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2015 (8) TMI 1012 - SC - Central ExciseClassification of Vaseline - Classification under Chapter Heading 3304.00 or under Chapter Heading 3003.10 - whether Vaseline Intensive Care Heel Guard is to be treated as merely a skin care preparation or it is a medicament having curing properties - Held that - if a particular product is substantially for the care of skin and simply because it contains subsidiary pharmaceutical or antiseptic constituents or is having subsidiary curative or prophylactic value, it would not become medicament and would still qualify as the product for the care of the skin. There would be certain products which would be purely for the care of skin and certain other products would be clearly medicament and such cases may not pose any problem. Whenever product has curative or prophylactic value as well, but the Department still wants the said product to be brought under Chapter Heading 3304.00, onus is on the Department to show that it is not medicament. For this, it will have to demonstrate that curative or prophylactic value is only subsidiary in nature or that the product is covered by the description under chapter notes 5, namely, either it is chiropody or barrier cream to give protection against skin irritants. If the Department fails to discharge this onus, the product has to be treated as medicament and would be covered under Chapter 30. 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 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. - , all the aforesaid features of the product are accepted by the Department. However, only on the ground that salicylic acid contained in the product is marginal, the Department took the view that it was a subsidiary substance. Having regard to the exposition of law narrated above, this was clearly an erroneous approach on the part of the Revenue as percentage of the said substance is immaterial to label it as subsidiary. Decision of the Tribunal holding the product in question to be a medicament and, therefore, covered by Chapter Heading 3003.10 is perfectly justified and does not call for any interference. - Decided against Revenue.
Issues Involved:
1. Classification of Vaseline Intensive Care Heel Guard (VHG) as either a skin care preparation or a medicament. 2. Determination of applicable excise duty based on the classification. Detailed Analysis: 1. Classification of Vaseline Intensive Care Heel Guard (VHG): The primary issue is whether VHG should be treated as merely a skin care preparation or as a medicament with curing properties. This classification will determine if VHG falls under Chapter Heading 3304.00 (skin care preparation) or Chapter Heading 3003.10 (medicament) of the First Schedule to the Central Excise Tariff Act, 1985. Chapter 33 (Skin Care Preparation): - Chapter 33 pertains to "essential oils and resinoids; perfumery, cosmetic or toilet preparations." - Entry 33.04 includes "Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen and suntan preparations; manicure or pedicure preparations." - Chapter notes 2 and 5 of Chapter 33 state that products suitable for use as cosmetics or toilet preparations, even if they contain subsidiary pharmaceutical or antiseptic constituents, are included under this heading. Chapter 30 (Pharmaceutical Products): - Chapter 30 deals with "pharmaceutical products." - Entry 30.03 includes "Medicaments (including veterinary medicaments)." - Chapter notes 1 and 2 of Chapter 30 define medicaments as products mixed or compounded for therapeutic or prophylactic uses and include patent or proprietary medicaments used for the treatment or prevention of ailments. 2. Determination of Applicable Excise Duty: - If VHG is classified under Chapter Heading 3304.00, it attracts a 40% duty as a skin care preparation. - If classified under Chapter Heading 3003.10, it attracts a 15% duty as a medicament. Analysis and Findings: Comparison of Entries 3304.00 and 3003.10: - Entry 3304.00 excludes medicaments, indicating that if VHG is a medicament, it must fall under Chapter 30. - The onus is on the Revenue to prove that VHG is not a medicament if they wish to classify it under 3304.00. - Pharmaceutical or antiseptic constituents in a product being subsidiary does not automatically classify it as a skin care product. Relevant Case Law: - BPL Pharmaceuticals Ltd. v. CCE, Vadodra: The Court held that the dominant use of a product determines its classification. If a product is primarily for curing a condition, it is a medicament. - Muller & Phipps (India) Ltd. v. Collector of Central Excise: The Court classified prickly heat powder as a medicament based on its therapeutic properties and the fact that it was treated as a drug by various authorities. - Commissioner of Central Excise v. Wockhardt Life Sciences Limited: The Court emphasized the "common parlance test" and the primary use of the product in determining its classification. - Commissioner of Central Excise, Mumbai IV v. Ciens Laboratories, Mumbai: The Court held that the presence of pharmaceutical ingredients, even in small quantities, could classify a product as a medicament if its primary function is to treat or cure. Application to VHG: - VHG is marketed as a solution for cracked heels, containing salicylic acid, lactic acid, and triclosan, which have therapeutic properties. - The Tribunal found that VHG was formulated for the treatment of cracked heels and was manufactured under a drug license. - The Revenue's argument that the salicylic acid content is marginal and subsidiary was rejected, as the percentage of pharmaceutical constituents is not decisive. Conclusion: - The Tribunal's decision to classify VHG as a medicament under Chapter Heading 3003.10 is justified based on its therapeutic properties and primary use. - The civil appeal is dismissed, and VHG is to be classified as a medicament, attracting a 15% excise duty. Final Judgment: The product Vaseline Intensive Care Heel Guard is classified as a medicament under Chapter Heading 3003.10, and the civil appeal is dismissed with no order as to costs.
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