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TMI Blog2007 (11) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - - - Dated:- 13-11-2007 - BHARATI SAPRU , J. BHARATI SAPRU J. Heard learned Standing Counsel Sri B.K. Pandey for the revisionist-State and Sri S. K. Bagaria, Sri Bharat Ji Agrawal assisted by Sri Piyush Agrawal for the assessee. This revision has been filed by the State against the judgment and order of the Tribunal dated October 21, 1999 under section 11 of the U.P. Trade Tax Act, 1948. The Tribunal has by the impugned order held that two products, namely, Himani Naturally Fair Cream and Himani Naturally Fair Lotion are to be classified as medicines and therefore chargeable to tax as ayurvedic medicines and has held that the same are not cosmetics. The State is aggrieved by the judgment and order of the Tribunal holding the above two products to be medicines. The facts of the case are as such that the assessee-dealer is a limited company having its registered office and manufacturing unit at Kolkatta, West Bengal, and its sale depot at Kanpur, U.P., is registered under the U.P. Trade Tax Act. For the assessment year 1996-97, an assessment order dated February 2, 1999 was passed under rule 41(8) of the U.P. Trade Tax Rules, 1948 whereby some of the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in the case of Balaji Agency, Gorakhpur v. Commissioner of Sales Tax reported in [1994] UPTC 184. The operative portion, which I relied reads thus: As regards Emami Naturally Fair Cream, Himani Gold Turmeric Cream and Himani Boroplus Antiseptic Cream, the learned counsel could not show that the view of the Tribunal that they are merely cosmetics was wrong. He contended that several medicinal herbs, etc., are used for preparing these items and they are, therefore, medicines. Every cosmetic usually has some medicinal properties for the care of the skin, teeth, hair, etc., and simply because they have some medicinal properties, they cannot be treated as medicines. Whether a thing is cosmetic or medicine has to depend on its general use and such creams are generally used for skin care and not for treatment of any disease of skin. I, therefore, do not find any force in the contention that the Tribunal, was in error in holding these items to be cosmetics. In the said case, it was held that the products of the assessee were not medicines but were cosmetics. Being aggrieved by the appellate order, the assessee-dealer preferred second appeal under section 10 of the Act bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air Cream and Naturally Fair Lotion have wrongly been classified as medicines by the Tribunal in the impugned order. In contra, the learned counsel for the assessee has very strenuously argued that the question whether the product is a cosmetic or medicine is a matter of classification, which can only be decided on the basis of the evidence which is before the authority. He has also argued that the assessee, in fact, led the entire evidence to show that the products were medicines firstly in reply submitted before the assessing authority and secondly also before the first appellate authority. He has further argued that as many as 13 documents of evidences were adduced before the assessing authority. He has next argued that the assessee had placed before the assessing authority as well as the first appellate authority a copy of the drug licence issued to the assessee under the Drugs and Cosmetics Act for the preparation and production of the items in question. He argued that by the above evidence, it was established that the products were medicines as the evidence was given from every conceivable quarter. The evidence so given has not been disputed by any of the authorities at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in [2005] 5 RC 50; [2005] 4 SCC 9. I have learned counsel for both sides at length and have perused the record as well as the two appellate orders. The first appellate order dated March 31, 1999 has recorded that the assessee had produced evidence to establish that it was an ayurvedic medicine and has, in fact, noted 13 sets of evidence produced by the assessee. However the first appellate order contains no discussion with regard to these 13 sets of evidence. In fact, the first appellate order does not even discard the evidence as produced by the assessee but has simply relied on the judgment of the Allahabad High Court in the case of Balaji [1994] UPTC 184 and has come to the conclusion that the cream which is being used externally cannot be classified as medicine, even though it may have some curative value. The second appellate order, which is the impugned order and in favour of the assessee has drawn conclusion in favour of the assessee. The conclusion as drawn in favour of the assessee classifying the two products, i.e., Naturally Fair Cream and Naturally Fair Lotion as medicines, is not recorded on the basis of any reason or after any discussion of the evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the decision of this court without any specific discussion for classification of the items in dispute as medicine. Having examined the matter at length and having given a due consideration, I am of the opinion that while dealing with the matter of classification of the items, the authority concerned must definitely apply its mind to the issue specifically and should be able to record reasons why it has come to the conclusion that certain items may be classified either as medicines or cosmetics and this too must be done after giving due consideration to the evidences, which have been produced before it. The courts have held more than once that in order to determine the product or cream as medicine, the twin test must be followed. That alone can will establish issue. The twin tests are as follows: (i) Whether the item is commonly understood as a medicament, which is called the common parlance test. For this test it will have to be seen whether in common parlance, the item is accepted as a medicament. If a product falls in the category of medicament, it will not be an item of common use. A user will use it only for treating a particular ailment and will stop its use a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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