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TMI Blog2008 (9) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... KGST Act. We are in agreement with the reasoning and conclusions reached by the Tribunal. Revision cases dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed by the Tribunal is called in question by the assessee in S.T. Rev. Case No. 164 of 2007. 8. For the assessment year 2000-2001, the assessing authority has completed the assessment proceedings by treating the product in question as "Medicated Talcum Powder" and has levied tax at 20% as an item falling under Entry 127 of First Schedule to KGST Act. The assessment order so passed is confirmed both by the first appellate authority and the Appellate Tribunal. It is the correctness or otherwise of this order, is called in question by the assessee, in S.T. Rev. Case No. 172 of 2008. 9. The assessee has raised identical questions of law in both these revision petitions for our consideration and consequent decision. They are :- "(a) Whether the Tribunal failed to see that Sl. No. 127 of the Schedule to the KGST Act should be read as whole cosmetics? (b) Whether the Tribunal committed an error in law in misconstruing Sl. No. 127 by failing to note that the said entry applied only if the goods in question were essentially cosmetics? (c) Whether the Tribunal applied the incorrect test of placing emphasis on the percentage of chlorophenesin while failing to take n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The core issue that falls for our consideration and decision is, whether the Nycil Prickly Heat Powder manufactured by the petitioner is a medicine or drug coming under Entry 79 or Medicated Talcum Powder falling under Entry 127 of the First Schedule to KGST Act. 11. The controversy has to be decided with reference to entries in the Schedule to the Act. Therefore, they are extracted. 12. Entry 79 reads as under :- "Medicines and Drugs including allopathic, ayurvedic, homeopathic, sidha and unani preparations and glucose IP." 13. Entry 127 of the First Schedule to the Act reads as under :- "Shampoo, Talcum Powder including medicated talcum powder, Sandalwood Oil, Ramacham Oil, Cinnamon Oil, other perfurmeries and cosmetics not falling under any other entry in this Schedule". 14. The answer to the question will turn on proper interpretation of Entry 79 and Entry 127 of First Schedule to KGST Act. 15. Entry 79 of the First Schedule speaks of Medicine and drugs including ayurvedic medicine etc. In the instant case, we are concerned only with medicine and drugs and not ayurvedic medicine. Therefore, we need to know only what is a medicine and drug? 16.&e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul, cannot be classified as a drug. 18. The assessee's contention is that the Nycil Powder is the trade name under which the manufacturer markets the substance known as 'Chlorphenesin'. The Nycil powder contains zinc oxide and boric acid and they form 32 per cent of the total contents of Nycil powder, and the rest of the material is starch and the talc. The Nycil Powder is designed to keep the skin clean so as to offer protection against prickly heat and infection besides giving comfort and freshness. Therefore, it would fall under entry 79 of First Schedule to KGST Act. 19. As regards the nature, composition and property of Nycil Powder, we can do no better than to set out the composition noticed by the Gujarat High Court in the case of B. Shah and Company v. State of Gujarat, 28 STC 5. "Nycil Powder has the following features and attributes : (1) Chlorphenesin, being a medical substance was introduced as a result of original work in the British Drug House Research Laboratories. "Nycil" is the trade name under which the British Drug House product of chlorphenesin is manufactured and marketed. (2) Chlorphenesin is a potent antifungal, antibacterial and tric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substances used as ingredients in the manufacture of Nycil powder are Indian Pharmaceutical or British Pharmaceutical articles for the use of which licence is necessary. Licence is also necessary under the Indian Drugs Control Act for manufacturing, stocking or selling Nycil powder and the licence has accordingly been issued. The Government of India, Ministry of Finance, has held and directed that Nycil powder should be assessed to duty as "P. and P. Medicines" under item No. 14E of the Central Excise Tariff." 20. The Revenue's contention appears to be that 'Nycil Prickly Meat Powder' is Medicated Talcum Powder and since there is separate entry for the Medicated Talcum Powder, the same requires to be classified under Entry 127 of the First Schedule to KGST Act. 21. Entry 127 of the First Schedule, apart from others speaks of Talcum Powder including Medicated Talcum Powder. The word 'includes' is to indicate that the particular so defined by the use of the word 'includes' not only continues to have its ordinary meaning, its natural import, but it also includes within its ambit all those things which the definition says that it shall include. The Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to their natural import, but also those things which the interpretation clause declares that they shall include. In other words, the word in respect of which "includes" is used, bears both its extended statutory meaning and its ordinary, popular and natural sense whenever that would be properly applicable". 24. The following passage in G.P. Singh's Principles of Statutory Interpretation, 2nd edn. p. 108, highlights as to how an inclusive definition is to be construed :- "The definition of a word in the definition section may either be restrictive of its ordinary meaning or it may be extensive of the same, when a word is defined to 'mean' such and such, the definition is prima facie restrictive and exhaustive, whereas when the word defined is declared to 'include' such and such, the definition is prima facie extensive. When by an amending Act, the word 'includes' was substituted for the word 'means' a definition section, it was held that the intention was to make it more extensive. Further a definition may be in the form of 'means and includes' where again the definition is exhaustive; on the other hand, if a word is defined 'to apply to and include', the definition is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powder. It is further submitted even the Central Excise Department is treating Nycil as Medicine. The learned Counsel would also contend that the intention of the legislature including Medicated talcum powder in Entry 127 of First Schedule is to classify talcum powders which are having medicinal effect. Such item is commercially identified as a talcum powder and used as a face powder or body powder for beautification. Nycil is not a talcum powder used for beautification. Lastly, it is contended that the Hon'ble Supreme Court in several decisions has held that Nycil Powder is a medicine. 27. The learned Counsel for the revenue would submit that, it is well established that in interpreting entries in a taxing statute, where the primary object is to raise revenue and for that purpose, various products are differently classified, the entries are not to be understood in its scientific and technical meaning. The terms and the expressions used in the Schedules have to be understood by their popular meaning, that is the meaning attached to them by those using the product. The chemical ingredients of the product are not decisive on the question of classification of the product for lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry should give way to the special entry. 31. The expression 'talcum powder' has been considered by various courts and consistent thinking is that it is cosmetic and not a medicine. The legislature while enumerating the articles in entry 127 of First Schedule to the Act has used the expression talcum powder including medicated talcum powder. When the entry uses the expression 'include' it is prima facie extensive. That only means even the medicated talcum powder is brought under entry 127 of the First Schedule to the Act. The word 'Medicated' has a wide import. In the Dictionary of Medicine by Peter Hodgson Collion, the word Medicated is defined as a product which contains medicinal drug - talcum powder which contains a medicinal drug. 32. In State of Goa and others v. Leukoplast (India) Ltd. - 1997 (92) E.L.T. 19 (S.C.) = [1997] 4 SCC 82, the Apex Court was asked to decide whether plaster, dressings and bandages produced by the assessee under licence from Drugs Controller, whether fell within the expression "Drugs and Medicine", one the contentions raised therein was, that it has got a licence to manufacture these products under the Drugs and Cosmetics Act and its pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... base being purified talc. 35. The product literature and advertised use would show that Nycil Powder is used for prickly heat and active skin protection. It is further stated that since Nycil powder contains Chlorphenesin, the antibacterial and antifungal agent, and it actively prevents prickly heat and protects the skin from sores, dhobie itch and athelet foot. The Nycil Powder is designed to keep the skin clean so as to offer protection against prickly heat and infections, besides giving comfort and freshness. It is clear from the composition of Nycil Powder that it is primarily and essentially an article recommended for use to cure a person of certain skin ailments. 36. Nycil Prickly Heat Powder is in the nature of 'medicament'. What is "medicament" came up for interpretation before the Apex Court in the case of Puma Ayurvedic Herbal Pvt. Ltd. - 2006 (196) E.L.T. 3 (S.C.) = (2006) 145 STC 200. In the said decision, the court has observed, whether the item is commonly understood as a medicament, which is called common parlance test. For this test, it will have to be seen whether in common parlance item is accepted as a medicament. If a product falls in the category o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of medicines and since the same is basically a talcum powder which has preventive and curative power, the same requires to be brought under the special entry rather than the general entry. 39. The Apex Court in Ponds India Ltd.'s case, 15 VST 256, has stated, that, it is true that the court must bear in mind the precise purpose for which the statute has been enacted, namely herein for the purpose of collection of tax, but the same by itself would not mean that an assessee would be made to pay tax although he is not liable therefor, or to pay higher rate of tax when he is liable to pay at a lower rate. 40. The legislative entry 127 of First Schedule immediately after the expression talcum powder has used the word 'including'. The word include/including, as we have already stated, is used in interpretation clause to enlarge the meaning of the word in the statute. When such word is used in an interpretation clause, it must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. A court of law in construing a statute with an interpretation c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only as Medicine. 43. In the aforesaid decision, the assessee firm was a dealer carrying on business in drugs and medicine. The question which arose for consideration and determination was, whether Nycil Medicated powder is a "toilet article" within the meaning of Entry 21A of Schedule E or is a "Medicine" within the meaning of Entry 13 of Schedule C or is it covered by the residuary Entry 22 of Schedule E to the Bombay Sales Tax Act, 1959. The court after detailed consideration of the issue has observed that Nycil Medicated Powder with its special qualities and attributes, its character and composition and its recommended or intended use as advertised by the manufacturers is a medicine within the meaning of the word in Entry 13 of Schedule C of Bombay Sales Tax Act, 1959 and not a toilet article within the meaning of Entry 21A of Schedule E to the Act. 44. In the aforesaid decision, the assessee firm was carrying on business in "drugs and medicine" and was also a distributor of Nycil Medicated Powder manufactured by the British Drug House (India) Pvt. Ltd., Bombay. The firm had made an application under Section 52 of the Act to the Commissioner of Sales Tax for deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lment is treated, the use of the product is discontinued. The court has further observed that the product in question contains a particular medicine namely Chlorphenesin I.P. The inclusion of this medicine in the composition makes all the difference as found by HSC. It was because of use of this medicine in Nycil Prickly Heat Powder that the HSC classified it differently as compared to Johnson Prickly Heat Powder and Shower to Shower Powder. The Court has also observed that the submission of the Revenue that the product is basically a powder and will always retain as its basic character as talcum powder even if some medicine is added to it, the base being purified talc. It is the additional of medicines which changes its basic character. 47. In the aforesaid decision the question before the court was whether 'Nycil' is a patent or proprietary medicine or body or make up preparations for cure of the skin. The court applying common parlance test has come to the conclusion, it is a medicine since the product is specifically used for treating heat. In our view, this decision would not assist the case of the petitioner, for the reason, the Schedule to KGST Act has two entries - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a cosmetic. 50. In B.P.L. Pharmaceuticals Ltd. v. Collector of Central Excise, 1995 (77) E.L.T. 485 (S.C.), the issue before the Apex Court was, whether "Selenium Sulfide Lotion" is classifiable as medicine under sub-heading 3003.19 or classifiable as cosmetic under sub-heading 3305.90, this decision was relied on by the learned Counsel for the assessee, for the purpose, firstly, since the respondents had not controverted the affidavits filed by the petitioner, the Appellate Tribunal should have allowed the assessee's appeal. Secondly, for the purpose the product is not a cosmetic, but medicine. This decision is also referred by the Apex Court in the case of Hindustan Ferodo Ltd. v. Collector of Central Excise - 1997 (89) E.L.T. 16 (S.C.) = (1997) 106 STC 214 (S.C.), wherein it is stated, that, it is not in dispute before us, as it cannot be, that, the onus of establishing that the said rings fell within item 22-F lay upon the revenue. The revenue had led no evidence. The onus was not discharged. Assuming therefore, that the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless have been allowed. In the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied as a medicament. In order to be a medicinal preparation or a Medicament, it is not necessary that the item must be sold under a doctor's prescription. Similarly the availability of the product across the counter in shops is not relevant as it makes no difference either way. 53. In Muller and Phipps (India) Ltd. v. Collector of Central Excise, 2004 (167) E.L.T. 374, the court has concluded that, Johnson Prickly Heat Powder is a medicament because it was not an ordinary talcum powder to be used to get rid of problem of prickly heat. The question before the court was whether Johnson's Prickly Heat Powder and Phipps processed talc are patent or proprietary medicines classifiable for the purpose of Excise duty as claimed by the appellants or cosmetics or toilet preparations as claimed by the revenue. In the appeal it was contended that prickly heat powder not only relieves prickly heat faster but actually helps to prevent it; that when a person perspires profusely the sweat stays on the skin too long and the persons potential victim of prickly heat; that specially formulated prickly heat powder absorbs the sweat better and faster and prevents the build up of bacteria on the sk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et as such, particularly, the circumstances that the manufacturers of the goods in question having applied for a licence under the Drugs Act as an ayurvedic drug and the same having been obtained and the goods marketed as such, the goods having been subjected to an examination by the Technical Committee of the Indian Standards Institution (Specification of Marks) Act, 1952 and the goods having been held not to be a cosmetic or toiletry item, but only as a drug, the goods in question were drug or medicinal preparations. If in truth the said goods are medicinal preparations, then merely because such goods are used for other purposes that would not change their character, while if the goods are in substance toiletry items and if they also have some medicinal ingredients added to them, they would not cease to be so. Though a tooth-paste, a tooth-powder or a skin cream by itself may not be characterised as medicinal preparation, if such goods attract the provisions of the Drugs Act, and are classified as such, certainly they have to be treated as medicinal preparations and not as toiletry items. If such goods could also be obtained in shops of ordinary merchandise or in chemists shops ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the dealer and in view of the licence issued under the Drugs and Cosmetics Act.' 57. Reference is made to the decision of the Bombay High Court in the case of Roopkala Industries v. the State of Bombay [1956] 7 STC 557. In the said decision, the question before the court was, whether the powder used for dusting body after bath and also used as face powder should be classified as cosmetics or toilet articles. The court concluded as under : 'The powders with which we are concerned can no doubt be and are used for dusting the body after bath, etc., but there is nothing to show that they are not used or intended to be used as a face powder as well. One of the tins produced before us is marked Roopkala Toilet Powder, with the words inscribed on it. "for beauty, toilet and nursery". The letter-head on the paper used by the appellants says that they are dealers in cosmetics and drugs. It is admitted that they do not deal in any powders other than the kinds of powders mentioned in the order of the Collector of Sales fax. In our opinion, even if the connotation accepted in America be considered to be too wide, the articles in question can undoubtedly be regarded as aids to beauti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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