2004 (10) TMI 93 - SC - Central Excise

Classification of goods - Whether the items should be classified under the Central Excise Tariff Act, 1985 as medicaments under Heading 3003.30 or under Heading 3305.10 and 3305.50 of which deal with perfumed hair oil and other preparations for use on the hair - Held that - A product may be medicinal without having been prescribed by a Medical Practitioner. It was also not necessary for a person manufacturing medical products to claim classification under Tariff Heading 3303.031 without establishing that the product had in fact been tested on patients in controlled situations or that the outcome had not been tested for effectiveness. This would be particularly true in the cases where the products are claimed to be based on traditional ayurvedic formulae - Banphool oil and Himtaj oil held that the ayurvedic hair oils, were medicines and should be properly classified under Tariff Heading 3303.031, rather than under Tariff Heading 3305.10 or 3305.50. Indeed the learned counsel appearing on behalf of the respondent has not seriously contended otherwise in respect of the first three items. - As far as items 4, 5 and 6 are concerned, for the reasons stated earlier, we are of the view that they are also properly classifiable under Medicaments under Tariff Heading 3303.30 - Decided in favour of assessee.

Summary

Issues:
Classification of six products under the Central Excise Tariff Act, 1985 as medicaments under Heading 3003.30 or under Heading 3305.10 and 3305.50 for perfumed hair oil and other hair preparations.

Analysis:
The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) classified the products under Tariff Heading 3305.10 and 3305.50, while the appellant argued for classification under Heading 3003.30. The Tribunal's decision was based on the lack of evidence showing medical prescription, patient observations, and packaging suggesting cosmetics. However, the Supreme Court found the Tribunal's reasoning flawed, stating that a product can be medicinal without a medical prescription and testing on patients. Traditional ayurvedic formulas were specifically highlighted as not requiring such testing.

The Court examined the composition and uses of the six products, undisputed by the Tribunal or Departmental authority. It emphasized that admitting the curative properties made it improper to classify the items as cosmetics based solely on packaging. Previous judgments were cited to support the medicinal classification of ayurvedic hair oils, reinforcing the classification under Tariff Heading 3303.031 for the first three items. The Court found items 4, 5, and 6 also properly classifiable under Medicaments under Tariff Heading 3303.30.

In conclusion, the appeal was allowed, setting aside the Tribunal's decision. The judgment highlighted the importance of considering composition and curative properties in classifying products as medicaments, especially in the case of traditional ayurvedic formulations.