2018 (9) TMI 1654 - AT - Central Excise

Classification of goods - Herbal Sheekakai Powder and Herbal Reetha Powder with the brand name Meera - whether Herbal Sheekakai Powder merits classification under Chapter 30 as medicaments or under Chapter 33 as preparations for use on the head ? Held that - As per the relevant Chapter Notes Chapter Note 1 (d) of Chapter 30 excludes preparations of Chapter 33 even if they have therapeutic and prophylactic properties . Secondly Chapter Note 2 to Chapter 33 states that Chapter Sub-Heading 33.03 to 33.07 apply inter alia to products suitable for use as goods of these headings and put up in packings with labels literature or other indications that they are for use as cosmetics or other toilet preparations or put up in a form clearly specialized for such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents or are held out as having subsidiary curative or prophylactic value . In the present case there is no evidence put forward by the respondent that the impugned products are sold in the market as medicines. Further it is also seen that the said products are advertised in TV as well as other media as preparations used on the hair and also understood by public as toiletry requisite only. The Supreme Court in the recent judgment in the case of Commissioner of Central Excise Mumbai Vs. M/s. CIENS Laboratories Mumbai 2013 (8) TMI 467 - SUPREME COURT has held that for an ayurvedic medicine to be classified under Chapter 33 has to pass the test whether it is for cure of any disease. If the same is only meant for care then such product would not fall under medicament. It is obvious that the product manufactured is for care of the hair even though it may have subsidiary medicinal properties - product rightly classified under CETH 3305.99 - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of Herbal Sheekakai Powder under Chapter 30 as "medicaments" or under Chapter 33 as "preparations for use on the head".

In this case, the respondents were manufacturing Herbal Sheekakai Powder and Herbal Reetha Powder under the brand name "Meera" and claimed classification under Sub-heading 3003.39 of CETA, 1985 as an ayurvedic proprietary medicine. The department contended that the items should be classified under 3305.90 as cosmetic preparations. A show-cause notice was issued, and the original authority confirmed the duty demand. The Commissioner (Appeals) set aside the demand, classifying the goods under Chapter Heading 3003.39. The department appealed to the Tribunal, questioning the classification.

During the hearing, the respondent's advocate argued that the products had medicinal properties and should be classified under Chapter Heading 3003.39 as medicaments. He cited precedents and opposed the Revenue's reliance on a stay order related to a previous case. The department's representative argued that the products did not have therapeutic properties and were marketed as toiletry items, not medicines. He referred to a Tribunal decision classifying a similar product under Chapter Heading 3305.99.

The Tribunal analyzed the dispute, noting that Chapter Note 1(d) of Chapter 30 excludes preparations of Chapter 33, even if they have therapeutic properties. Chapter Note 2 to Chapter 33 specifies that products suitable for use as cosmetics fall under that chapter, even if they have subsidiary medicinal value. The Tribunal found no evidence that the products were sold as medicines, as they were advertised for hair use and perceived as toiletry items. Referring to a Supreme Court judgment, the Tribunal emphasized that for an ayurvedic medicine to be classified under Chapter 33, it must be intended for curing diseases, not just care.

Based on this analysis, the Tribunal concluded that the Herbal Sheekakai Powder was primarily for hair care, with subsidiary medicinal properties. Therefore, it upheld the department's classification under CETH 3305.99 and allowed the appeal filed by the department, setting aside the Commissioner (Appeals) order.