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TMI Blog2024 (7) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... uitable for use for the care of skin, which is also indicated to be covered under heading 33.04. The products in question viz, petroleum jelly Baby and petroleum jelly Aloe Vera are those meant exclusively for the care of skin, petroleum jelly meant for skin care specifically excluded from CTH 2712 and therefore, they are cosmetics which are correctly classifiable under CTH 3304. Hence, the appellant should succeed. The impugned order upholding wrong classification cannot sustain for which reason, the same is set aside - appeal allowed. - MR. P. DINESHA, MEMBER (JUDICIAL) AND MR. M. AJIT KUMAR, MEMBER (TECHNICAL) Ms. Padmavathi Patel / Shri Viraj Reshamvala, Advocate or the Appellant Shri M. Selvakumar, Authorised Representative for the Respondent ORDER The facts of the case, as explained during the course of arguments on behalf of the appellant, are that the appellant was manufacturing White Petroleum Jelly I.P. with various packing sizes, under Food and Drugs License issued by Food and Drug Administration, Puducherry. There is no dispute that the admitted classification of said product was CTH 2712. Thereafter, it appears that they started manufacturing the variants of the Whit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Baby and White / Vaseline Petroleum Jelly Aloe Vera are manufactured from liquid light paraffin, paraffin wax with additives of fragrance gentle Lily, fragrance aloe vera for application on skin as a barrier cream to prevent cracking of skin in dry conditions. The products which were essentially for taking care of skin specifically and hence, they were rightly classifiable as cosmetics under Chapter 33. 5.3. White petroleum jelly was without any additive or perfume and hence, the same was classifiable only under Chapter 27. The products in question which are added with fragrance which were primarily for skin care and hence, were rightly classified under Chapter 33049990, based on their combined understanding of Heading 3304 read with Explanatory Notes to Chapter 27 of the HSN which provides for specific exclusion of Petroleum Jelly used for skin care. 6.1. With effect from 28.02.2005, the Central Excise Tariff was aligned in toto with Explanatory notes to HSN as well as customs tariff and hence, Explanatory notes to HSN is to be taken as a persuasive aid for correct classification of the products under central Excise Tariff. In this regard, they have relied upon the following Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from HSN for the product description in the CET, under the eight digits tariff 2712.10 has two sub-headings as 2712.10.10 crude and 2712.10.90 others; when entries in HSN and the tariff were not aligned, no reliance could be placed upon HSN for classification of the goods and therefore, the classification issue involved was required to be decided as per CET, 1985. Reliance is placed in this regard on a decision of Apex Court in the case of Camlin Ltd. Vs. Commissioner [2008 (230) ELT 193)]. 8.1. Reference is made to the Tribunal s decision in the case of Ponds India Ltd. [2000 (116) ELT 708] wherein it was held that white petroleum jelly would be rightly classifiable under chapter subheading 2712.10, the tariff having provided for a specific entry covering the white petroleum jelly, would clearly supersede all other considerations. Further, even if the additional information that the jelly could be used as lip guard or as a neutral dressing for minor burns, cuts, scraps, etc. is considered, such use would not change the nature of contents which remain as white petroleum jelly only. 8.2. Whether the addition of less than 0.30% of perfume to a product distinctly classified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is held to have suppressed facts and thereby willfully mis-declared the classification of its product as cosmetics under Chapter 33 and therefore, there was willful suppression of fact on the part of the taxpayer. Hence, the extended period was rightly invoked. 10. We have considered the rival contentions, perused the documents placed on record and the Judicial precedents relied upon; we find that the following question of law emerges for our consideration: Whether, in the facts of the case, the product under dispute deserve to be classified as petroleum jelly under CTH 2712 or cosmetics, under CTH 3304 ? 11. 3304 covers inter alia cosmetics or toilet preparations while Heading 27.12 HSN covers Petroleum Jelly but however excludes Petroleum Jelly suitable for use for the care of skin. When it is used for skin care, it gives an indication that it may be a medicament but the clear exclusion as of above throws the item under CTH 3304 which clearly covers inter alia, cosmetics. That means, the intention appears to be that as long it is a cosmetic and used for skin care, it would fall under CTH 3304 as claimed by the appellant, or else under CTH 2712, as contended by the revenue. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 500 (S.C.) = 1995 taxmann.com 474 (SC). (vi) That a license under the Drugs Act is necessary is not a determinative or decisive factor always --- [emphasis added by us] 13. From the above it is clear that - the proportion of the ingredients is not decisive; prescription is not decisive; the primary function is to be looked into; product cannot be classified solely based on their outward packing; mixing medical ingredients with other products or preservatives do not alter the character; and License under the Drugs Act, even if necessary, is not a determinative or decisive factor always. 14. Here, in the case on hand, the scope of litigation is whether the products in question are drug or Cosmetic and the addition of ingredient would result in any change in their classification? The observations by the Hon ble Supreme Court at paragraph 41 is categoric that the proportion of the ingredients is not decisive and the primary product, if it is care and not cure, then it is a cosmetic. 15. The claim of the appellant is that petroleum jelly Baby and petroleum jelly Aloe Vera are intended for application on skin for skin care, to act as a barrier cream to prevent cracking of skin in dry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised Commodity Description and Coding System (Harmonised System of Nomenclature) with necessary modifications. HSN contains a list of all the possible goods that are traded (including animals, human hair etc.) and as such the mention of an item has got nothing to do whether it is manufactured and taxable or not. 29. In a number of cases, this court has clearly enunciated that the HSN is a safe guide for the purpose of deciding issues of classification. In the present case, the HSN explanatory notes to Chapter 20 categorically state that the products in question are so included in Chapter 20. The HSN explanatory notes to Chapter 20 also categorically state that its products are excluded from Chapter 8 as they fall in Chapter 20 . In this view of the matter, the classification of the products in question have to be made under Chapter 20. --- . 20.2. In COLLECTOR OF CUSTOMS, BOMBAY -Vs - BUSINESS FORMS LTD. THR. O.L. 2002 (142) E.L.T. 18 (S.C.), it was held as under: --- 2. This Court in Collector of Central Excise, Shillong v. Wood Craft Products Limited [1995 (77) E.L.T. 23] has said : We are of the view that the Tribunal as well as the High Court fell into the error of overlooking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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