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TMI Blog2017 (1) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... hanol which may be available in almost all cosmetics as well, cannot justify the claim as raised by assessee that they have to be classified as drugs/medicine - the claim of the petitioner is required to be rejected and accordingly the petitions insofar as the assessee is concerned, is required to be dismissed. Savlon - Held that: - The Apex Court in the case of ICPA Health Products Pvt. Ltd. v. CCE [2004 (4) TMI 77 - SUPREME COURT OF INDIA] was considering a case of Hexiperp, Hexiscrub (Surgiscrub) and Hexiaque, which also contain Chloral Hex dine Gluconate Solution BP, which is also available in “Savlon” and held it to be a medicine - the finding reached by the Tax Board, in my view, is just and proper and is not required to be interfered with. Penalty u/s 61 - Held that: - Admittedly, it is a case where an issue of classification of entries is there and the issue becomes debatable once the assessee claims that it is a drug/medicine and Revenue may dispute to be falling in the general category or as a cosmetic but at least penalty cannot be levied in such a case. Though it is a case of survey and some material was gathered by the AO during the course of survey but that by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitions is about three products, namely "Shower to Shower", "Listerine Mouthwash, Listerine Cool Mint Mouthwash", and one product "Savlon". While the assessee has challenged applicability of rate on two products "Shower to Shower", and "Listerine Mouthwash", as above, however, the Revenue has preferred cross appeals where the Tax Board held insofar as "Savlon", is concerned that it is a drug and the Revenue has also challenged deletion of penalty u/s 61. 5. The Assessing Officer, during a survey, taking into consideration the products after analysing the medicinal value and in particular test of common parlance, held that the three products named above, cannot be said to fall as drugs and a residuary rate is applicable and accordingly charged differential rate and held that the rate of 12.5% being the general rate or residuary rate, is required to be applied, accordingly charged differential rate on the sales recorded. The AO also levied interest u/s 55 and also imposed penalty u/s 61 of the Act holding that the assessee concealed the particulars and furnished inaccurate particulars by paying a lower rate of tax. 6. The matter was assailed before the Dy. Commissioner ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Learned counsel also contended that the authorities below are not technical persons to judge as to whether they have some medicinal value or not, rather when the drug authorities have held them to be of medicinal value as a drug/medicine, the claim deserves to be allowed. 10. Learned counsel for the petitioner contended that the finding reached insofar as "Savlon" is concerend, the Tax Board has rightly held it to be a drug and taken into consideration the antiseptic value which it has to protect against germs in cuts, abrasions, minor burns and other infective skin conditions and the same is just like "Dettol", and supported the order of Tax Board in this regard. 11. Learned counsel also relied on Naturalle Health Products (P) Ltd. v. Collector of Central Excise, Hyderabad - (2004) 9 SCC 136 = 2003 (158) E.L.T. 257 (S.C.), Commissioner of Central Excise, Calcutta v. Sharma Chemical Works - (2003) 5 SCC 60 = 2003 (154) E.L.T. 328 (S.C.), Puma Ayurvedic Herbal (P) Ltd. v. Commissioner, Central Excise, Nagpur - (2006) 3 SCC 266 = 2006 (196) E.L.T. 3 (S.C.), Dabur India Limited v. Commissioner of Central Excise, Jamshedpur - (2005) 4 SCC 9 = 2005 (182) E.L.T. 290 (S.C.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or under the prescription of a medical Doctor. Learned counsel contended that these products can be merely termed as cosmetics and nothing more. Learned counsel also contended that even applying the test of common parlance it does not show or prove that these are to be considered as medicines or drugs. Learned counsel contended that even Savlon is not a drug and both the AO as well as DC(A) have rightly held that these are not drugs and the findings reached by the Tax Board is required to be reversed as claimed in the petition preferred by the Revenue. 14. Learned counsel for the respondent also contended that all the cases relied upon by the learned counsel for the petitioner are under Excise Act and reliance cannot be placed on the findings reached under Excise Act as they are entirely different provisions. Learned counsel also contended that various Courts have held that even if some ingredients of medicinal value or use are there, it cannot be said to be a medicine and even the common parlance test does not justify that these products can be said to be drugs/medicines. 15. Learned counsel also justified imposition of penalty u/s 61 as it is a clear cut case of evas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body smell or odour will certainly contain some medicinal properties like acid etc. and even if the licensing authorities may grant permission to the producers/manufacturers as drug but they cannot be treated as a drug or medicine when specific entries under the Sales Tax laws are required to be looked into and considered. A minor percentage of acid/ethanol which may be available in almost all cosmetics as well, cannot justify the claim as raised by assessee that they have to be classified as drugs/medicine. 19. Accordingly, in my view insofar as "Shower to Shower" and "Listerine Mouth Wash" are concerned, the finding reached by all the three authorities in unison is not required to be interfered with and the claim of the petitioner is required to be rejected and accordingly the petitions insofar as the assessee is concerned, is required to be dismissed. 20. Insofar as the issue raised by the Revenue about "Savlon" is concerned, I do agree with the finding reached by the Tax Board that it is entirely a different product and it has medicinal value for it is used when there is some cut or injury on the skin and the same is used as an antiseptic. A product which is used m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abscesses and boils, not to say about its use to prevent dandruff. 'Dettol' can be used for bathing as well. It is stated (on the label) that a little Dettol added to bath water is pleasant, refreshing and deodorising. A deodorant is a substance that destroys or masks odors (smell). The mere fact that 'Dettol' can also be used for pre-operative preparation of patient's skin or as antisepsis in obstetrics and midwifery, on cuts and wounds (also bites, scratches and insect sting), all externally, and all for the purpose of destruction or making inert micro organisms in my view does not make 'Dettol' anything other than a 'Disinfectant'. Dettol is a 'Disinfectant' used to treat inanimate objects and materials though it may also be applied to agents used to treat the skin and other body membranes and cavities (externally). Dettol contains some chemicals which are antiseptic but does not loose its character as a Disinfectant for the said reason or that it can be used to treat skin and other body membranes and cavities..." 20.3 The Apex Court in the case of ICPA Health Products Pvt. Ltd. v. CCE (supra) was considering a case of Hexiperp, Hexiscrub (Surgiscrub) and Hexiaque, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "Though it is claimed on the part of the assessee that it was paying tax in accordance with the rate where the registered office of the limited company is situated, i.e., Andhra Pradesh but certainly it was the duty of the assessee to have known the exact rate of tax being applicable in the State of Rajasthan when admittedly the case falls under the Rajasthan Value Added Tax Act, 2003. Nevertheless, in my view, it is not a case where the Revenue claims that the assessee did not pay any tax or concealed the particulars of sales, rather there could be a bona fide error about classification of entry as to in which entry the goods do fall. In my view, merely because the rate of 12.5% may have been applicable on the items which were being manufactured/sold by the assessee and the assessee having shown 4%, in my view, at least penalty u/s 61 may not be leviable in the instant case and on the facts noticed." 22. In view of the observations made hereinbefore, the questions raised by the assessee are answered in favour of the Revenue and against the assessee, and the questions raised by the Revenue are answered in favour of the assessee and against the Revenue. Resultantly, all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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