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TMI Blog2023 (5) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... he entries are not to be understood in their scientific or technical sense, but by their popular meaning for the purpose of interpretation. In Sunny Industries [ 2003 (3) TMI 102 - SUPREME COURT ], this Court was dealing with the question whether Ad-Vitamin Massage Oil Forte was still classifiable as patent and proprietary medicine even after the change of tariff description after 1985 Budget. This Court dismissed the appeal of the assessee as the product in question was oil, used for massage to take care of the skin, and not to cure the skin and hence, was classifiable under cosmetics and not under medicaments . In Sharma Chemicals [ 2003 (4) TMI 102 - SUPREME COURT ], this Court was concerned with the issue as to whether the product Banphool Oil could be classified under as Ayurvedic medicament or as perfumed hair oil. This Court held that mere fact that a product is sold across the counter and not under a doctor s prescription, does not ipso facto lead to the conclusion that it is not a medicament. In the case Meghdoot [ 2004 (10) TMI 93 - SUPREME COURT ], while dealing with the question of classification of six items namely Bhringraj Tail, Trifla Brahmi Tail, Neem Herbal Sat, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression Hair Oil while ignoring the preceding significant expressions Homeo and Arnica . Whether re-look at classification of the product in question justified? - HELD THAT:- There had been no justification in the Department seeking to re-open the settled position in relation to the product in question merely with reference to certain changes made in Chapter 30 and Chapter 33, which had essentially broadened their ambit and scope and provided modified marginal notes and tariff entries with detailed specifications. These changes had otherwise no impact, so far as the product of the respondent, AHAHO, is concerned - there had been no justification for making any attempt to re-classify the product in question with reference to the amendments brought about in Chapters 30 and 33 in the year 2012. Thus, AHAHO, merits classification as medicament under Chapter 30 and not as cosmetic or toilet preparations under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985; and the change in tariff structure by way of amendment brought about in the year 2012 did not justify any re-look at the classification of the product in question. Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... emand to the tune of Rs.2,72,14,266/- on the respondent for the differential duty payable in terms of Section 11-A (10) of the Central Excise Act, 1944 Hereinafter also referred to as 'the Act of 1944'; ordered payment of interest on the said differential duty in terms of Section 11-AA of the Act of 1944; and imposed penalty in the sum of Rs.54,00,000/- under Rule 25 of the Central Excise Rules, 2002. 1.2. However, the appeal preferred by the respondent was allowed by the Tribunal by its impugned order dated 31.01.2018 and the aforesaid order dated 16.10.2015 passed by the Adjudicating Authority was set aside. The Tribunal held that the product in question, AHAHO, fell in the category of 'medicament' and hence, was rightly classified under Chapter 30 of the First Schedule to the Act of 1985. 1.3. An ancillary but intertwined aspect of the matter had been that the product in question was being classified as 'medicament' under the said Chapter 30 since the year 1994. According to the respondent, this classification was regularly accepted by the Department in the past with at least two successive orders of the Commissioner (Appeals) and hence, there was no justification in re-examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent was served with different show-cause notices pertaining to different periods of consideration, essentially to the effect that the product in question was classifiable as 'cosmetic or toilet preparations' under Chapter 33, Tariff Item 3305 09 19. In the show-cause notice dated 26.12.2014, which forms the subject-matter of this appeal, the Adjudicating Authority, inter alia, stated as under: - "02. The assessees are engaged in the manufacture of 'Aswini Homeo Arnica Hair Oil' which was classified by them under Tariff Item No. 3003 9014 of the First Schedule to the Central Excise Tariff Act, 1985. However, as per Chapter 33 of the Central Excise Tariff Act, 1985, preparations for use on the hair are rightly classifiable under Chapter Sub Heading No. 33050919 and shall be liable for assessment under Section 4A of the Central Excise Act, 1944 @12% adv. creating them as 'Cosmetic or Toilet preparations'. Accordingly, show cause notices as under were issued to the assessees. Sr. No. O.R. No. Period Duty 1 O.R. No. 21/2013-Adjn (Commr) CE dt. 31.1.2013 OC No. 33/2013 (GGP/S-II) April' 2012 to Sept' 2012 Rs. 73,71,267/- 2 O.R. No. 170/2013-Adjn (Commr) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise Act 1944-and iii) Penalty under Rub 25 of the Central Excise Rules, 2002 should not be imposed on them for contravention of the Central Excise-Rules, 2002 mentioned supra. 06. M/s Aswini Homeo Pharmacy are further required to produce all the evidence upon which they intend to rely in support of their defense at the time of showing the cause. They are further required to mention in their written reply whether they wish to be heard in person before the case is adjudicated. If no cause is shown within the stipulated period or if they do not appear before the adjudicating authority when the case is posted for hearing, the case will be decided on merits on the basis of the evidence available on record. 07. The Department reserves its right to amend, modify or supplement or do addition to this notice on the basis of further evidence made available to it prior to the adjudication of this case. This notice is issued without prejudice to any other action that may initiated under the provisions of the Central Excise Act, 1944 and the rules made there under or any other law for the time being in force in India. 08. Reliance for the issuance is based on ER-1 returns furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and claims on the label and, therefore, the said circular did not justify revising its classification to that of 'cosmetic or toilet preparations'. The respondent asserted that due to the absence of any change in its tariff description, ingredients, process of manufacture and use, the question would not arise of re-classification of the product in question. The respondent also requested that the proceedings be dropped or be kept pending until the Tribunal had adjudicated on the pending issues concerning classification of the product in question. 5.4. The respondent, in order to support its assertion that AHAHO is a medicament, placed reliance on a decision of the Tribunal in Bakson Homeo Pharmacy (P) Ltd. v. Collector of Central Excise, New Delhi: (2001) 136 ELT 485, wherein a similar product named "Sunny Arnica Hair Oil" was held to be a medicament. Before the Commissioner of Customs and Central Excise 6. The Adjudicating Authority framed two issues for its adjudication as follows: - "(i) Whether the notice has disturbed the settled position of law by reagitating the classification matter, and if not (ii) whether the impugned product viz. AHAHO merits classification as a me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hair lacquers 3305 90 - Other: - - - Hair oil: 3305 90 11- - - - Perfumed 3305 90 19 - - - - Other 3305 90 20 - - - Brilliantines (spirituous) 3305 90 30 --- Hair cream 3305 90 40 --- Hair dyes (natural, herbal or synthetic) 3305 90 50 --- Hair fixers 3305 90 90 - - - Other" 6.2. At this juncture, we may also take note of a few other contents of Chapter 30, which carries the heading 'Pharmaceutical Products'. 6.2.1. Note 1 of Chapter 30 specifies the items not covered thereunder. Clause (e) of this Note 1 has been referred to by the Adjudicating Authority, which reads as under: - "Notes: 1. This Chapter does not cover : ----- (e) preparations of headings 3303 to 3307, even if they have therapeutic or prophylactic properties; -----" 6.2.2. In this Chapter 30, apart from heading 3003, medicaments have also been specified under heading 3004, the relevant contents whereof read as under: - "3004 Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f questionable inasmuch that item covered only the medicaments not put up in measured doses or packing whereas AHAHO was indisputably put up for sale in packing of 50ml, 100ml, 200ml and 400ml bottles for retail sale. The Adjudicating Authority observed that the claim of the respondent for classifying the product in question under the said heading remained baseless. However, the Adjudicating Authority proceeded to observe that Tariff Item 3004 90 14 was covering similar goods put up in measured doses and packings and hence, the matter required consideration vis-à-vis Tariff Item 3305 90 19. Thereafter, the Adjudicating Authority pointed out that the main prerequisite for the classification as a 'medicament' was that the product must be for 'therapeutic' or 'prophylactic' use; and with reference to the dictionary meaning, observed that a medicament with 'therapeutic' or 'prophylactic' use would mean that it was for healing or for preventing a disease. The Adjudicating Authority also referred to Circular No. 333/49/97-CX dated 10.09.1997 issued by the Central Board of Excise and Customs Hereinafter also referred to as 'the Board', which laid down certain criteria for the class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.5 ml ii) Cantharis Q 0.5 ml iii) Cinchona Q 0.2 ml iv) Piocarpine Q 0.2 ml (Q= lX in pure coconut oil q.s. Alcohol 0.9°/o V/V) 11.7 On perusal of the label of AHAHO, it was observed that the front side of the label, there is a caption which reads "controls hair fall"; "prevents dandruff". On the reverse of the label i.e. the bottle hind side, it is mentioned that "Indication: Improves blood , circulation to the hair roots, thereby stops hair fall and promotes hair growth. Also controls dandruff, removes headache, induces good sleep and maintains natural color of the hair; "Contra Indications: NIL". "Directions for use: Massage directly on the scalp, for best results leave it on overnight." The label also reads "Aswini Homeo Arnica Hair Oil". It does not contain any condition like "to be sold by authorized medical distributor or retailer under prescription from medical practitioner" even though such mention is a mandatory requirement under Section 97(1) of the Drugs & Cosmetics Act, 1940. Secondly, it does not contain any specification regarding the dosage to be used and the duration for which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escription on the basis of which such a conclusion was drawn (apart from other factors) indicates that the product should be projected and marketed in I such a manner so as to express the intention of the manufacturer that the product is a medicament and not a cosmetic. Such a situation does not exist in the present case inasmuch as the labels neither contain a positive indication that it is a medicament nor a negative indication that it is not a cosmetic. However, it is certainly labeled as a Hair Oil, prominently. If the intention is to identify the product as medicament, there was no need to label it is Hair Oil. Hence following the finding in the said case, I am inclined to hold that AHAHO cannot be categorized as a medicament but has to be classified as a Hair Oil. Accordingly, AHAHO does not fit into the first criteria prescribed under the said Circular." 6.8. As regards the common parlance criteria i.e., the way the product was marketed, it was observed that AHAHO was accessible in both Medical and General Stores and could be bought across the counter. Moreover, depiction of a lady with long, black flowing hair on its label indicated its categorisation as cosmetic and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions, as cited on behalf of the parties, shall be referred to and examined at the relevant stage hereafter. Before the Customs, Excise and Service Tax Appellate Tribunal 7. The assessee's appeal Being Appeal No. E/30050/2016 against the aforesaid order dated 16.10.2015 was taken up for consideration by the Tribunal along with a bunch of its other appeals involving the same issues but pertaining to different periods of consideration. 7.1. The respondent-assessee (appellant before the Tribunal) made various submissions, including that the product was made of four homeopathic medicines in coconut oil base with therapeutic use for curing alopecia (loss of hair) and insomnia (lack of sleep) amongst other diseases; that the product was being manufactured under the drug license issued by the Director, Indian Medicine and Homeopathy, subsequently renewed as a medicament by the Additional Director & Drug Controller (Homeo), Department of Ayush, Government of Telangana; that AHAHO was mentioned at Serial No. 35 of Schedule K to the Rules of 1945, which contains only drugs; that the label clearly listed the ingredients and composition, indications and contra-indications as also mode of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned its use for other ailments like sleep loss; that the contents of its label clearly mentioned the product as homeopathic medicine and the same was understood as such by its users and traders; and that the product in question indeed passed the common parlance test. The Tribunal further referred to the four homeopathic medicines as being the ingredients of products and the same being covered by Serial No. 35 of Schedule K to the Rules of 1945, which only related to drugs and not cosmetics. The Tribunal yet further observed that the Adjudicating Authority had not been adopting a uniform approach and referred to the fact that the respondent had been issued show-cause notices in the past too and the Adjudicating Authority, upon examining the common parlance test as also the contents and usage of product, had accepted AHAHO as a homeopathic medicine. The Tribunal observed that the product remained the same and its classification as previously accepted was not required to be altered. The Tribunal also observed that on one hand, the Adjudicating Authority noted that the classification made before the amendment had to be re-looked but on the other hand, relied upon the decisions b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by serial no. 35 of Schedule K of Drugs and Cosmetic Rules (Homeopathic Hair oils having active ingredients upto 3X potency) and the said schedule covers only drugs and not Cosmetics. The product has already been held to be Drug by the Hon'ble Andhra Pradesh High Court in reference to APGST as well as Commercial taxes. The Advance Ruling authority of Commercial Taxes, Government of Tamilnadu for the purpose of TNVAT Act 2006 held that product to be a homeopathic medicine. We find that even before the subject cases, on many occasions in the past, Appellant were issued show cause notices for classification of goods as cosmetic and the Appellate Authority after going into all the aspects of common parlance as well as contents of the product and its usage held that the product is Homeopathic medicine. The adjudicating authority has relied upon the judgment of Hon'ble Supreme Court in case of CCE, Nagpur Vs. M/s Shree Baidyanath Ayurved Bhavan Ltd. 2009 (237) E.L.T. 225 (S.C.) to state that the product in question does not satisfy the common parlance test. We find that the ratio of said judgment is not applicable as in the said case, the product Lal Dant Manjan was kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medicine The Judgment of Hon'ble Apex Court in case of Sujanil Chemco Industries Vs. CCE, Pune 2005 (181) ELT 206 (SC) and Tribunal order in case of Bakson Homeo Pharmacy (P) Ltd. Vs. CCE, New Delhi 2001 (136) ELT 485 (TR- DEL) are absolutely applicable to the present case in view of our above findings and we do not find any reason to differ with those decisions. 10. We also find that the adjudicating authority at the one hand has held that the classification done before amendment in Central Excise Tariff in the year 2012 would require relook into the classification of the product in question and thus refused to accept the settled classification of goods under chapter 30 in terms of Appellate Orders passed in favour of Appellant. However on the other hand the adjudicating authority has relied upon the judgments rendered in the context of Central Excise Tariff before year 2012 and the Board Circular issued in year 1997 which clearly shows that there is no uniformity adopted by him to decide the issue. The adjudicating authority has relied upon the Circular No. 333/49/97 CX dt. 10.09.1997 to hold that the medicine is prescribed by a medical practitioner, used for limited time a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no change of tariff heading. Thus the contention of the Ld. Adjudicating authority that the change in tariff entry would require relook into classification is absolutely erroneous as the product has remained same and it would remain classified as Homeopathic medicine. 11. After careful appreciation of the facts as narrated above we find no reason to classify the product as Cosmetic under Chapter 33 of the CETA, 1985. We thus hold that the goods are classifiable under chapter 30 of the Central Excise Tariff as Homeopathic medicine and liable to duty accordingly. There is no reason to demand the duties and penalties adjudged against the Appellant." Rival Submissions 8. In the present appeal, the learned Additional Solicitor General Mr. Vikramjit Banerjee has assailed the impugned judgment and order dated 31.01.2018 on a variety of grounds while asserting that the Tribunal has erred in holding that the product in question would fall under Chapter 30 and not under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985 as amended in the year 2012. 8.1. Learned ASG has stressed upon the necessity for re-look into the classification of the product in question wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... practitioner, is available freely without any prescription in Medical and General Stores, and could be purchased across the counter, as admitted by the respondent. Additionally, the label does not indicate the condition of sale by authorised medical distributor or retailer under prescription as mandated under the Act of 1940; it does not cure any particular disease; and the claims on the label are for marketing purposes only. Learned ASG has relied upon the decision in Alpine Industries v. Collector of Central Excise, New Delhi: (2003) 3 SCC 111 to submit that any subsidiary therapeutic or prophylactic use of the product would not change its nature as "Hair oil", if in the common parlance, it is treated as a cosmetic. Another decision of this Court in Sunny Industries (P) Ltd. v. Collector of Central Excise, Calcutta: (2003) 4 SCC 280 has also been relied upon. 8.4.1. Learned ASG has again referred to common parlance test to submit that the product is advertised as hair oil and not a medicament; and is perceived by the public who purchase and sell the product as a hair oil (cosmetic) and not as medicament. For the purpose of construing the words in a statute, the learned ASG has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orms or packings suitable for retail sale). It has been argued with reference to the decisions in BPL Pharmaceuticals v. Collector of Central Excise, Vadodara: 1995 Supp (3) SCC 1 and Commissioner of Central Excise, Nagpur v. Vicco Laboratories: (2005) 4 SCC 17 that some differences in the tariff entries would not change its character when the product remains the same. According to the learned counsel, insertion of Sub-Headings in Chapter 33 makes no difference as the product in question does not fit into any of the revised descriptions of "Hair oil" in Chapter 33, for AHAHO is clearly covered by the definition of 'medicament'. 9.1.1. In regard to the question of re-look at the classification, it has also been submitted that the contention on the part of appellant that the respondent classified the product under 3003 90 14, which provides for medicaments not put up in measured doses or packaging, whereas admittedly AHAHO is sold in packaging of 50ml, 100ml etc., is a new ground which was not a part of the show-cause notice; rather the respondent was never called upon to show-cause as to why the classification should not be changed. Therefore, all the proceedings are vitiated. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medium of oil for the diseases relating to the scalp. The product is not advertised as "Hair Oil" but is marketed only as "Aswini Homeo Arnica Hair Oil". 9.6. With reference to the majority decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra) in respect of a similar product, "Sunny Arnica Hair Oil", learned senior counsel has submitted that the said decision having attained finality, and in the case of respondent itself, the Department having four times accepted the classification of the product as medicament, the attempt to revisit the classification had been wholly unjustified and has rightly been disapproved by the Tribunal 9.7. It has, thus, been contended on behalf of the respondent that in the impugned order dated 31.01.2018, the Tribunal has rightly set aside the demands raised by the Department after appreciating the facts and the law applicable to the case inasmuch as, during the relevant period, there was no change in the said Chapter 30; and there was no change in the manufacturing process or ingredients of AHAHO. As such, the product remained a medicament under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985 prior to 2012 and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classify them according to whether they are put up in unit containers for retail sale or not; the mention about the Act of 1940 and the various Pharmacopeia came to be deleted; and under Chapter 33, the phrase "Hair oil" became prominent under which, subsidiary headings of "perfumed hair oil" and "others" came to be specified. Learned ASG has also relied upon the reasons adopted by the Adjudicating Authority in support of his contentions and has cited the decision in Andhra Sugar Ltd. (supra) as regards construction of statute with reference to the legislative intent. 13.1. In the case of Andhra Sugar Ltd. (supra), essentially, the issue involved had been as to whether acetic anhydride manufactured by the respondent and sold to drug manufacturers was eligible to benefit of exemption as drug intermediate. This Court held, having regard to the language and purpose of exemption Notification, that the said product acetic anhydride was covered by the expression 'drug intermediate' in the Notification. In that context, this Court, observed in the referred paragraph as follows: - "5. …It is well settled that the meaning ascribed by the authority issuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case none of the requirements are fulfilled. Therefore, Note 2 to Chapter 33 is not attracted. Again it is without substance the reason given by the authorities that the product contains 2.5% w/v of Selenium Sulfide which is only of a subsidiary curative or prophylactic value. The position is that therapeutic quantity permitted as per technical differences including US Pharmacopoeia is 2.5%. Anything in excess is likely to harm or result in adverse effect. Once the therapeutic quantity of the ingredient used, is accepted, thereafter it is not possible to hold that the constituent is subsidiary. The important factor is that this constituent (Selenium Sulfide) is the main ingredient and is the only active ingredient. 30. As rightly contended by the learned Senior Counsel for the appellants that merely because there is some difference in the tariff entries, the product will not change its character. Something more is required for changing the classification especially when the product remains the same…… *** *** *** 33. The labels which give the warning, precaution and directions for use do make a difference from that of ordinary shampoo which will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce as a patent and proprietary medicine was also found by the Central Board of Excise and Customs as early as in 1981 and accepted by the Excise authorities and in the absence of any new material on the side of the respondents there is no difficulty in accepting this contention without referring to decision cited by the counsel for the appellants. 36. Yet another reason given by the CEGAT for not accepting the case of the appellants was that the product is sold with a pleasant odour and, therefore, it must be treated as a cosmetic. Selenium Sulfide has an unpleasant odour and to get rid of it insignificant amount of perfume is used and make it acceptable to the consumers. A medicine, for example, sugar-coated pill will nevertheless be medicine notwithstanding the sugar-coating. Likewise the addition of insignificant quantity of perfume to suppress the smell will not take away the character of the product as a drug or medicine. Again one other reason given by the Tribunal is regarding the packing. The Tribunal has held that the product is cosmetic because it is packed in an attractive plastic bottle. This by itself will not change the character, as cosmetic is put up for sale wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was falling within the meaning of an Ayurvedic Medicine to qualify for exemption from payment of excise duty under Notification No. 62/78-CE dated 01.03.1978 issued in exercise of power conferred by Rule 8(1) of the Central Excise Rules, 1944. The relevant entry introduced by amendment was reading as 'all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified'. The appellant contended that the product in question was a scientific medicine which would attract the aforesaid entry and would, therefore, be exempt from the payment of excise duty. The Tribunal disagreed with these submissions and held that the product in question could rightly be described as a toilet preparation. In that regard, after noticing that the ingredient for the product was stated to be Geru (red earth) to the extent of 70% having a cooling quality, the Tribunal observed that the same was largely used as a filler or coloring agent and was not described as a medicine in common parlance. After going through various texts, definition of 'drug' under the Act of 1940 and ayurvedic books as well as opinion of experts in this behalf, the Tribunal concluded that the product in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with pharmaceutical products. With reference to the new enactment and its amendments in the year 1996-1997, the assessee approached the Board with a plea that now, there was specific definition of Ayurvedic medicines and hence, its product DML should be classified on the basis of that definition. This led to the Board sending communication to the Commissioner of Central Excise, Nagpur concerning the classification of DML. These propositions led to different decisions where the assessee contended that the product DML was a medicament under Chapter Sub-Heading 3003.31 of the Act of 1985 whereas, stand of the Department had been that the said product was a cosmetic/toiletry preparation/tooth powder classifiable under Chapter Heading 3306. West Regional Bench of the Tribunal decided the classification in favour of the assessee and held that DML was classifiable under Chapter Sub-Heading 3003.31. A similar view was taken by East Regional Bench of the Tribunal. However, the Larger Bench of the Tribunal, to which the issue of classification of DML was referred, held that DML was classifiable under Chapter Sub-Heading 3306.10. 14.3. In the above backdrop, the second decision concerning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authoritative textbooks on ayurveda?" *** *** *** 48. Applying the twin tests for determination of classification of products (including common parlance test), this Court in Puma Ayurvedic Herbal (P) Ltd. [(2006) 3 SCC 266] held that Items 1, 2, 3, 4, 7, 9, 10 and 11 were medicaments while Items 5, 6 and 8 were liable to be classified as cosmetics under Chapter Sub-Heading 33.04. We endorse the view that in order to determine whether a product is covered by "cosmetics" or "medicaments" or in other words whether a product falls under Chapter 30 or Chapter 33 the twin tests noticed in Puma Ayurvedic Herbal (P) Ltd. [(2006) 3 SCC 266] continue to be relevant. 49. The primary object of the Excise Act is to raise revenue for which various products are differently classified in the new Tariff Act. Resort should, in the circumstances, be had to popular meaning and understanding attached to such products by those using the product and not to be had to the scientific and technical meaning of the terms and expressions used. The approach of the consumer or user towards the product, thus, assumes significance. What is important to be seen is how the consumer looks at a product and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance test applied by the Tribunal has been approved. Second, and more importantly, with regard to the very same product (DML), this Court held that it could not be classified as ayurvedic medicine and rather the product is a toilet requisite. Baidyanath I [(1996) 9 SCC 402] , no doubt relates to the old Tariff period i.e. prior to enactment of the new Tariff Act but since the product in its composition, character and uses continues to be the same, even after insertion of new Sub-Heading 3301.30, we have already held that change in classification is not justified as common parlance test continues to be relevant for classification. Vicco Laboratories [(2005) 4 SCC 17: (2005) 179 ELT 17] is of no help to the assessee." (emphasis supplied) 15. As regards the test to be applied for determination of the proper classification of a product and construction of the tariff entries with reference to a product, we may refer to the other cited decisions as infra. 15.1. The case of Alpine Industries (supra) essentially related to the question of classification of the product 'Lip Salve', manufactured in accordance with the defence services specifications and supplied entirely to military perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of lips. It is not a curative product, maybe, that incidentally on cracked and chapped lips, it has some curative effect. It is also not denied that the product "Lip Salve" is not suitable for use only for soldiers operating in high-altitude areas but it is of use for everyone as protection from dry, cold weather or sunrays. The product, therefore, essentially is protective of skin of lips. It is a lip-care product and not a "medicament". It is neither prescribed by any doctor nor obtainable from the chemist or pharmaceutical shops in the market. 8. The appellant seeks classification of the product as a pharmaceutical product under Chapter 30 and as a "medicament" under Heading 30.03. Under the Rules for Interpretation of the Schedule under the Central Excise Tariff Act, 1985, for the purpose of classification chapter notes can be taken as an aid for understanding their various entries under various headings of the tariff. What is to be noted from Chapter 30 of the Tariff Act is that under Note 1(d) preparations covered by Chapter 33 even if they have "therapeutic or prophylactic properties" are excluded from Chapter 30. "Medicament" has been defined in Note 2(i) to mean "good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s probably the reason why the "common parlance test" or the "commercial usage test" are the most common (see A. Nagaraju Bros. 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 definitive index of the legislative intention, when the statute was enacted (see Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan [(1980) 4 SCC 71]. 34. One of the essential factors for determining whether a product falls within Chapter 30 or not is whether the product is understood as a pharmaceutical product in common parlance [see CCE v. Shree Baidyanath Ayurved Bhavan Ltd. [(2009) 12 SCC 419] and CCE v. Ishaan Research Lab (P) Ltd. [(2008) 13 SCC 349]]. Further, the quantity of medicament used in a particular product will also not be a relevant factor for, normally, the extent of use of medicinal ingr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question whether 'Ad-Vitamin Massage Oil Forte' was still classifiable as patent and proprietary medicine even after the change of tariff description after 1985 Budget. This Court dismissed the appeal of the assessee as the product in question was oil, used for massage to take care of the skin, and not to cure the skin and hence, was classifiable under 'cosmetics' and not under 'medicaments'. This Court observed and held as under: - "11. From the aforesaid chapter notes, it is clear that Heading 33.03 would include products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value and Heading 33.04 would inter alia include the products specified therein and other preparations for use in manicure or chiropody and barrier creams to give protection against skin irritants. Therefore, the product, mainly oil containing some A and D vitamins which is used for massage, even if it prevents ailment of rickets and treats the same cannot be held to be a medicament. 12. Hence, in our view, after verification of the entire evidence and the certificates produced on record as well as the report o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not under a doctor's prescription, does not ipso facto lead to the conclusion that it is not a medicament. This Court, inter alia, observed and held as under: - "12. ….It is settled law that the onus or burden to show that a product falls within a particular tariff item is always on the Revenue. Mere fact that a product is sold across the counters and not under a doctor's prescription, does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr Lakshmikumaran that merely because the percentage of medicament in a product is less, does not ipso facto As per Corrigendum issued by Supreme Court of India No. F.3/Ed. B.J./92/2003 dated 9-9-2003 mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda textbooks. Of course the formula may not be as per the textbooks but a medicament can also be under a patented or pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sub-Heading 3305.10 or 3305.50…. 9. As far as Items (4), (5) and (6) are concerned, for the reasons stated earlier, we are of the view that they are also properly classifiable under medicaments under Tariff Sub-Heading 3003.30." (emphasis supplied) 16. Apart from the above, on behalf of the respondent, reference has also been made to a decision of this Court dated 27.02.2019 concerning its product in relation to the entry in the Andhra Pradesh General Sales Tax Act, 1957 and it has been asserted that therein, this Court accepted that the product in question was a medicine and not a cosmetic product. This Court observed and held as under: - "6. Notably, the Commissioner had failed to address the specific plea of the respondent that the hair oil manufactured by the respondent contains 'Arnica Mount Q, Cantharis Q, Cinchona Q and Pilocarpine Q' and would, therefore, qualify to be a drug within the meaning of Section 3 of The Drugs and Cosmetics Act, 1940, and if so, would be covered under Entry 37 of Schedule-I of the APGST Act; and not Entry 36 which is for general hair tonics, hair oils or hair lotions, as such. The High Court, therefore, reversed the conclusion reac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ingredients and observed as under : - "On a careful consideration and examination of the materials produced and referred to above, we notice that the ingredients utilised in the manufacture of Arnica Hair Oil are exclusively natural substances and their reference has been found in Homoeopathic Pharmacopia of India. The manufacturers have obtained drug licence and the use of the Hair oil, as a medicament, has been recommended by the Homeopaths. The appellants have shown that the ingredients are homoeopathic in nature and having therapeutic and prophylactic. Therefore, their contention cannot be rejected in the light of the evidence produced……In the present case, we are concerned with Arnica Hair Oil, which is claimed to be medicament in terms of the ingredients having necessary antiseptic, antiphlogistic action for dermatological diseases. It is also used for treatment of baldness and acts as an anti-dandruff agent and as cooling agent. In view of each of the ingredients having one or the other therapeutic or prophylectic functions in terms of homoeopathic science, therefore, it has to be held that the Arnica Hair Oil is not a cosmetic preparation or for use on hai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng whether a product falls under Chapter 30 or not is as to whether the product is understood as a pharmaceutical product in common parlance. However, the quantity of medicament used in a particular product is not a relevant factor because, ordinarily, the extent of use of medical ingredients is very low as a larger use may be harmful for the human body [vide Wockhardt Life Sciences (supra)]. Moreover, as held in Sharma Chemicals (supra), the mere fact that a product is sold across the counters and not under a doctor's prescription, does not by itself lead to a conclusion that it is not a medicament; and in Meghdoot (supra), that a product may be medicinal without having been prescribed by a medical practitioner. It is held by this Court in BPL Pharmaceuticals (supra) and reiterated in Meghdoot (supra) that the items which may be sold under names bearing a cosmetic connotation would nevertheless remain medicines based on the composition. As regards the question as to whether a particular product is classifiable under Chapter 30 as 'medicament' or under Chapter 33 as 'cosmetic', one of the essential features would be as to whether the preparation is essentially for cure or preventio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its composition, character and uses continued to remain the same even after insertion of new Sub-Heading 3301.30. 19. Having thus summarised the discernible principles, so far as relevant for the present purpose, we may take up the points arising for determination. As noticed, the principal point arising for determination in this case is as to whether the product in question, AHAHO, merits classification as a 'medicament' under Chapter 30 or as 'cosmetic or toilet preparations' under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985. For determination of this point, the inquiry would be directed towards the twin tests as noticed above. Application of the principles and twin test 20. Before applying twin tests for the purpose of the product in question, we may usefully recapitulate the divergent propositions presented in this case, where the findings of the Adjudicating Authority and the submissions made on behalf of the appellant stand on one side whereas, the findings of the Tribunal with the submissions made on behalf of the respondent stand on the other. 20.1. As noticed, the Adjudicating Authority examined the contents of the product as also its lab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses issued by respective authorities, per se did not make AHAHO a preparation of homeopathic medicine. While referring to Materia Medica, the Adjudicating Authority noted his reservations about one ingredient (Pilocarpine) and observed that there was no nexus of the said ingredient with Homeopathy. While referring to the significance of general rules of interpretation as regards the Notes attached to the respective Chapters/Tariff Items in the First Schedule to the Act of 1985, the Adjudicating Authority observed that as per Note 1(e) to Chapter 30, the said Chapter did not cover preparation of the headings of Chapter 3303 to 3307, even if they have therapeutic or prophylactic properties. 20.1.1. Learned ASG, while supporting the aforesaid findings of the Adjudicating Authority and while assailing the findings of the Tribunal, has argued that the product in question does not meet the criteria laid down under Chapter 30; that even if the product is stated to possess certain curative or prophylactic value, it would still be cosmetic as it excludes those with subsidiary curative and prophylactic value; and Tariff Item 3305 90 19, specifically meant for "Hair oil", directly covers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a period of nearly 19 years. The respondent also submitted that the product was not 'cosmetic', as the ingredients used had prophylactic properties and it was not applied for cleansing or beautifying or promoting attractiveness or altering the appearance; and depiction of a lady with long flowing hair on its label was only subjective and could be interpreted as indicative of good health evidenced by the long flowing hair upon being treated for hair fall and dandruff. 20.2.1. The Tribunal took note of the observation and findings in the order impugned as also the evidence placed before it and the cited decisions and held, inter alia, that even though the goods were sold over the counter and not on a medical prescription, it would not lead to the goods being out of the category of medicine; that when different branches of medicine and the Licensing Authorities recognized baldness or hair fall as disease, the Adjudicating Authority could not take a different view which was not recognized by the branches of medicine; that the product clearly mentioned that it could be used for other ailments also such as sleep loss, increase of blood circulation and it nowhere depicted itself as for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for ointment and cream for external application as a non-pharmacopoeia item whereas in the present case, the product was registered as Homeopathic Medicine. 20.2.2. While supporting the findings of the Tribunal, learned senior counsel for the respondent has contended that AHAHO is a therapeutic or prophylactic medicament in the medium of oil for curing diseases relating to the scalp. The product is not advertised as "Hair Oil" but is marketed only as "Aswini Homeo Arnica Hair Oil". 21. In an overall comprehension of the matter, and with application of the relevant principles to the facts of the present case, we are clearly of the view that the product in question sails through the twin tests without any doubt and has rightly been held as medicament by the Tribunal. 22. Taking up the test relating to the ingredients, there appears absolutely no reason to suggest that the product in question, AHAHO, does not pass this test. It remains indisputable that the product has been manufactured as a drug after being duly licensed by the competent authorities and carries the combination of as many as four Homeopathic medicines, Arnica Montana, Cantharis, Pilocarpine, and Cinchona in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of use is to put the same on the scalp and to leave it overnight. Looking to the nature of the product and its uses, the observations about want of specification regarding the dosage do not take the product out of its pharmaceutical value. Further, the Adjudicating Authority's observations of dissatisfaction because of there being no contra-indications have gone miles away from the reasonableness of approach. If the respondent has stated in clear terms on the label that the product carried nil contra-indications, looking to its nature, purpose and the manner of use, it does not cease to be a medicament. 22.2. The perversity and unreasonableness of approach of the Adjudicating Authority is also noticed from the observations that, if the intention was to identify the product as medicament, there was no need to label it as "Hair Oil". While the expression "Hair Oil" does appear on the label, the other integral expressions "Homeo" and "Arnica" preceding the expression "Hair Oil" could not have been ignored and could not have been left aside. The Adjudicating Authority had gone to the extent of observing that hair growth was at best a cosmetic necessity rather than a disease requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he efforts on the part of the appellant to take the product in question to Chapter 33 merely because of its label carrying the expression "Hair Oil" while ignoring the preceding significant expressions "Homeo" and "Arnica". As observed by this Court in BPL Pharmaceuticals (supra), for a product to be taken to Chapter 33, it has first to be a 'cosmetic'. Similarly, reference to Note 1(e) of Chapter 30 also turns out to be of no relevance because the product in question cannot be said to be a preparation of Heading 3305 and then having insignificant or subsidiary therapeutic or prophylactic properties. As regards the product in question, which is essentially made of Homeopathic medicines which have therapeutic and prophylactic uses, it cannot be said to be carrying only subsidiary pharmaceutical value. Putting it differently, we are satisfied that the product in question, AHAHO, is predominantly of pharmaceutical value and the item of cosmetic therein, i.e., hair oil, is nothing but a medium for appropriate use of that pharmaceutical value. 23.2. In regard to the above, we find the consideration of this Court in the case of BPL Pharmaceuticals (supra) to be apposite to the questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration of the Tribunal, we find it just and proper to endorse the views of the majority of the Tribunal in Bakson Homeo Pharmacy (supra) and there appears no requirement to re-analyse the medicinal properties of the ingredients. Suffice it would be to observe that the product in question, AHAHO, passes the ingredients test beyond any doubt. 25. On the other features of common parlance test, i.e., the manner in which the product in question is commonly understood, it is noticed that one of the grounds placed at the forefront by the appellants and the Adjudicating Authority had been that AHAHO was accessible in both Medical and General Stores and could be bought across the counter. This feature of availability of the product in question has absolutely no relevance. In Sharma Chemical (supra), this Court clearly held that merely for a product being sold across the counter and not on doctor's prescription, does not by itself lead to a conclusion that it is not a 'medicament'. Similarly, in Meghdoot (supra), this Court made it clear that a product may be medicinal without having been prescribed by a medical practitioner. In Meghdoot, this Court has also made it clear with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reatment. We have reproduced these expressions of the Adjudicating Authority verbatim to show the irrationality of reasoning and want of logic. A treatment or prevention of hair fall by way of medication was sought to be rejected by the Adjudicating Authority by his impression that hair growth was only a cosmetic necessity. We could only disapprove such an approach. 27.1. The substance of the matter remains that in common parlance, the product in question would be approached essentially for its claimed medicinal qualities and not as another hair oil. This aspect, in our view, is itself sufficient to reject the contentions of the appellant and the observations of the Adjudicating Authority. The Tribunal has rightly dealt with the matter in accordance with the law applicable to the facts of the present case. 28. The Adjudicating Authority has also observed that drug licenses issued by respective authorities per se did not make AHAHO a preparation of Homeopathic medicine. However, the Adjudicating Authority has failed to consider that such drug license issued under Schedule K to the Rules of 1945 had not been a factor to be ignored altogether. Both in relation to common parlance tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial changes in the tariff headings, particularly when Chapter 30 came to be reworded so as to remove the distinction between patent/proprietary and generic medicaments and to classify them according to whether they are put up in unit containers for retail sale or not; the mention about the Act of 1940 and the various Pharmacopeia came to be deleted; and under Chapter 33, the phrase 'Hair oil' became prominent under which, subsidiary headings of 'perfumed hair oil' and 'others' came to be specified. According to the Adjudicating Authority, all these changes merited interpretation of the new entries vis-à-vis the product in question than what was decided or settled earlier. Learned ASG has also relied upon these very reasons in support of his contentions. In our view, there had been no justification in the Department seeking to re-open the settled position in relation to the product in question merely with reference to certain changes made in Chapter 30 and Chapter 33, which had essentially broadened their ambit and scope and provided modified marginal notes and tariff entries with detailed specifications. These changes had otherwise no impact, so far as the product of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance. This is apart from the fact that the specification of medicament under Heading 3004 would, in any case, cover the product in question in the form it is marketed for retail sale. 32.1. By way of the amendment of 2012, even if the relevant entries pertaining to preparation for use on the hair have been provided with micro classifications in comparison to the entries standing earlier (as could be seen from the entries extracted hereinbefore), it could never be taken to mean that anything which is prepared for being used on the hair and carries the name "Hair Oil", would lose its character as medicament if otherwise it has been prepared for therapeutic or prophylactic uses. Moreover, rewording and regrouping of different entries in medicaments are hardly of any impact on the character of the product in question. 32.2. As noticed, in Chapter 30, apart from Heading 3003 relating to medicaments consisting of two or more constituents which have been mixed together for therapeutic or prophylactic uses not put up in measured doses or in forms or packing for retail sale, Heading 3004 pertains to the medicaments consisting of mixed or un-mixed product for therapeutic or prophylactic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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