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TMI Blog2024 (3) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... AR. Therefore, it appears that the instant product satisfies the second criterion of the twin test that is the Ingredients test . The judgment in the case of The Commissioner Commercial Tax Uttarakhand Vs Perfetti Van Melle India Pvt Ltd [ 2008 (7) TMI 870 - UTTARAKHAND HIGH COURT] holding that only for the reasons these items (Chlormint, Happydent) are also purchased by some customers for taste also, does not make them confectionary items particularly when the same are manufactured under a valid drug licence. Based on this decision, it can be deduced that the perceived utility of a product does not necessarily serve as a determining factor in its classification. WBAAR's classification of the product, which was predicated primarily on the Common Parlance test and neglected a number of previously discussed factors and cited decisions of the Honourable Courts, is therefore rejected. Thus, it is held that the product JAC OLIVOL BODY OIL intended to be manufactured sold by the applicant would be covered under Heading 3004 of THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT and would be taxed accordingly under the GST Act. As per Mr. Devi Prasad Karanam, Member - Whether the instant pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant product i.e. 'JAC OILVOL BODY OIL', it is deemed that no Advance Ruling can be issued in respect of the questions under appeal as per the provisions of Section 101 sub-section (3) of the GST Act. Thus the Advance Ruling No. 19/WBAAR/2023-24 dated 10.08.2023 is deemed to be not in operation. - MR. NAVNEET GOEL, AND MR DEVI PRASAD KARANAM, MEMBER Present for the Appellant: Mr. Ankit Kanodia, Advocate Present for the Respondent: Not Applicable An Appeal filed under Section 100 (1) of the West Bengal Goods and Services Tax Act, 2017/ Central Goods and Services Tax Act, 2017, by Indranil Chatterjee, 61/1, Moore Avenue, Regent Park, Circus Avenue, Kolkata, Pin-700040 against the Ruling passed by the West Bengal Advance Ruling Authority vide Advance Ruling Order No. ZD 1908230145559 (19/WBAAR/2023-24 dated 10.08.2023). At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as the 'CGST Act, 2017' and the 'SGST Act, 2017') are in pari materia and have the same provisions in like matter and differ from each other only on a fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not be an item of common use. A user will use it only for treating a particular ailment and will stop its use after the ailment is cured. Are the ingredients used in the product mentioned in the authoritative textbooks on Ayurveda? 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 : twin test noticed in Puma Ayurvedic Herbal (P) Ltd., continue to be relevant. 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 what is his perception in respect of such product. The user's understanding is a strong factor in determination of classification of the products, [emphasis added] 5. The WBAAR also relied on the judgement of Hon ble Supreme Court in Alpine Industries vs Collector Of Central Excise, New Delhi, [(2003) 3 SCC 111] where it has been observed that The terms and expressions used in tariff have to be understood by their popular meaning that is the meaning that is attached to them by those using the product. and that of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the product JAC OLIVOL is being used for curing the dead and dried skin, reducing muscle pain and joint pains but at the same time it also helps in preventing anti-ageing and wrinkles which is consequential to the predominant purpose. (iii) That the ingredients of the product are mentioned in the Ayurvedic pharmacopoeia and authoritative textbooks of Ayurveda (Bhav Prakash) and inter alia approved by the Drug Controller, but these facts have been ignored by the Hon'ble WBAAR. (iv) The product JAC OLIVOL being an herbal oil, is not a cosmetic product as it has therapeutic or prophylactic qualities, but the intrinsic properties of its components also make the skin soft and supple, the same is substantial to the principal intent of the product. (v) Medicament has not been explicitly provided anywhere in the Drugs and Cosmetics Act, 1940, the GST Act, the Customs Tariff Act, 1975, or Rules framed there under, and thus the word must be construed in its popular sense i.e., how the common man who uses it or comprehends it. (vi) That the appellant relied on the judgment of the Hon'ble court in the matter of Collector of Central Excise vs. CIENS Laboratories, wherein it has been h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rayed for submitting of additional judgements at the time of hearing, which the appellant has also relied. 10. Personal Hearing: During the course of hearings, the Appellant's authorised representative reiterated the points as stated in the Appeal, emphasising the subsequent points:- (i) that the intended manufactured product, Jac Olivol Body Oil, is an ayurvedic patent and proprietary medication, as explicitly stated on its label, and is further protected by trademarks and copyrights; (ii) that for a product to be classified as a medicament, it is important that the product has either of the two qualities i.e., therapeutic or prophylactic. Even if a product is manufactured using ingredients regulated under the Drugs and Cosmetics Act and according to the formula prescribed in the Pharmacopoeia, it cannot be classified as a medicament under Heading 3004 unless it is meant for therapeutic or prophylactic uses; (iii) that the aforementioned product is being used as a proprietary medicine protected by an ayurvedic patent, and all constituents employed in its production are specified in authoritative Ayurvedic textbooks (Bhavprakash) and the Ayurvedic pharmacopoeia; (iv) that the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iagnosis, treatment or prevention of diseases or disorder in human beings or animals and manufactured exclusively in accordance with the formulae described in the authoritative books of Ayurvedic, Siddha or Unani Tibb systems of medicine, specified in the First Schedule. (ii) Section 3(h) of the Act defines 'patent or proprietary medicine' as: In relation to Ayurvedic, Siddha or Unani Tibb systems of medicine all formulations containing only such ingredients mentioned in the formulae described in the authoritative books of Ayurveda, Siddha or Unani Tibb systems of medicine specified in the First Schedule, but does not include a medicine which is administered by parental route and also a formulation included in the authoritative books as specified in Clause (a) ... 12.4 The Ayurvedic Pharmacopoeia of India, Part I Vol. I and Part I Vol. II, which were attached to the additional submission by the appellant have been acknowledged. These publications were published by the Department of Ayush, Ministry of Health and Family Welfare, Government of India. From the soft copies, it appears that several ingredients present in the instant product, including Haridra, Manjistha, Arjuna, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicine used only for the treatment of any particular disease. (iii) Commissioner of Central Excise, Mumbai IV Vs Ciens Laboratories (2013) 14 SCC 133: In this judicial decision, the Honourable Court established the subsequent principles to ascertain the classification of a product as medicament or cosmetic:- (i) Firstly, when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive. What is of importance is the curative attributes of such ingredients that render the product a medicament and not a cosmetic. (ii) Secondly, though a product is sold without a prescription of a medical practitioner, it does not lead to the immediate conclusion that all products that are sold over across the counter are cosmetics. There are several products that are sold over-the-counter and are yet, medicaments. (iv) The Commissioner of Customs, Central Excise and Service Tax, Hyderabad Versus Ashwani Homeo Pharmacy [Civil appeal No. 9525 of 2018 dated 03.05.2023]: Stipulating that 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 ..... buy any of the ordinary soaps available in the market. But if one has a skin problem, he may have to buy a medicated soap. Such a soap will not be an ordinary cosmetic. It will be medicament falling in Chapter 30 of the Tariff Act. II. Are the ingredients used in the product mentioned in the authoritative textbooks on Ayurveda? .... 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 what is his perception in respect of such product. The user's understanding is a strong factor in determination of classification of the products. (ii) Alpine Industries vs Collector of Central Excise, New Delhi, (2003) 3 SCC 111 where the issue before the Hon ble Apex Court was to decide classification of the product 'Lip Salve', manufactured in accordance with the defence services specifications and supplied entirely to military personnel. The Hon ble Supreme Court, while held the item as a preparation for protection of lips and skin and is not a 'medicament' observed as follows: ....The terms and expressions used in tariff have to be understood by their popular meaning that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mere fact that the product has some curative effect is not enough to classify the product as a medicament. (iii) The mere fact that the product is being manufactured under a drug licence is not enough to classify the product. (iv) The language of the entry has to be given effect. (v) How the product is known in scientific sense or technical sense is not much relevant. (vi) The dictionary meaning is a good guide but not conclusive. (vii) For being a medicine, a product must have the effect either of curing the disease or preventing it and the intended use must be for treatment, mitigation or -prevention of disease and in common parlance and commercial sense known as medicine. (viii) Cosmetic and toilet preparations are products which are used for beautification or care of face, skin, hair, nails, eyes or brow and are known as cosmetic and toilet preparations in common parlance and commercial sense. (ix) The onus lies on the Revenue to prove that the product falls under a particular entry. (v) WBAAR has also referred the Ciens Laboratories (supra), as in the said judgement the Hon ble Apex Court has also formulated following guiding principles in addition to what has already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the product itself instructs users to apply daily before or after bathing all over your body contradicts the aforementioned court's ruling. 12.11 In the judgement passed by the Hon ble Supreme Court in the case of Commr. Of Central Excise, Delhi vs M/S. Ishaan Research Lab. (P) Ltd. Ors, the Apex Court has observed that: Our attention was also invited to various orders as also to the literature and it was tried to be suggested that these products were treated to be the cosmetic products, if not by the assessee, at least by the customers. We have already pointed out that the common parlance test is not be all and end all of the matter on the basis of which the case of Shri Baidyanath Ayurved Bhavan's case (supra) was decided. We have further pointed out that thereafter firstly the entry was amended and in series of decisions this Court has held that merely because the product could be put to cosmetic use that would not by itself make it a cosmetic product provided there was a rightful claim made that it was an Ayurvedic product on the factual basis, and it contained the medicinal Ayurvedic medicament. The miniscule percentage used is also not a deciding factor and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Commr. Of Central Excise, Delhi vs M/s. Ishaan Research Lab. (P) Ltd. Ors, we find that the common parlance test is not be all and end all for deciding the deciding the classification of a product as medicament. We would also like to quote another relevant portion of the said judgement which observes that: ...that merely because the product could be put to cosmetic use that would not by itself make it a cosmetic product provided there was a rightful claim made that it was an Ayurvedic product on the factual basis, and it contained the medicinal Ayurvedic medicament. The miniscule percentage used is also not a deciding factor and this court has, in series of decisions, held that the miniscule percentage does not change the nature of the product from medicament to the cosmetic products. 12.17 In the judgement passed in the case of Commissioner of Central Excise, Mumbai IV Vs Ciens Laboratories (2013) 14 SCC 133 , it is directed that: (i) Firstly , when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive. What is of importance is the curative attributes of such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yush, Ministry of Health and Family Welfare, Government of India as annexures to his additional submission wherefrom it appears that various ingredients of the instant product i.e. Haridra, Manjistha, Arjuna, Daruharidra, Karpoor, Neem Oil etc. are covered under such Ayurvedic Pharmacopoeia of India as Ayurvedic ingredients. 19. Now, comes the first leg of the afore-stated 'twin test' i.e. whether in common parlance the item is accepted as a medicament? 20. Taking the example of Haridra or Turmeric - the same goods are used for therapeutic or prophylactic purposes but at the same time it is widely used all over the India as spice and condiment being one of the primary ingredients of cooking. Similarly, Karpoor or Camphor not only has its uses to treat skin conditions, improve respiratory function, and relieve pain but also as an insect repellent and moreover for the purposes of puja and aarti. So, here naturally the question comes, what is the identity of these goods in the minds of general people in common parlance? As for example, The Ayurvedic Pharmacopoeia of India, Part I Vol. I and Part I Vol. II as referred to by the appellant even has entries like Atasi or Linseed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c demand specified medical treatment with medicines. Thus, there is a wide gap between the word 'cure' and 'care' so far as the instant product is concerned. 25. The same theory has been promulgated in the case of Commissioner of Customs, Central Excise and Service Tax, Hyderabad versus Ashwani Homeo Pharmacy (Civil appeal No. 9525 of 2018 dated 03.05.2023), where the Hon ble Supreme Court has observed: ... when the preparation is for cure or prevention, it would be medicament but, if only for care, it would be cosmetic. Of course, a cosmetic would not become medicament even if having subsidiary curative or prophylactic value, as held by this Court in Alpine Industries (supra). [emphasis added] 26. In view of above discussions, it can be opined that the product Jac Olivol Body Oil intended to be manufactured sold by the applicant shall not be covered under Heading 3004 of the First Schedule to the Customs Tariff Act as appealed for. Instead, it would get covered under Heading 3304 of the First Schedule to the Customs Tariff Act and would be taxed accordingly under the GST Act. 27. The WBAAR Ruling No. 19/WBAAR/2023-24 dated 10.08.2023 is confirmed and the Appeal sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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