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TMI Blog2018 (4) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... description of goods under HSN 3004 [serial no. 63 of Notification No. 1/2017-CT(Rate) dated 28/06/2017], and, therefore, taxable under Schedule II. 3. The Applicant has submitted a list of these 33 manufactured products and their description as per the product label for review in Annexure X of their submission, which is given below: Name of the product Nature of the product Description Baranga Face & Body Grain Brightens the skin all the more without black heads, pimples and scars Tanuruchi Face Pack for Oily Skin Control excessive oil secretion and takes care of scar free face Twakamadhuri Face Pack for Normal & Dry Skin Keeps skin glossy without freckles and spots Subarna Face Wash for Oily Skin Removes dead cells and black heads for oily skin Angarag Black Patch Pack Beautifies the skin of sun-burn and black patches, ensures dazzling liveliness. Enhances glamour and beauty Rupam Pimple Pack Glossy skin without pimples and rashes Tanurima Baby Skin Care Fair and glossy skin for your baby Romancho (lavender) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... texture of skin and body Nabaroop (Orange) Face & Body Wash Properly cleanses, exfoliate and moisturizes the skin. Helps for removing make-ups and sunscreen which, clog pores. Strengthens the natural protection of the skin. Instantly enhances glow and fairness. Improves the skin texture of skin and body Swarnali Fairness Cream Improve the skin complexion. Removes acne, pimples, black spot, black heads, hyper pigmentation. Make the skin glossy and shiny Tanujjal Fairness Face and Body Scrubber Gently scrubs away skin scars, white & black heads, dead cells, makes skin smooth, healthy and glowing Twaka Snigdha (Lemon) Skin Toner Helps in the normal firming and toning of skin along with hydrating the skin to make it glow, fresh and smooth. Helps to skin and tighten skin pores. Make skin soft and more elastic, reduces skin oilyness. Twaka Snigdha (Orange) Skin Toner Helps in the normal firming and toning of skin along with hydrating the skin to make it glow, fresh and smooth. Helps to skin and tighten skin pores. Make skin soft and more elastic, reduces skin oilyness. Twaka Snigdha (Neem) Skin Toner Helps in the normal firming and toning of skin alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rapeutic value. The first product, namely the toner, does not contain any active ingredient for curing the disease but is used for cleansing the skin as an aid to acne treatment. The petitioner sought an Advance Ruling on commodity Classification. After that, the AAR refers to several decisions of the Apex Court that have laid down common parlance as the appropriate test for determining the meaning or connotation of words or expressions describing an article in a Tariff Schedule. According to the AAR, common parlance test is not a rigid formula capable of being applied in all situations. The test ceases to be applicable if the products referred to are couched in technical/scientific language, or there is a definite indication in the Tariff Schedule negating application of this standard test. 5. The AAR also points out that most of the skin care or toilet preparations containing some recognized medical ingredients and professing to cure or mitigate the skin diseases for which drug licenses have been obtained are held by the apex court as medicaments notwithstanding the fact that they have cosmetic value too (for example, prickly heat powder, anti-dandruff shampoo, anti-pimple herba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished, it cannot be placed under Chapter 30 as a Medicament. 9. The AAR's observations are primarily based on Puma Ayurvedic Herbal Pvt Ltd [2006 (196) ELT 3 (SC)]. In its written submission the Applicant also refers extensively to the above judgment, which has traversed the history of Supreme Court's observations on the related questions and issues while deciding upon the classification of the petitioner's skin care products. It has direct relevance to the Applicant's case and needs to be discussed in some detail for clarity on the legal position regarding classification of goods in the present context. 10. In Puma Ayurvedic Herbal Pvt Ltd (supra) the Court observes, "In order to determine whether a product is a cosmetic or a medicament a twin test has found favour with the Courts. The test has the approval of this Court also vide Collector Vs. Richardson Hindustan Ltd [1989(42) ELT A100 (SC)/2004 (9) SCC 156]. There is no dispute about this as even the Revenue accepts that the test is determinative for the issue involved. The tests are I. Whether the item is commonly understood as a medicament which is called the common parlance test (emphasis added). For this test, it will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the practitioners in Ayurvedic medicine, the dealers and the licensing officials treat the products in question as Ayurvedic medicines that fact gives an indication that they are exclusively Ayurvedic medicines or that they are used in the Ayurvedic system of medicine. This is especially so when all the ingredients used are mentioned in the authoritative books on Ayurveda. From the above and other judgments, the Apex Court observes that the law is settled on the applicability of the twin test for determination of the classification of a product (emphasis added). 12. In its judgment dated 13/04/2009 in Baidynath Ayurved Bhawan Ltd (CA No. 4048 of 2001), the Apex Court revisited the question of the twin test for determining whether the product is an Ayurvedic Medicament or not. It observes that the twin test noticed in Puma Ayurvedic Herbal (P) Ltd continue to be relevant. The court holds that classification should be based on the popular meaning and understanding attached to such products by those using them and not the scientific and technical meaning of the terms and expressions used (emphasis added). "The approach of the consumer or user towards the product, thus, assumes signif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disease or skin disorder. 15. Note 1 (e) to Chapter 30 states that the Chapter does not cover preparations of headings 3303 to 3307, even if they have therapeutic or prophylactic properties. In the present context, it means a skin care preparations, if it otherwise falls under heading 3304, shall be excluded from Chapter 30, even if it has therapeutic or prophylactic properties. But what should be the yardstick to determine whether a product qualifies to be included under heading 3304? 16. The discussion in Puma Ayurvedic Herbal Pvt Ltd (supra) is relevant. The apex court says, "The learned counsel for the respondent drew our attention to Note 2 of Chapter 33 of the Central Excise Tariff which is as under: 'Note 2. Heading Nos.33.03 to 33.07 apply, inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings with labels literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialized to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GST Act. 18. Conclusions reached in Puma Ayurvedic Herbal Pvt Ltd (supra) and followed by the AAR in M/s Guthy Renker Marketing Pvt Ltd [2009 (248) ELT 932 (AAR)], based on earlier constructions of Notes 2 and 5 to Chapter 33 in the Excise Tariff Act, 1985 are, therefore, need to be revisited in the context of the GST Act. In the absence of the restrictive phrases attributed to Notes 2 and 5 to Chapter 33, heading 3304 should now include all preparations for the care of skin, whether cosmetics or not or having therapeutic or prophylactic properties of whatever degree, excluding the ones that are medicaments covered by Chapter 30. A preparation for care of skin, unless already specified under heading 3304, should, therefore, first be examined concerning its suitability for inclusion as a medicament in heading 3004 by applying the twin tests set out in Puma Ayurvedic Herbal Pvt Ltd (supra) and Baidynath Ayurved Bhawan Ltd (supra). If it fails the test, it should be classified under heading 3304. On the other hand, if the skincare preparation is specifically included under heading 3304 (for example sunscreen or suntan preparations, talcum powder, face powder, moisturizing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dorsing the Applicant's products as showing good results. It is not clear whether the 'good results' relate to enhancing appearance of the skin or treatment of a disease. We are not to involve ourselves in examining efficacy of the Applicant's products. Our focus will be to ascertain from available materials what the Applicant is offering and consumer is using. A more objective way to examine it is to analyse the information contained in the labels attached to the product when offered in retail set up. The information provided on the labels may be considered as written communication from the manufacturer to the consumer as to what is being offered. If a customer purchases the product it may be presumed that he or she accepts the offer and believes in the information contained in the label. 22. In response to an enquiry made regarding the products in communication dated 03.04.2018 the Applicant has stated that three (03) of the products in the list submitted by the Applicant, namely, Swarnajyoti, Sunayana and Tarumitra-60, are yet to be manufactured by them and are presently not in existence. This was also admitted by the Applicant during Personal Hearing on 04.04.2018. 23. In lig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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