Herbal Body Oil for soft, smooth, glowing & healthy skin attracts GST @ 28%

[CA Bimal Jain]

The AAR, West Bengal, in IN RE: INDRANIL CHATTERJEE - 2023 (9) TMI 125 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL held that, Jac Olivol Body Oil which serves the primary function of care of skin and not cure of skin will be classified under HSN 3304 and attracts GST @ 28%.

Facts:

Indranil Chatterjee (“the Applicant”) intends to produce Jac Olivol Body Oil (“the Product”) and claims the product will be used primarily to cure dry skin, relieves body ache, joint & knee pains, minor burns and prevents blisters.

The Applicant classifies the Product as an ayurvedic patent & proprietary medicine. Further submitted that the Product has been granted with a licence under section 3(4) of the Drug and Cosmetic Act, 1940 inter alia, an ayurvedic patent and proprietary medicine.

According to the Applicant the classification of the product is under HSN 3004 as the product is classified as a medicament, thereby attracts GST @ 12%.

In order to determine the classification the Applicant relied upon judgement in COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HYDERABAD VERSUS ASHWANI HOMEO PHARMACY - 2023 (5) TMI 191 - SUPREME COURT wherein the Hon‘ble Supreme Court of India held that, ‘medicament’ under Chapter 30 and not as ‘cosmetic or toilet preparations’ under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985.

Issue:

Whether the Jac Olivol Body Oil will be classified as a medicament or a cosmetic product?

Held:
The AAR, West Bengal, in IN RE: INDRANIL CHATTERJEE - 2023 (9) TMI 125 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL held as under:

• Opined that, in order to decide the correct classification of the Product the common parlance will be resorted.
• Noted that, the primary use of the Product, as appears from the label, is to care for skin. Since the product label described as ‘For soft, smooth, glowing and & healthy skin’.
• Further noted that, the label read as follows―Apply daily before or after bath all over your body. The labels further indicate the application of the product as ―In winter: Before bath & In summer: After bath’.
• Opined that, the product is commonly understood as a preparation for the care of skin thereby considered to be a cosmetic product which is used to get soft and smother skin.
• Held that, the product's primary function is "care" and not cure," even if it has subsidiary curative or prophylactic properties.
• Further held that, the Product is to be classified as a cosmetic product rather than a medicament on the observation that the primary function of the product and the product will be classified under HSN 3304 and liable to GST @ 28%.

(Author can be reached at [email protected])