2012 (3) TMI 40 - SC - Central Excise

Classification of Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub - assessee contending it to be medicaments classifiable under Chapter sub-heading 3003 whereas Revenue contends it to be detergents classifiable under chapter sub-heading 3402.90 on ground of presence of the surface active agent and other substances in it Held that - Combined factor that requires 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-heading 3402.90 which is a residuary entry Decided in favor of assessee.

Summary

Issues Involved:
1. Classification of products under the Central Excise Tariff Act, 1985.
2. Determination of whether Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub are medicaments or detergents.
3. Interpretation of relevant tariff headings and sub-headings.
4. Application of common parlance and commercial usage tests.
5. Examination of the primary and essential use of the products.
6. Consideration of the composition and labeling of the products.
7. Review of previous judgments and legal principles for classification.

Detailed Analysis:

1. Classification of Products under the Central Excise Tariff Act, 1985:
The primary issue in these appeals is the classification of two products, Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub, for the purpose of levy of duty under the Central Excise Tariff Act, 1985. The assessee claims these products are medicaments and should be classified under Chapter sub-heading 3003, while the revenue contends they are detergents and should be classified under Chapter sub-heading 3402.90.

2. Determination of Whether Products are Medicaments or Detergents:
The assessee manufactures Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub, which have identical compositions but differ in branding. The Adjudicating Authority issued show cause notices alleging misclassification under Chapter sub-heading 3003.10/20 instead of 3402.90, suggesting the products are primarily used as detergents rather than medicaments.

3. Interpretation of Relevant Tariff Headings and Sub-headings:
The relevant tariff items under Chapter sub-heading 3003 and 3402.90 are examined. Chapter Note 2(i) of Chapter 30 defines "medicament" as products mixed or compounded for therapeutic or prophylactic uses. The products in question contain Povidone Iodine along with Neutronix, Superamide, and Sodium Hydroxide.

4. Application of Common Parlance and Commercial Usage Tests:
The Tribunal considered the wide range of literature on the products, their composition, and user, concluding that Povidone Iodine Cleansing Solution USP is used as an antiseptic and disinfectant. The Tribunal rejected the revenue's contention that the addition of surface active agents rendered the products as washing solutions, emphasizing their primary use in medical settings.

5. Examination of the Primary and Essential Use of the Products:
The Tribunal observed that the products are not used as general cleansing solutions but in places where surgery and medicine are practiced. The labeling indicates preoperative use by surgeons and patients, supporting the classification as medicaments.

6. Consideration of the Composition and Labeling of the Products:
The products' labels and compositions were scrutinized, showing they contain Povidone Iodine, Neutronix, Superamide, and Sodium Hydroxide. Various pharmacopeias and medical dictionaries were referenced to highlight the therapeutic and prophylactic properties of Povidone Iodine.

7. Review of Previous Judgments and Legal Principles for Classification:
The judgment references several Supreme Court decisions, emphasizing that the classification of products should consider their primary and essential use, common parlance, and commercial usage. The Tribunal's decision to classify the products under Chapter sub-heading 3003 was upheld, as they are primarily intended and used for their antiseptic properties.

Conclusion:
The Supreme Court confirmed the Tribunal's order, rejecting the revenue's appeals and classifying Povidone Iodine Cleansing Solution USP and Wokadine Surgical Scrub as medicaments under Chapter sub-heading 3003. The decision was based on the products' composition, labeling, primary use in medical settings, and the application of common parlance and commercial usage tests.