2005 (1) TMI 237 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Nizral Shampoo 2%.
2. Applicability of the common parlance test.
3. Relevance of prior judgments and pharmaceutical literature.
4. Manufacturing process and drug license implications.

Issue-Wise Detailed Analysis:

1. Classification of Nizral Shampoo 2%:
The appellants contested the classification of Nizral Shampoo 2% as a cosmetic under CSH 3305.99 of the Central Excise Tariff. They argued that it should be classified as a Patent or Proprietary Medicament under CSH 3003.10 due to its content of 2% synthetic broad-spectrum antifungal agent, Ketoconazole. The product pamphlet indicated that it is intended for use only by a Registered Medical Practitioner, a hospital, or a laboratory, supporting its classification as a medicament.

2. Applicability of the Common Parlance Test:
The appellants referenced the Supreme Court's judgment in the case of B.P.L. Pharmaceuticals Ltd. v. CCE, Vadodara, where 'Selsun,' an anti-dandruff preparation containing 2.5% Selenium Sulfide, was classified as a drug under sub-heading 3003.19 of the CET. The Tribunal noted that the common parlance test should be applied to determine whether a product is classified as a pharmaceutical product or a cosmetic, as established in the case of CCE v. Vicco Laboratories.

3. Relevance of Prior Judgments and Pharmaceutical Literature:
The appellants presented extensive evidence, including product literature, Remington Pharmaceutical Sciences, Martindale Extra Pharmacopeia, and various articles and affidavits, to support their claim that Nizral Shampoo 2% is a medicament. The Tribunal found that the product's therapeutic dosage of Ketoconazole and its use for treating infections like seborrhoeic dermatitis and dandruff aligned with the criteria for classification as a medicament. The Tribunal also referenced the Supreme Court's ruling in Muller & Phipps (India) Ltd. v. CCE, which held that an item manufactured under a drug license and treated as a drug should not be reclassified as a cosmetic.

4. Manufacturing Process and Drug License Implications:
The manufacturing process involved mixing and heating various ingredients, including Ketoconazole, and the product was tested in the quality control department before being packaged. The Tribunal noted that the product was manufactured under a drug license and sold on prescription by a Registered Medical Practitioner, further supporting its classification as a medicament.

Conclusion:
The Tribunal concluded that Nizral Shampoo 2% should be classified under Chapter sub-heading No. 3003.10 as a Patent or Proprietary Medicament. The appeal was allowed with consequential relief, if any. The Tribunal emphasized that the product's therapeutic properties, prescription requirement, and manufacturing under a drug license aligned with the criteria for classification as a medicament, and there was no need to distinguish the Apex Court's judgment in the B.P.L. Pharmaceuticals Ltd. case.