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TMI Blog2012 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a "medicament" which would fall under chapter sub-heading 3003 which is a specific entry and not under chapter sub-heading 3402.90 which is a residuary entry – Decided in favor of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... for external treatment of a human-being. The assessee had also placed reliance on the Indian Pharmacopoeia, the United States Pharmacopoeia and the International Pharmacopoeia. The assessee had also contended that the `Neutronix and Superamide' are other two products with which Povidone Iodine is mixed to contend that they are in the nature of vehiculars for the spreading of the medicament. 6. After receipt of the reply so filed, the adjudicating authority has proceeded to conclude, that, since the contents of Neutronix and Superamide are more than the medicament, namely; Povidone Iodine, the product in question requires to be classified as detergent and therebY, would fall under chapter sub-heading 3402.90 and it has also observed in its order that the product in question is primarily used as a cleansing solution and, therefore, cannot fall in the description of the medicament. Accordingly, had confirmed the show cause notices issued earlier and, thereby, had directed the assessee to pay the difference in duty and also the penalty. 7. Aggrieved by the aforesaid order passed by the adjudicating authority, the assessee had carried the matter in appeal before the First Appellate Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine as Polyvinyl Povidone Iodine and, the test laid down for classification of the product as medicament: has concluded that the product is purchased primarily for its therapeutic or prophylactic qualities and not for its qualities as organic surface active preparation. In conclusion, the Tribunal, while allowing the appeal, has held that the product in question is, primarily intended and also actually, used for its antiseptic properties, therefore, it is classifiable as medicament under Chapter 30 of the Schedule to the Act. It is the correctness or otherwise of the findings and conclusions reached by the Tribunal is the subject matter of these appeals before us. 9. We have heard Shri R.P. Bhatt, learned senior counsel appearing for the Revenue and Shri Ajay Aggarwal, learned counsel appearing for the Assessee. Both the learned counsel have dealt with the matter in detail and have also relied upon some of the decisions of this Court to buttress their submissions. 10. Shri R.P. Bhatt, learned senior counsel for revenue would submit that the product in dispute, namely; Povidone Iodine Solution or its patent and proprietary equivalent Wokadine surgical scrub, contains only 80 kg of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore, it will fall under Chapter Sub- heading 3003 and not under Chapter 34. 13. In order to resolve the controversy that is raised before us, we need to notice first the entries which the revenue and the assessee relies upon to drive home their point of view. The Tariff Items under Chapter sub-heading 3003 and chapter sub-heading 3402.90, at the relevant time, are extracted. The same reads as under: Heading No. Sub-heading No. Description of goods Rate of duty 30.03 Medicaments (including veterinary medicaments) 3003.10 Patent or proprietary medicaments, other than those medicaments which are exclusively Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic. 15% 3003.20 Medicaments (other than patentor proprietary) other than those which exclusively used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems including those in Ayurvedic, Unani, Siddha, Homeopathic or Bio- chemic systems. 8% 34.02 Organic Surface active agents (other than soap): surface-active preparations, washing preparations (including auxiliary washing preparations and cleaning preparations, whether or not containing soap. 3402.90 Other 18% 14. The chapter note 2 (i) of Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zoa, yeasts and viruses. Formula: Povidone-Iodine I.P. 7.5. w/v (Available Iodine 0.75% w/v) Phosphate Free" Store in a cool place For External use only Usage: 1. For preoperative cleansing and degerming of surgeon's and operating team's hands a) Wet hands and forearms with water. Pour about 5 ml of surgical scrub with the help of the `elbow dispenser' on the palm and spread over both hands and forearms scrubbing thoroughly over all areas for about 5 minutes. Add little water to develop copious suds. Rinse thoroughly under running water. b) Complete the cleansing with another 5 ml of surgical scrub in the same way. 2. For preoperative uses on Patients. After the skin area is shaved, wet it with water. Apply Povidone Iodine surgical scrub on the skin and scrub, thoroughly for about 5 minutes. Rinse off by aid of sterile gauze saturated with water. Now paint the skin with Povidone-Iodine solution and allow to dry before incision." 18. The composition of the product per 1000 litres has been produced below: Sl. No. Ingredients Quantity 1. Povidone Iodine IP 80.21 Kgs. 2. Neutronix S-60(Anionic. Detergent) (active content 58%) 250 Kgs 3. Superamid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records that Povidone Iodine USP is a virtually non-stinging, film forming, water soluble iodine compound used as a topical antiseptic that essentially retains the non-selective broad range microbicidal activity of iodine. Povidone Iodine will rapidly kill bacteria (both Gram positive and Gram negative as well as antibiotic resistant organisms), fungi, viruses,protozoa and yeasts, to cause a substantial reduction of the microorganisms on the skin. Preoperatively, or as a post surgical antiseptic scrub, its microbicidal action is fast acting and is effective for a period of 6 to 8 hours. It is further stated that povidone-iodine antiseptic preparations are clinically indicated for the prevention and treatment of surface infections as well as to degerm the skin prior to injection and hyperalimentation procedures, for pre and post operative scrubbing and washing of hospital operating room personnel and for pre-operative skin preparation of the patient of surgery. 25. In Martindale's The Extra Pharmacopoeia, states that Povidone-Iodine is an iodophore which is used as a disinfectant and antiseptic mainly for the treatment of contaminated wounds and pre-operative preparation of the ski ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be brought under the definition of medicaments. As we have already noticed, medicaments are products which can be used either for therapeutic or prophylactic usage. Since the product in question is basically and primarily used for the prophylactic uses, in our view the Tribunal was justified in coming to a conclusion that the adjudicating authority and the first appellate authority were not right in classifying the products under chapter sub-heading 3402.90 and, therefore, had classified those products under chapter sub- heading 3003. 30. There is no fixed test for classification of a taxable commodity. This is probably the reason why the 'common parlance test' or the 'commercial usage test' are the most common [ see A. Nagaraju Bors. v. State of A.P., 1994 Supp (3) SCC 122 ]. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the basis of the tangible material or evidence to determine how such an article is understood in 'common parlance' or in 'commercial world' or in 'trade circle' or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the defini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to say, the latter will always prevail over the former [see CCE v. Jayant Oil Mills, (1989) 3 SCC 343); HPL Chemicals v. CCE, (2006) 5 SCC 208; Western India Plywoods v. Collector of Customs, (2005) 12 SCC 731); CCE v. Carrier Aircon, (2006) 5 SCC 596)], this Court held: "14... There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the relevant factors inter alia are statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to (sic. produced), the end use to which the product is put to, cannot determine the classification of that product." 34. In our view, as we have already stated, the combined factor that requires to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the user to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the surgeo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Chapter Sub-heading 33.04. The stand of the assessee was that the product in question was supplied exclusively to the military for use while serving at high altitude. They claimed, by relying on various literatures based on the composition of the product that it was used as "medicament" and therefore, sought classification under Chapter Sub- Heading 30.03. The stand of the revenue was that it was used as "a preparation for care of skin" to protect the skin on the lips against damage by natural factors. This Court after considering the various medical and pharmaceutical literatures held that the Entries are not to be understood in their scientific or technical sense, but by their popular meaning for the purpose of interpretation. This court had observed that for the purpose of classification, the commercial parlance theory has to be applied and the chemical ingredients of the product are not decisive. This Court after considering the nature of the product and the use to which it is put had observed that the `Lip salve' is used for "care of skin" and not "cure of skin" and just because it has some curative effect, its primary use is not curative, therefore it is not medicament an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " and not "medicinal preparation". The revenue also pointed that the assessee had obtained the license for manufacture of ASL as a cosmetic product and not as a medicinal product. This Court while rejecting the assessee's contention held that the high composition of alcohol in the product is not a relevant factor for ASL to be considered a medicament. This Court further observed that in order to come within the ambit of "medicinal preparations", the article must be used for the purpose of either curing or mitigating the disease after its symptoms have appeared or in prevention of any disease and therefore, on a plain interpretation ASL cannot be considered to be within the ambit of "medicinal preparation". Thus, in that case, this Court did not rely on the composition of the product but relied on the principal use and the common understanding of the product in the market as the test for classification, in other words, the classification of commodity does not depend on the incidental character that the commodity takes but on its primary character. 40. In CCE, Nagpur v. Vicco Laboratories, (2005) 4 SCC 17), the point in consideration before this Court was that whether the products, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Chapter Note 1(d) of Chapter 38 which excludes "medicaments under Heading 30.03 or 30.04" from its ambit and considering the definition of `medicament' in terms of Chapter Heading 2(i) of Chapter 30, had observed that in normal parlance, a product may be considered to be an insecticide but if that product has any therapeutic and prophylactic use then for purposes of classification that product would fall under Chapter 30 instead of Chapter 38. This Court observed that Licel cures the infection or infestation of lice in human hair which is a disease; therefore, it is thus therapeutic. This Court further observed that Licel is also prophylactic inasmuch as it prevents disease which will follow from infestation of lice. This Court referring to its earlier decision in ICPA Health Products (P) Ltd. v. CCE (Supra) has concluded that this product for its therapeutic and prophylactic usages would be classified as medicament under Chapter Sub-heading 3003.10. We are of the opinion that decision would not come to rescue of the revenue as this Court in that decision has clearly observed that the licel prevents as well as cures the infection or infestation of the lice. 42. In Puma Ayurve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the human body and improvement in appearance is subsidiary, therefore, are liable to be classified as medicaments falling under Chapter 30. This case would not assist revenue as this Court had applied a primary user test of the products in question which has certain medicinal ingredient. 43. In Commissioner of Central Excise, Delhi v. Ishaan Research Lab (P) Ltd. (Supra) , the issue before this Court was whether the products manufactured by the assessee would fall under Sub-Heading 3003.30 as medicament or under Chapter 33 as cosmetics. The assessee contended that each of the products was having ayurvedic medicinal herbs in it and even the labels on these products claim specifically the medicinal properties of the product. The assessee further urged that even if the user of product leads to improvement in appearance of a person that by itself cannot bring it into the category of "cosmetics" if otherwise the product is having a medicinal value and is marketed as such. According to the revenue, all these products were understood to be the "cosmetics" in common parlance and not actually the "ayurvedic medicines" for various reasons, the said products should have been held to be cov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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