1997 (1) TMI 298 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product 'Moisturex' under the Central Excise Tariff Act, 1985 (CETA).
2. Determination of whether 'Moisturex' is a medicament or a cosmetic product.
3. Examination of the therapeutic properties and primary function of 'Moisturex'.
4. Applicability of Chapter Notes and Rules for interpretation of the Tariff.

Detailed Analysis:

1. Classification of the Product 'Moisturex':
The primary issue in the appeal was the classification of the product 'Moisturex'. The appellants classified the product under Heading 30.03 of CETA as a medicament. However, the jurisdictional Assistant Commissioner of Central Excise classified it under Heading 33.04 as a cosmetic product. The Commissioner (Appeals) upheld this classification, leading to the present appeal.

2. Determination of Whether 'Moisturex' is a Medicament or a Cosmetic Product:
The appellants argued that 'Moisturex' should be classified as a medicament due to its therapeutic properties. They submitted that the main active ingredient, urea (10% w/w), is recognized in therapeutic quantities by the British and Indian Pharmacopoeia. They cited various authoritative articles and a Supreme Court decision in BPL Pharmaceuticals v. Collector of Central Excise to support their claim. The department argued that 'Moisturex' is primarily a moisturizer with cosmetic effects, as its ingredients are commonly used in cosmetic preparations. They also questioned the therapeutic quantity of urea in the product.

3. Examination of the Therapeutic Properties and Primary Function of 'Moisturex':
The product 'Moisturex' contains urea, propylene glycol, lactic acid, liquid paraffin, and a cream base. The container indicates its use for conditions like Ichthyosis Vulgaris, fissure foot, and dry scaly skin conditions. The product literature provided by the appellants emphasized its therapeutic use for treating skin disorders. Affidavits from dermatologists supported the claim that 'Moisturex' has therapeutic properties, particularly for treating Ichthyosis Vulgaris and other dry skin conditions. The affidavits highlighted that urea in the product attracts moisture, hydrates the skin, and prevents water loss, differentiating it from ordinary moisturizing creams.

4. Applicability of Chapter Notes and Rules for Interpretation of the Tariff:
Chapter 30 of CETA covers pharmaceutical products, while Chapter 33 covers cosmetic or toilet preparations. Chapter Note 2 to Chapter 33 states that products suitable for use as cosmetics, even if they contain subsidiary therapeutic constituents, should be classified as cosmetics. The Supreme Court in BPL Pharmaceuticals v. CCE provided guidelines to distinguish between cosmetics and drugs or medicaments. A cosmetic is intended for cleansing, beautifying, or altering appearance, whereas a drug is used for diagnosis, treatment, or prevention of diseases.

Conclusion:
The Tribunal concluded that 'Moisturex' satisfies the definition of a medicament as it comprises ingredients mixed for therapeutic use. The product literature and affidavits indicated its primary function is to treat dry skin conditions, not for beautifying or promoting attractiveness. Therefore, 'Moisturex' should be classified under sub-heading 3003.10 of CETA as a medicament. The impugned order was set aside, and the appeal was allowed.