic or toilet
preparations and are to be treated under Heading 33.04. It is further
contended that even if such cosmetic products contain certain subsidiary
pharmaceutical contents or even if they have certain subsidiary curative or
prophylactic value, still, they are to be treated as cosmetics only. It is
also contended that the product is sold across or under the counter and the
same can be purchased without prescription of a medical practitioner and
hence it is not medicament.
9. On the other hand, it is submitted on behalf of the assessee that the
very presence of pharmaceutical substances will change the identity of the
product since such constituents are used not for care of the skin but for
cure of certain diseases relating to skin. The container of the product has
given the following indications for use:
“Ichthyosis vulgaris, Fissure foot, Dry Scaly Skin conditions”
10. In the product literature, the cream is indicated for any dryness of
skin associated with winter, fissure feet, cracked nipples, in the
treatment of pathological dry skin conditions and also for dryness
associated with leprosy and clofazimine. Detailed discussion on the
pharmaceutical content and its use for treatment of dry skin conditions of
human skin is given at Paragraph 12 in Time Pharma vs. Commissioner of
Central Excise, Mumbai-II[1], wherein the Customs, Excise and Gold
(Control) Appellate Tribunal, West Zonal Bench, Mumbai held that the
product is a medicament. Since there is no dispute as to the description of
the product, the contents and the usage, we shall extract paragraph 12: -
“12. It is further stated that the product literature is given for use
by medical practitioners. This gives the pharmacology of the
ingredients in the product; under the heading, "Indications & usage",
it is stated that Moisturex cream is indicated in dryness of skin
associated with winter, fissure feet, cracked nipples, in the
treatment of pathological dry skin conditions like ichthyosis and it
is also indicated in dryness associated with leprosy and clofazimine.
It contain a precaution and warning against application in large
quantities as it contains keratolytic moisturing agent that have
potential to cause irritation and stinging sensation; it is not to be
used near eyes and mucous membranes. The dosage and administration is
indicated that thin layer of the cream should be applied to
the affected area (emphasis supplied) once or twice daily and in case
of severe dry skin conditions three times application may be
required.”
(Emphasis supplied)
It is brought to our notice that the said decision has attained finality
qua the assessee therein since the Special Leave Petition filed by the
Central Excise was dismissed.
11. In the Chapter Note dealing with cosmetics, it is clearly provided
that the preparations for the care of skin, beauty or make-up preparations
are the ones covered by the Heading 33.04 for the care of the skin. The
Note has specifically excluded medicaments. Still further, in the Chapter
Note under Heading 33.04(B) also, it is clarified that medicinal
preparations used to treat certain skin complaints are to be covered under
the Heading 30.03 (medicaments) or Heading 30.04 (products containing
pharmaceutical substances used for medical, surgical, dental or veterinary
purposes).
12. Thus, if a product comprises of two or more constituents which have
been mixed or compounded together for therapeutic or prophylactic use, the
same is to be covered by Heading 30.03. Urea, lactic acid, propylene glycol
are pharmaceutical constituents as per as Indian Pharmacopoeia.
13. The contention that ‘Moisturex’ is a moisturizing cream used for
softening the skin cannot be appreciated. As we have already discussed, the
use of the cream is not for the care of the skin. ‘Moisturex’ is also not
primarily intended to protect the skin from sun, tan or dryness, etc. On
the other hand, it is intended for treating or curing the dry skin
conditions of the human skin and for a few other skin complaints like
fissure feet, dry scaly skin conditions, ichthyosis, etc. The argument
advanced on behalf of the Central Excise that use of urea or lactic acid or
propylene glycol, etc., is only as subsidiary pharmaceutical constituents
and, hence, they cannot be held out as having curative, therapeutic or
prophylactic value, cannot also be appreciated. It is the presence of the
ingredients of the pharmaceutical constituents which makes the difference
and not the percentage of the ingredients as held by this Court in Meghdoot
Gramodyog Sewa Sansthan vs. Commissioner of Central Excise, Lucknow[2]. It
was held that the composition and the curative properties would make the
difference in the classification. If the product is composed of
pharmaceutical constituents which have curative properties, the product is
to be classified as medicament. To quote:
“6. The appellant has drawn our attention to the composition of the
six products and the uses in respect of each of these six products.
This has not been doubted by the Tribunal nor indeed by the
Departmental authority. The composition and the curative properties
being admitted, it was not open either to the Department or the
Tribunal to hold that the items were cosmetics merely by reason of the
outward packing.”
(Emphasis supplied)
14. Another contention advanced by the appellant-Central Excise is that
the product is sold not under any medical prescription but the same is
available across or under the counter and, hence, the same cannot be
treated as medicament. This contention also has been rejected by this Court
in Commissioner of Central Excise, Calcutta vs. Sharma Chemical Works[3].
To quote:
“12. … Mere fact that a product is sold across the counters and not
under a Doctors prescription, does not by itself lead to the
conclusion that it is not a medicament. We are also in agreement with
the submission of Mr. Lakshmikumarn that merely because the percentage
of medicament in a product is less, does also ipso facto mean that the
product is not a medicament. Generally the percentage or dosage of the
medicament will be such as can be absorbed by the human body. The
medicament would necessarily be covered by fillers/vehicles in order
to make the product usable. It could not be denied that all the
ingredients used in Banphool Oil are those which are set out in the
Ayurveda text books. Of course the formula may not be as per the text
books but a medicament can also be under a patented or proprietary
formula. The main criteria for determining classification is normally
the use it is put to by the customers who use it. ...”
(Emphasis supplied)
15. In Puma Ayurvedic Herbal (P) Ltd. vs. Commissioner of Central Excise,
Nagpur[4], it was held that the purpose of cosmetic product is to improve
the appearance of a person and for enhancing the beauty whereas a medicinal
product or medicament is meant to treat some medical condition. It was also
held that merely because a product is sold not under a doctor’s
prescription, the same does not cease to be a medicament. In both these
cases, it was held that minimal presence of medicinal element does not
detract the product from being classified as a medicament. To quote:
“20. It will be seen from the above definition of cosmetic that the
cosmetic products are meant to improve appearance of a person, that
is, they enhance beauty. Whereas a medicinal product or a medicament
is meant to treat some medical condition. It may happen that while
treating a particular medical problem, after the problem is cured, the
appearance of the person concerned may improve. What is to be seen is
the primary use of the product. To illustrate, a particular Ayurvedic
product may be used for treating baldness. Baldness is a medical
problem. By use of the product if a person is able to grow hair on his
head, his ailment of baldness is cured and the person's appearance may
improve. The product used for the purpose cannot be described as
cosmetic simply because it has ultimately led to improvement in
appearance of the person. The primary role of the product was to grow
hair on his head and cure his baldness.
21. The extent or the quantity of medicament used in a particular
product will also not be a relevant factor. Normally, the extent of
use of medicinal ingredients is very low because a larger use may be
harmful for the human body. The medical ingredients are mixed with
what is in the trade parlance called fillers, or vehicles in order to
make the medicament useful. To illustrate an example of Vicks Vaporub
is given in which 98% is said to be paraffine wax, while the medicinal
part i.e. Menthol is only 2%. Vicks Vaporub has been held to be
medicament by this Court in CCE v. 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.
22. 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.”
(Emphasis supplied)
16. In Union of India vs. G. D. Pharmaceutical Limited[5], the Calcutta
High Court considered the question as to whether the product ‘Boroline’
containing boric acid with zinc oxide would be a medicament or cosmetic. It
was held that the very presence of the pharmaceutical constituents like
boric acid and zinc oxide will make the product medicament and not
cosmetic. We are in respectful agreement with the views taken in the above-
mentioned decisions.
17. We shall also refer to the decision in Alpine Industries vs.
Collector of Central Excise, New Delhi[6], wherein this Court despite a
certificate from Army that the cream ‘Lip Salve’ is used for treatment of
sore, inflamed, roughened and cracked lips, declined to include the same in
the category of medicament. It has been found that the product is meant for
the care of the lips and not for the cure of the skin, being a
protective/preventive preparation for chapping of lips though it has an
incidental use on cracked and chapped lips. To quote:
“7. We have gone through the pharmaceutical and medical literature
produced before us in the course of hearing and which has been duly
dealt with by the Tribunal in its minority and majority opinion. The
certificate issued by the Army Authorities and the chemical
ingredients of the product are not decisive on the question of
classification of the product for levy of excise duty. It is firmly
established that on the question of classification of product under
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 we find from the material produced
before the Tribunal is that essentially the product is a
protective/preventive preparation for chapping of lips. It is not a
curative product maybe that incidentally on cracked and chapped lips,
it has some curative effect. It is also not denied that the product
'Lip Salve' is not suitable for use only for soldiers operating in
high altitude areas but it is of use for every one as protection from
dry, cold weather or sun rays. The product, therefore, essentially is
protective of skin of lip. It is lip care product and not a
'medicament'. It is neither prescribed by any doctor nor obtainable
from the Chemist or Pharmaceutical shops in the market.”
(Emphasis supplied)
18. Similarly, in Sunny Industries Private Limited vs. Collector of
Central Excise, Calcutta[7], while considering the question as to whether
the Ad-vitamin Massage Oil forte could be medicament, it has been held that
the same not being used for cure of skin but for care of skin, it can only
be classified under 33.04 as a skin care oil. To quote:
“11. From the aforesaid Chapter notes, it is clear that heading 33.03
would include products whether or not they contain subsidiary
pharmaceutical or antiseptic constituents, or are held out as having
subsidiary curative or prophylactic value and heading 33.04 would
inter alia include the products specified therein and other
preparations for use in manicure or chiropody and barrier creams to
give protection against skin irritants. Therefore, the product mainly
oil containing some A&D vitamins which is used for massage, even if it
prevents ailment of rickets and treats the same, it cannot be held to
be medicaments.”
(Emphasis supplied)
19. Thus, the following guiding principles emerge from the above
discussion. Firstly, when a product contains pharmaceutical ingredients
that have therapeutic or prophylactic or curative properties, the
proportion of such ingredients is not invariably decisive. What is of
importance is the curative attributes of such ingredients that render the
product a medicament and not a cosmetic. Secondly, though a product is sold
without a prescription of a medical practitioner, it does not lead to the
immediate conclusion that all products that are sold over / across the
counter are cosmetics. There are several products that are sold over-the-
counter and are yet, medicaments. Thirdly, prior to adjudicating upon
whether a product is a medicament or not, Courts have to see what the
people who actually use the product understand the product to be. If a
product’s primary function is “care” and not “cure”, it is not a
medicament. Cosmetic products are used in enhancing or improving 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.
20. In the case of ‘Moisturex’,
there is no dispute that the said cream
is prescribed by the dermatologist for treating the dry skin conditions and that the same is also available in chemist or pharmaceutical shops in the market.
The cream is not primarily intended for protection of skin.
The ingredients in the cream, the pharmaceutical substances do show that it is used for prophylactic and therapeutic purposes.
The Central Excise Tariff
Act has unambiguously clarified as to what is a medicament for curing an ailment relating to skin.
Heading 33.04 dealing with beauty or make-up
preparations and preparations for the care of the skin has specifically excluded medicaments.
There is also an indication under the same entry that
medicinal preparations used to treat certain complaints are to be provided under the Heading 30.03 (medicaments) or 30.04 (products containing pharmaceutical substances used for medical, surgical, dental or veterinary purpose).
21. Tribunals, the Customs, Excise and Gold (Control) Appellate Tribunal,West Zonal Bench at Mumbai in the first case and Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai in the other, having regard to the pharmaceutical constituents present in the cream
‘Moisturex’ and its use for the cure of certain skin diseases, have rightly
held that the same is a medicament liable to be classified under the Heading 30.03 (medicament).
Thus, there is no merit in these appeals. They are accordingly dismissed. No costs.
....……...……………………………..………J.
(SUDHANSU JYOTI MUKHOPADHAYA)
....……..…………………………………..…J.
(KURIAN JOSEPH)
New Delhi;
August 14, 2013.
-----------------------
[1] 1998 (99) E.L.T. 643 (Tri. Mumbai)
[2] (2004) 174 E.L.T. 14 (S.C.)
[3] 2003 (154) E.L.T. 328 (S.C.)
[4] 2006 (196) E.L.T. 3 (S.C.)
[5] 1998 (100) E.L.T. 24 (Cal.)
[6] 2003 (152) E.L.T. 16 (S.C.)
[7] 2003 (153) E.L.T. 259 (S.C.)
-----------------------
REPORTABLE
-----------------------
15
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6988 OF 2003
Commissioner of Central Excise, Mumbai IV … Appellant (s)
Versus
M/s. Ciens Laboratories, Mumbai … Respondent (s)
WITH
CIVIL APPEAL NO. 4434 OF 2004
Commissioner of Central Excise, Thane-II … Appellant (s)
Versus
M/s. Time Pharma, Mumbai … Respondent (s)
J U D G M E N T
KURIAN, J.:
1. ‘Care or cure’, is the clue for the resolution of the lis arising in
these cases.
If the product by name ‘Moisturex’ is held to be a medicament
for cure, the decision goes in favour of the assessee and if the product is held to be one for care of the skin, the decision benefits the Central Excise.
The Tribunal has held in favour of the assessee and, thus, the Central Excise is in appeals.
2. The Central Excise Tariff Act, 1985 (hereinafter referred to as
‘CETA’) under Chapter 30 of the Schedule (2) deals with pharmaceutical
products for the purposes of tariff. At the relevant time, if a product is
held to be medicament, then, the rate of duty was 15% and, if not, 70%.
Heading 30.03 deals with the medicaments including veterinary medicaments.
The same reads as follows:
|“Heading |Sub-headi|Description of goods |Rate of |
|No. |ng No. | |duty |
|(1) |(2) |(3) |(4) |
|30.03 | |Medicaments (including | |
| |3003.10 |veterinary medicaments) |15% |
| | |-Patent or proprietary | |
| | |medicaments, other than | |
| | |those medicaments which are | |
| | |exclusively Ayurvedic, | |
| | |Unani, Siddha, Homoeopathic | |
| | |or Bio-chemic.” | |
3. ‘Medicaments’ is defined under Note 2(i) under Chapter 30 which reads
as follows:
“2. For the purposes of heading No. 30.03:
(i) ‘Medicaments’ means goods (other than foods or beverages such as
dietetic, diabetic or fortified foods, tonic beverages) not
falling within heading No.30.02 or 30.04 which are either:-
(a) products comprising two or more constituents which have
been mixed or compounded together for therapeutic or
prophylactic uses; or
(b) unmixed products suitable for such uses put up in measured
doses or in packings for retail sale or for use in
hospitals.”
(Emphasis supplied)
4. ‘Patent or proprietary medicaments’ is defined under Note 2(ii) which
reads as under:
“2(ii) ‘Patent or proprietary medicaments’ means any drug or
medicinal preparation, in whatever form, for use in the internal or
external treatment of, or for the prevention of ailments in human
beings or animals, which bears either on itself or on its container or
both, a name which is not specified in a monograph, in a
Pharmacopoeia, Formulary or other publications, namely:-
(a) The Indian Pharmacopoeia;
(b) The International Pharmacopoeia;
(c) The National Formulary of India;
(d) The British Pharmacopoeia;
(e) The British Pharmaceutical Codex;
(f) The British Veterinary Codex;
(g) The United States Pharmacopoeia;
(h) The National Formulary of the U.S.A.;
(i) The Dental Formulary of the U.S.A.; and
(j) The State Pharmacopoeia of the U.S.S.R.;
or which is a brand name, that is, a name or a registered trade mark
under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any
other mark such as a symbol, monogram, label, signature or invented
words or any writing which is used in relation to that medicine for
the purpose of indicating or so as to indicate a connection in the
course of trade between the medicine and some person, having the right
either as proprietor or otherwise to use the name or mark with or
without any indication of the identity of that person.”
5. The Chapter Note has explained Heading No.30.03 as under:
“This heading covers medicinal preparations for use in the
internal or external treatment or prevention of human or animal
ailments. These preparations are obtained by mixing together two or
more substances. However, of put up in measures doses or in forms or
packings for retail sale, they fall in heading 30.04.
The heading includes :
(1) Mixed medicinal preparations such as those listed in an official
pharmacopoeia, proprietary medicines, etc., including those in
the form of gargles, eye drops, ointments, liniments,
injections, counter-irritant and other preparations not falling
in heading 30.02, 30.05 or 30.06.”
Entry 33.04 dealing with cosmetics reads as follows:
|“Heading |Sub-headi|Description of goods |Rate of |
|No. |ng No. | |duty |
|(1) |(2) |(3) |(4) |
|33.04 |3304.00 |Beauty or make-up |70% |
| | |preparations and | |
| | |preparations for the care | |
| | |of the skin (other than | |
| | |medicaments), including | |
| | |sunscreen and suntan | |
| | |preparations; manicure or | |
| | |pedicure preparations.” | |
The Chapter Notes on this Entry has explained the products as under:
“33.04 - BEAUTY OR MAKE-UP PREPARATIONS AND PREPARATIONS FOR THE
CARE OF THE SKIN (OTHER THAN MEDICAMENTS), INCLUDING
SUNSCREEN OR SUN TAN PREPARATIONS; MANICURE OR PEDICURE
PREPARATIONS.
3304.10 - Lip make-up preparations.
3304.20 - Eye make-up preparations.
3304.30 - Manicure or pedicure preparations.
- Other :
3304.91 - - Powders, whether or not
compressed.
3304.99 - - Other
A) BEAUTY OR MAKE-UP PREPARATIONS AND PREPARATIONS FOR THE
CARE OF THE SKIN, INCLUDING SUNSCREEN OR SUN TAN
PREPARATIONS
This part covers:
1) Lipsticks and other lip make-up preparations.
2) Eye shadow, mascara, eyebrow pencils and other eye make-up
preparations.
3) Other beauty or make-up preparations and preparations for
the care of the skin (other than medicaments), such as:
face powders (whether or not compressed), baby powders
(including talcum powder, not mixed, not perfumed, put up
for retail sale), other powders and grease paints; beauty
creams, cold creams, make-up creams, cleansing creams, skin
foods (including those containing bees’ royal jelly) and
skin tonics or body lotions; petroleum jelly, put up in
packings of a kind sold by retail for the care of the skin;
barrier creams to give protection against skin irritants;
anti-acne preparations (other than soaps of heading 34.01)
which are designed primarily to cleanse the skin and which
do not contain sufficiently high levels of active
ingredients to be regarded as having a primary therapeutic
or prophylactic effect against acne; toilet vinegars which
are mixtures of vinegars or acetic acid and perfumed
alcohol.
Sunscreen or sun tan preparations are also included.
B) MANICURE OR PEDICURE PREPARATIONS
This part covers nail polishes, nail varnishes, nail
varnish removers, cuticle removers and other preparations
for use in manicure or pedicure.
The heading does not cover:
(a) Medicinal preparations used to treat certain skin
complaints, e.g., creams for the treatment of eczema
(heading 30.03 or 30.04).
(b) Foot deodorants and preparations for treating nails or claws on
animals (heading 33.07).”
(Emphasis supplied)
6. Entry 30.04 reads as follows:
|“Heading |Sub-headi|Description of goods |Rate of duty |
|No. |ng No. | | |
|(1) |(2) |(3) |(4) |
|30.04 |3004.00 |Wadding, gauze, bandages |15% |
| | |and similar articles (for| |
| | |example, dressings, | |
| | |adhesive plasters, | |
| | |poultices), impregnated | |
| | |or coated with | |
| | |pharmaceutical substances| |
| | |or put up in forms or | |
| | |packings for medical, | |
| | |surgical, dental or | |
| | |veterinary purpose.” | |
7. The pharmaceutical contents of the product ‘Moisturex’ are as
follows:
“Urea I.P. -10%
Propylene Glycol I.P. -10%
Lactic Acid I.P. -10%
Liquid Paraffin I.P. -10%
Cream Base.”
8. It is the contention of the learned counsel for the Central Excise-
appellants herein that the product ‘Moisturex’ is mainly used for care of
the skin and thus, they are to be classified as cosmetic or toilet
preparations and are to be treated under Heading 33.04. It is further
contended that even if such cosmetic products contain certain subsidiary
pharmaceutical contents or even if they have certain subsidiary curative or
prophylactic value, still, they are to be treated as cosmetics only. It is
also contended that the product is sold across or under the counter and the
same can be purchased without prescription of a medical practitioner and
hence it is not medicament.
9. On the other hand, it is submitted on behalf of the assessee that the
very presence of pharmaceutical substances will change the identity of the
product since such constituents are used not for care of the skin but for
cure of certain diseases relating to skin. The container of the product has
given the following indications for use:
“Ichthyosis vulgaris, Fissure foot, Dry Scaly Skin conditions”
10. In the product literature, the cream is indicated for any dryness of
skin associated with winter, fissure feet, cracked nipples, in the
treatment of pathological dry skin conditions and also for dryness
associated with leprosy and clofazimine. Detailed discussion on the
pharmaceutical content and its use for treatment of dry skin conditions of
human skin is given at Paragraph 12 in Time Pharma vs. Commissioner of
Central Excise, Mumbai-II[1], wherein the Customs, Excise and Gold
(Control) Appellate Tribunal, West Zonal Bench, Mumbai held that the
product is a medicament. Since there is no dispute as to the description of
the product, the contents and the usage, we shall extract paragraph 12: -
“12. It is further stated that the product literature is given for use
by medical practitioners. This gives the pharmacology of the
ingredients in the product; under the heading, "Indications & usage",
it is stated that Moisturex cream is indicated in dryness of skin
associated with winter, fissure feet, cracked nipples, in the
treatment of pathological dry skin conditions like ichthyosis and it
is also indicated in dryness associated with leprosy and clofazimine.
It contain a precaution and warning against application in large
quantities as it contains keratolytic moisturing agent that have
potential to cause irritation and stinging sensation; it is not to be
used near eyes and mucous membranes. The dosage and administration is
indicated that thin layer of the cream should be applied to
the affected area (emphasis supplied) once or twice daily and in case
of severe dry skin conditions three times application may be
required.”
(Emphasis supplied)
It is brought to our notice that the said decision has attained finality
qua the assessee therein since the Special Leave Petition filed by the
Central Excise was dismissed.
11. In the Chapter Note dealing with cosmetics, it is clearly provided
that the preparations for the care of skin, beauty or make-up preparations
are the ones covered by the Heading 33.04 for the care of the skin. The
Note has specifically excluded medicaments. Still further, in the Chapter
Note under Heading 33.04(B) also, it is clarified that medicinal
preparations used to treat certain skin complaints are to be covered under
the Heading 30.03 (medicaments) or Heading 30.04 (products containing
pharmaceutical substances used for medical, surgical, dental or veterinary
purposes).
12. Thus, if a product comprises of two or more constituents which have
been mixed or compounded together for therapeutic or prophylactic use, the
same is to be covered by Heading 30.03. Urea, lactic acid, propylene glycol
are pharmaceutical constituents as per as Indian Pharmacopoeia.
13. The contention that ‘Moisturex’ is a moisturizing cream used for
softening the skin cannot be appreciated. As we have already discussed, the
use of the cream is not for the care of the skin. ‘Moisturex’ is also not
primarily intended to protect the skin from sun, tan or dryness, etc. On
the other hand, it is intended for treating or curing the dry skin
conditions of the human skin and for a few other skin complaints like
fissure feet, dry scaly skin conditions, ichthyosis, etc. The argument
advanced on behalf of the Central Excise that use of urea or lactic acid or
propylene glycol, etc., is only as subsidiary pharmaceutical constituents
and, hence, they cannot be held out as having curative, therapeutic or
prophylactic value, cannot also be appreciated. It is the presence of the
ingredients of the pharmaceutical constituents which makes the difference
and not the percentage of the ingredients as held by this Court in Meghdoot
Gramodyog Sewa Sansthan vs. Commissioner of Central Excise, Lucknow[2]. It
was held that the composition and the curative properties would make the
difference in the classification. If the product is composed of
pharmaceutical constituents which have curative properties, the product is
to be classified as medicament. To quote:
“6. The appellant has drawn our attention to the composition of the
six products and the uses in respect of each of these six products.
This has not been doubted by the Tribunal nor indeed by the
Departmental authority. The composition and the curative properties
being admitted, it was not open either to the Department or the
Tribunal to hold that the items were cosmetics merely by reason of the
outward packing.”
(Emphasis supplied)
14. Another contention advanced by the appellant-Central Excise is that
the product is sold not under any medical prescription but the same is
available across or under the counter and, hence, the same cannot be
treated as medicament. This contention also has been rejected by this Court
in Commissioner of Central Excise, Calcutta vs. Sharma Chemical Works[3].
To quote:
“12. … Mere fact that a product is sold across the counters and not
under a Doctors prescription, does not by itself lead to the
conclusion that it is not a medicament. We are also in agreement with
the submission of Mr. Lakshmikumarn that merely because the percentage
of medicament in a product is less, does also ipso facto mean that the
product is not a medicament. Generally the percentage or dosage of the
medicament will be such as can be absorbed by the human body. The
medicament would necessarily be covered by fillers/vehicles in order
to make the product usable. It could not be denied that all the
ingredients used in Banphool Oil are those which are set out in the
Ayurveda text books. Of course the formula may not be as per the text
books but a medicament can also be under a patented or proprietary
formula. The main criteria for determining classification is normally
the use it is put to by the customers who use it. ...”
(Emphasis supplied)
15. In Puma Ayurvedic Herbal (P) Ltd. vs. Commissioner of Central Excise,
Nagpur[4], it was held that the purpose of cosmetic product is to improve
the appearance of a person and for enhancing the beauty whereas a medicinal
product or medicament is meant to treat some medical condition. It was also
held that merely because a product is sold not under a doctor’s
prescription, the same does not cease to be a medicament. In both these
cases, it was held that minimal presence of medicinal element does not
detract the product from being classified as a medicament. To quote:
“20. It will be seen from the above definition of cosmetic that the
cosmetic products are meant to improve appearance of a person, that
is, they enhance beauty. Whereas a medicinal product or a medicament
is meant to treat some medical condition. It may happen that while
treating a particular medical problem, after the problem is cured, the
appearance of the person concerned may improve. What is to be seen is
the primary use of the product. To illustrate, a particular Ayurvedic
product may be used for treating baldness. Baldness is a medical
problem. By use of the product if a person is able to grow hair on his
head, his ailment of baldness is cured and the person's appearance may
improve. The product used for the purpose cannot be described as
cosmetic simply because it has ultimately led to improvement in
appearance of the person. The primary role of the product was to grow
hair on his head and cure his baldness.
21. The extent or the quantity of medicament used in a particular
product will also not be a relevant factor. Normally, the extent of
use of medicinal ingredients is very low because a larger use may be
harmful for the human body. The medical ingredients are mixed with
what is in the trade parlance called fillers, or vehicles in order to
make the medicament useful. To illustrate an example of Vicks Vaporub
is given in which 98% is said to be paraffine wax, while the medicinal
part i.e. Menthol is only 2%. Vicks Vaporub has been held to be
medicament by this Court in CCE v. 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.
22. 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.”
(Emphasis supplied)
16. In Union of India vs. G. D. Pharmaceutical Limited[5], the Calcutta
High Court considered the question as to whether the product ‘Boroline’
containing boric acid with zinc oxide would be a medicament or cosmetic. It
was held that the very presence of the pharmaceutical constituents like
boric acid and zinc oxide will make the product medicament and not
cosmetic. We are in respectful agreement with the views taken in the above-
mentioned decisions.
17. We shall also refer to the decision in Alpine Industries vs.
Collector of Central Excise, New Delhi[6], wherein this Court despite a
certificate from Army that the cream ‘Lip Salve’ is used for treatment of
sore, inflamed, roughened and cracked lips, declined to include the same in
the category of medicament. It has been found that the product is meant for
the care of the lips and not for the cure of the skin, being a
protective/preventive preparation for chapping of lips though it has an
incidental use on cracked and chapped lips. To quote:
“7. We have gone through the pharmaceutical and medical literature
produced before us in the course of hearing and which has been duly
dealt with by the Tribunal in its minority and majority opinion. The
certificate issued by the Army Authorities and the chemical
ingredients of the product are not decisive on the question of
classification of the product for levy of excise duty. It is firmly
established that on the question of classification of product under
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 we find from the material produced
before the Tribunal is that essentially the product is a
protective/preventive preparation for chapping of lips. It is not a
curative product maybe that incidentally on cracked and chapped lips,
it has some curative effect. It is also not denied that the product
'Lip Salve' is not suitable for use only for soldiers operating in
high altitude areas but it is of use for every one as protection from
dry, cold weather or sun rays. The product, therefore, essentially is
protective of skin of lip. It is lip care product and not a
'medicament'. It is neither prescribed by any doctor nor obtainable
from the Chemist or Pharmaceutical shops in the market.”
(Emphasis supplied)
18. Similarly, in Sunny Industries Private Limited vs. Collector of
Central Excise, Calcutta[7], while considering the question as to whether
the Ad-vitamin Massage Oil forte could be medicament, it has been held that
the same not being used for cure of skin but for care of skin, it can only
be classified under 33.04 as a skin care oil. To quote:
“11. From the aforesaid Chapter notes, it is clear that heading 33.03
would include products whether or not they contain subsidiary
pharmaceutical or antiseptic constituents, or are held out as having
subsidiary curative or prophylactic value and heading 33.04 would
inter alia include the products specified therein and other
preparations for use in manicure or chiropody and barrier creams to
give protection against skin irritants. Therefore, the product mainly
oil containing some A&D vitamins which is used for massage, even if it
prevents ailment of rickets and treats the same, it cannot be held to
be medicaments.”
(Emphasis supplied)
19. Thus, the following guiding principles emerge from the above
discussion. Firstly, when a product contains pharmaceutical ingredients
that have therapeutic or prophylactic or curative properties, the
proportion of such ingredients is not invariably decisive. What is of
importance is the curative attributes of such ingredients that render the
product a medicament and not a cosmetic. Secondly, though a product is sold
without a prescription of a medical practitioner, it does not lead to the
immediate conclusion that all products that are sold over / across the
counter are cosmetics. There are several products that are sold over-the-
counter and are yet, medicaments. Thirdly, prior to adjudicating upon
whether a product is a medicament or not, Courts have to see what the
people who actually use the product understand the product to be. If a
product’s primary function is “care” and not “cure”, it is not a
medicament. Cosmetic products are used in enhancing or improving 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.
20. In the case of ‘Moisturex’,
there is no dispute that the said cream
is prescribed by the dermatologist for treating the dry skin conditions and that the same is also available in chemist or pharmaceutical shops in the market.
The cream is not primarily intended for protection of skin.
The ingredients in the cream, the pharmaceutical substances do show that it is used for prophylactic and therapeutic purposes.
The Central Excise Tariff
Act has unambiguously clarified as to what is a medicament for curing an ailment relating to skin.
Heading 33.04 dealing with beauty or make-up
preparations and preparations for the care of the skin has specifically excluded medicaments.
There is also an indication under the same entry that
medicinal preparations used to treat certain complaints are to be provided under the Heading 30.03 (medicaments) or 30.04 (products containing pharmaceutical substances used for medical, surgical, dental or veterinary purpose).
21. Tribunals, the Customs, Excise and Gold (Control) Appellate Tribunal,West Zonal Bench at Mumbai in the first case and Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai in the other, having regard to the pharmaceutical constituents present in the cream
‘Moisturex’ and its use for the cure of certain skin diseases, have rightly
held that the same is a medicament liable to be classified under the Heading 30.03 (medicament).
Thus, there is no merit in these appeals. They are accordingly dismissed. No costs.
....……...……………………………..………J.
(SUDHANSU JYOTI MUKHOPADHAYA)
....……..…………………………………..…J.
(KURIAN JOSEPH)
New Delhi;
August 14, 2013.
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[1] 1998 (99) E.L.T. 643 (Tri. Mumbai)
[2] (2004) 174 E.L.T. 14 (S.C.)
[3] 2003 (154) E.L.T. 328 (S.C.)
[4] 2006 (196) E.L.T. 3 (S.C.)
[5] 1998 (100) E.L.T. 24 (Cal.)
[6] 2003 (152) E.L.T. 16 (S.C.)
[7] 2003 (153) E.L.T. 259 (S.C.)
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