COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HYDERABAD v. ASHWANI HOMEO PHARMACY

A “So certificates and affidavits given by the Vaidyas do not advance the case of Shri Baidyanath Ayurved Bhawan Limited in the absence of any evidence on record to show and prove that the common man who uses this Dant Manjan daily to clean his teeth considers this Dant Manjan as a medicine and not a toilet requisite.” B It is this line of reasoning with which we are in agreement. The Tribunal rejected the claim of the appellant holding that ordinarily a medicine is prescribed by a medical practitioner and it is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes. We are, therefore, of the opinion that the Tribunal applied the correct principles in concluding that the product in question was not a medicinal preparation (‘Ayurvedic’) and, therefore, the appellant was not entitled to the benefit of the exemption notification. Having heard the learned counsel at length and having perused the line of reasoning adopted by the Tribunal with which we are in general agreement, we see no reason to interfere with the conclusion reached by the Tribunal and, therefore, we dismiss these appeals, but make no order as to costs.” 14.2. The aforesaid case related to the Rules framed under the E Act of 1944 and the Notification issued thereunder. During the pendency of appeal before this Court, the Act of 1985 was enacted which replaced the Schedule to the Act of 1944; and Chapter 30 of the Act of 1985 dealt 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 F 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- G 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, H

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A stop its use after the ailment is cured. The approach of the consumer towards the product is very material. One may 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. B II. Are the ingredients used in the product mentioned in the authoritative textbooks on ayurveda?” *** *** ***

C 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- D 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. E

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 F 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 what is his perception in respect of such product. The user’s understanding is a G strong factor in determination of classification of the products. *** *** ***

52. The approach of the West Regional Bench is fallacious in what we have indicated above as it overlooks and ignores common H

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 327 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

parlance test which is one of the well-recognised tests to determine A whether the product is classifiable as medicament or cosmetic and that has been consistently followed by this Court including with regard to this very product. It also overlooks the well- settled legal position that without a change in the nature or a change in the use of the product and in the absence of a B statutory definition, the product will not change its character. The product DML remains the same in its composition, character and uses. We have already held above that Sub- Heading 3003.31 does not define ayurvedic medicine and, therefore, there cannot be any justification enough for changing the classification of the product DML which has not been held to be ayurvedic medicine by this Court. *** *** ***

56. There is no doubt that a specific entry must prevail over a general entry. This is reflected from Rule 3(a) of the general Rules of interpretation that states that Heading which provides the most specific description shall be preferred to Headings providing a more general description. DML is a tooth powder which has not been held to be ayurvedic medicine in common parlance in Baidyanath I [(1996) 9 SCC 402].

57. We have already observed that common parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosmetic. There being no change in the nature, character and uses of DML, it has to be held to be a tooth powder – as held in Baidyanath 1. DML is used routinely for dental hygiene. Since tooth powder is specifically covered by F Chapter Sub-Heading 3306, it has to be classified thereunder. By virtue of Chapter Note 1(d) of Chapter 30 even if the product DMLhas some therapeutic or medicinal properties, the product stands excluded from Chapter 30.

58. The learned Senior Counsel for Baidyanath relied upon the G judgment of this Court in Vicco Laboratories [(2005) 4 SCC 17 : (2005) 179 ELT 17] to show that in Baidyanath I [(1996) 9 SCC 402], no tests for classification were laid down. First, in Baidyanath I [(1996) 9 SCC 402] common parlance test applied by the Tribunal has been approved. Second, and more importantly, H

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A 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, B 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.” C (emphasis supplied)

15Copy pinpoint15. 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. D 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 personnel, as a ‘medicament’ under Chapter 30 or as ‘a preparation for care of skin’ under Chapter 33. This Court, while dealing with common parlance theory, held that the entries are not to be understood in their scientific or technical sense, but by their popular meaning for the purpose of interpretation. This Court said: - “5. It is well established that in interpreting tariff entries in taxation statute like the Excise Act, where the primary object is to raise revenue and for that purpose various products are differently classified, the entries are not to be understood in their scientific and technical meaning. 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. See the decision of the Supreme Court on the dispute regarding classification for excise duty, the product — Lal Dant Manjan manufactured by Shree Baidyanath Ayurved Bhavan Ltd. reported in the case of Shree Baidyanath Ayurved Bhavan Ltd. v. CCE [(1996) 9 SCC 402]. The manufacturer claimed the product to be an Ayurvedic H

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 329 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

medicinal preparation product for dental care. The view of the A Tribunal was upheld by this Court by holding (at SCC pp. 404-05, para 3) that “ordinarily a medicine is prescribed by a medical practitioner and it is used for a limited time and not every day unless it is so prescribed to deal with a specific disease like diabetes”. B *** *** ***

7. ….. It is firmly established that on the question of classification of a product under the Central Excise Tariff Act, “commercial parlance theory” has to be applied. It is true that the entire supply by the appellant of its product “Lip C Salve” has been to the Defence Department for use of military personnel but that would also not be determinative of the nature of the product for classifying it. It is not disputed that the product “Lip Salve” is used for the care of the lips. It is a product essentially for “care of skin” and not for “cure of skin”. It is, therefore, classifiable as a skin-care cream and not a medicament. From D the nature of the product and the use to which it is put, we do not find that the claim of the appellant is acceptable that it is primarily for therapeutic use. What we find from the material produced before the Tribunal is that essentially the product is a protective/ preventive preparation for chapping of lips. It is not a curative E 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 F “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 30.³. Under the Rules for G 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 H

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A 33 even if they have “therapeutic or prophylactic properties” are excluded from Chapter 30. “Medicament” has been defined in Note 2(i) to mean “goods which are either products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic use”. On a reading of Note 1(d) with Note 2(i) of Chapter 30 under the heading B “Pharmaceutical Products”, it is clear that preparations which fall under Chapter 33 even if they have therapeutic or prophylactic properties are not covered under Heading 30.³ as “medicaments” *** *** *** C

13. ……..Note 2 and Note 5 with Entry 33.04, we find ourselves in agreement with the majority opinion of the Tribunal that the product “Lip Salve” is a kind of “barrier cream” or a protective cream against skin irritants. It, therefore, clearly falls under Entry 33.04 and conforms to the description “preparations for the care D of the skin (other than medicaments)”. The learned counsel of the appellant has not been able to persuade us to take a different view from the one taken in the majority opinion of the Tribunal. We confirm that the product “Lip Salve” is essentially a preparation for protection of lips and skin and is not a E “medicament”. Such preparations which have a subsidiary curative or prophylactic value clearly fall under Entries 33.³ to 33.07 as per Note 2 under Chapter 33. The product clearly is covered by Entry 33.04 read with Note 5 of Chapter 33, it essentially being a preparation for protection of lips or skin. We have also gone through the minority opinion expressed F by one of the members of the Tribunal and the reasoning therein supported before us on behalf of the appellant. For the reasons aforesaid, we are unable to agree with the minority view. In the result, we find no merit in these appeals and the same are hereby dismissed.” G (emphasis supplied) 15.2. In G.C. Jain (supra), this Court held that the words and expressions have to be construed as per trade and understanding usage, unless defined in the statute. This Court said: -

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 331 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

“18. Admittedly, the expression “adhesive” is not defined in the A Act. It is now well settled that the words and expressions, unless defined in the statute have to be construed in the sense in which persons dealing with them understand i.e. as per trade and understanding and usage.” 15.³. In Wockhardt Life Sciences (supra), this Court further B elaborated on the common parlance test as under: - “33. There is no fixed test for classification of a taxable commodity. This is 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] ). C 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 D 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 E 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 F used in a particular product will also not be a relevant factor for, normally, the extent of use of medicinal ingredients is very low because a larger use may be harmful for the human body. [Puma Ayurvedic Herbal (P) Ltd. v. CCE [(2006) 3 SCC 266], State of Goa v. Colfax Laboratories Ltd. [(2004) 9 SCC 83] and B.P.L. Pharmaceuticals Ltd. v. CCE [1995 Supp (3) SCC 1].] G

35. However, there cannot be a static parameter for the correct classification of a commodity. This Court in Indian Aluminium Cables Ltd. v. Union of India: (1985) 3 SCC 284 has culled out this principle in the following words: (SCC p. 291, para 13) H

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A “13. To sum up the true position, the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff.” B

36. Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance. [See O.K. Play (India) Ltd. v. CCE [(2005) 2 SCC 460] , Alpine C Industries v. CCE [(2003) 3 SCC 111] , Sujanil Chemo Industries v. CCE & Customs [(2005) 4 SCC 189] , ICPA Health Products (P) Ltd. v. CCE [(2004) 4 SCC 481] , Puma Ayurvedic Herbal [(2006) 3 SCC 266] , Ishaan Research Lab (P) Ltd. [(2008) 13 SCC 349] and CCE v. Uni Products India D Ltd. [(2009) 9 SCC 295] ] *** *** ***

39. In our view, as we have already stated, the combined factors that require to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the user to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the surgeons for the purpose of cleaning or degerming their hands and scrubbing the surface of the skin of the patient before that portion is operated upon. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified as a “medicament” which would fall under Chapter Sub-Heading 3003 which is a specific entry and not under Chapter Sub-Heading 3402.90 which is a residuary entry.” G (emphasis supplied) 15.4. In Sunny Industries (supra), 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 H

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 333 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

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 33.³ 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 of the Chemical Analyser, the Tribunal rightly arrived at the conclusion that the product in question is oil used for massage and would be covered by Heading 33.04. Similar contention was raised in Alpine Industries v. CCE [(2003) 3 SCC 111: JT (2003) 1 SC 130] . The Court observed (at SCC p. 116, para 8) that “medicament” has been defined in Note 2(i) to mean “goods which are either products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic use”. On a reading of Note 1(d) with Note 2(i) of Chapter 30 under the heading “Pharmaceutical Products”, it is clear that preparations which fall under Chapter 33 even if they have therapeutic or prophylactic properties are not covered under F Heading 30.³ as “medicaments”. The Court thereafter held thus: (SCC p. 115, para 7) “The certificate issued by the Army Authorities and the chemical ingredients of the product are not decisive on the question of classification of the product for levy of excise duty. G It is firmly established that on the question of classification of a product under the Central Excise Tariff Act, ‘commercial parlance theory’ has to be applied. It is true that the entire supply by the appellant of its product ‘Lip Salve’ has been to the Defence Department for use of military personnel but that H

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A would also not be determinative of the nature of the product for classifying it. It is not disputed that the product ‘Lip Salve’ is used for the care of the lips. It is a product essentially for ‘care of skin’ and not for ‘cure of skin’. It is, therefore, classifiable as a skin-care cream and not a medicament. From the nature of the product and the use to which it is put, we do B not find that the claim of the appellant is acceptable that it is primarily for therapeutic use.”

13. The same would be the position in the present case. The oil is not used for cure of skin but is oil for massage and it takes care of the skin. C

14. In this view of the matter, we find no substance in these appeals and they are accordingly dismissed. There shall be no order as to costs.” (emphasis supplied) D 15.5. In Sharma Chemicals (supra), 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. 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 facto13 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 13 As per Corrigendum issued by Supreme Court of India No. F.3/Ed. B.J./92/2003 dated 9-9-2003. H

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 335 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

textbooks. Of course the formula may not be as per the textbooks but a medicament can also be under a patented or proprietary formula. The main criterion for determining classification is normally the use it is put to by the customers who use it. The burden of proving that Banphool Oil is understood by the customers as a hair oil was on the Revenue. This burden is not discharged as no such proof is adduced. On the contrary, we find that the oil can be used for treatment of headache, eye problem, night blindness, reeling head, weak memory, hysteria, amnesia, blood pressure, insomnia etc. The dosages required are also set out on the label. The product is registered with the Drug Controller and is being manufactured under a drug licence.” (emphasis supplied) 15.6. In the case Meghdoot (supra), while dealing with the question of classification of six items namely Bhringraj Tail, Trifla Brahmi Tail, Neem Herbal Sat, Sat Reetha, Meghdoot Herbal Sat, Meghdoot D Herbal Powder and following the decision in BPL Pharmaceuticals (supra), this Court classified the items under the heading of ‘medicaments’ and held that items which may be sold under names bearing a cosmetic connotation but would remain medicines based on the composition of the items, in the following terms: - E “5….. A product may be medicinal without having been prescribed by a medical practitioner. It was also not necessary for a person manufacturing medical products to claim classification under Tariff Sub-Heading 3003.30 without establishing that the product had in fact been tested F on patients in controlled situations or that the outcome had not been tested for effectiveness. This would be particularly true in the cases where the products are claimed to be based on traditional Ayurvedic formulae. *** *** *** G

7. This Court has in similar matters come to the conclusion that items which may be sold under names bearing a “cosmetic” connotation would nevertheless remain medicines based on the composition of the items in B.P.L. H

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A Pharmaceuticals Ltd. v. CCE [1995 Supp (3) SCC 1 : (1995) 77 ELT 485].

8. As far as the first three items listed earlier are concerned, this Court has in CCE v. Pandit D.P. Sharma [(2003) 5 SCC 288 : (2003) 154 ELT 324] and CCE v. Himtaj Ayurvedic Udyog B Kendra [(2003) 5 SCC 290 : (2003) 154 ELT 323] in connection with Banphool Oil and Himtaj Oil held that the Ayurvedic hair oils, were medicines and should be properly classified under Tariff Sub-Heading 3003.30, rather than under Tariff Sub-Heading 3305.10 or 3305.50….

C 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)

16Copy pinpoint16. 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. E 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 reached by the Commissioner after noting the aforementioned contention of the respondent and, instead, held that the respondent had produced sufficient material to show that the product manufactured by the respondent was a medicine and not a cosmetic product.

7. The fact that the respondent is using the Homeopathic Pharmacopoeia referred to earlier in manufacturing of the hair oil has not been traversed by the appellant. Neither has the

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 337 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Commissioner dealt with that contention of the respondent nor was such a plea taken before the High Court by the appellant. Considering this, we see no reason to deviate from the conclusion reached by the High Court that the product manufactured by the respondent was rightly assessed at the relevant point of time in the assessment years 1994-1995 and 1995-1996, as covered by B Entry 37 of Schedule-I of the APGST Act.

8. We once again make it amply clear that the view taken in these appeals is in the fact situation of this case and confined to the assessment years 1994- 1995 and 1995-1996 only and would not apply or be of any avail to the respondent for the subsequent assessment years, in view of the amendment effected in the C APGST Act.”

17Copy pinpoint17. Before concluding this segment pertaining to the decided cases, we may also take note of the decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra) which had all through been relied upon by the respondent for the reason that therein, a substantially similar D product was held to be a medicament. In fact, in the said decision, the Tribunal examined the questions relating to two products namely, “Sunny Arnica Hair Oil” and “Sunny Arnica Shampoo”. As regards the issue concerning the product shampoo, the Tribunal remanded the matter to the lower authority for decision afresh but, as regards hair oil, the Tribunal E upheld the contention of the assessee in terms of the opinion of the majority and held that the said product was answering to the description of Homeopathic medicine while predominantly applying the tests pertaining to the ingredients. In the leading opinion, the learned Member of the Tribunal extensively referred to the individual properties of Homeopathic medicines as also the other natural ingredients of the product. The learned Member further underscored the connotations of Homeopathy system of medical treatment as also the therapeutic and prophylactic properties of the 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 H

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A 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. B 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 C cosmetic preparation or for use on hair under sub-heading 3505.90 of the Central Excise Tariff, as they are not intended for cleansing, beautifying, promoting attractiveness or altering appearance in terms of the Hon’ble Supreme Court judgment in the case of B.P.L. Pharmaceuticals Ltd. but they are meant for specific treatment for dandruff of D other skin and hair problem. Therefore, the appellant’s contention for treatment as a medicament having homoeopathic ingredients and considered as homoeopathic medicine is required to be accepted for classification under TI 14E of erstwhile tariff and under sub-heading 3003.30 E of the new tariff.” (emphasis supplied)

18Copy pinpoint18. We may usefully summarise the discernible principles from the cited decisions as also the other referred orders, so far relevant for the purpose of determination of points arising in this appeal as follows: F 18.1. As regards the question as to whether the product in question, AHAHO, merits classification as ‘medicament’ under Chapter 30 or as ‘cosmetic or toilet preparations’ under Chapter 33, the inquiry shall be directed towards a couple of tests taken together, being the common/ commercial parlance test i.e., how the product is understood commonly, G including by the persons dealing in the same and by the end-users; and the ingredients test i.e., whether the ingredients used in the product are found mentioned in authoritative textbooks [vide Shree Baidyanath Ayurved Bhavan Ltd. (supra)]. The connotations of common parlance test could further be understood from the case of Alpine Industries H (supra), that the primary object of such taxing statute being to raise

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 339 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

revenue and various products being differently classified for that purpose, the entries are not to be understood in their scientific and technical meaning; rather the terms and expressions used in tariff have to be understood by their popular meaning, that is the meaning attached to them by those dealing with or using the product. Further, as observed in G.C. Jain (supra), the words and expressions, unless defined in the statute have to be construed in the sense in which persons dealing with them understand i.e., as per trade understanding and usage. Yet further, there is no fixed test or static parameter for correct classification of a product and it essentially depends on the meaning assigned to it by the persons concerned with it. One of the essential factors for determining 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 D 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 prevention of disease (medicament) or for care (cosmetic); and the preparation having only subsidiary curative or prophylactic value would fall under Chapter 33 [vide Alpine Industries and Sunny Industries (supra)]. 18.2. Ordinarily, we would not have delved into another decision of the Tribunal but have found it appropriate to refer to the said decision in the case of Bakson Homeo Pharmacy (supra), which had all through been relied upon by the respondent, for the reason that it related to a similar product marketed in the name of “Sunny Arnica Hair Oil”, which was held to be a ‘medicament’. The said decision has also been relied upon by the Tribunal in the order impugned. The significant feature H

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A of the said decision is that therein, in the leading opinion of majority, ingredient test has extensively been dealt with and the medicinal qualities; and therapeutic/prophylactic use of several of the ingredients have been analysed, which include all the ingredients of the product involved in the present case14. B 18.³. As regards the question of justification for re-classification or re-examination of the classification, this Court has clearly held that there is no good reason to change the classification merely on the ground of change of tax structure or tariff entries without showing a change in the nature and character of a product or a change in the use of the product [vide the decisions in BPL Pharmaceuticals and Vicco C Laboratories (supra)]. As noticed in Shree Baidyanath Ayurved Bhavan Ltd. (supra), this Court rejected the contentions seeking reclassification of the product in question therein, DML, after enactment of new Tariff Act because the product in its composition, character and uses continued to remain the same even after insertion of new Sub- D Heading 3301.30.

19Copy pinpoint19. 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 E 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

20Copy pinpoint20. 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

14 It appears from the facts of the present case and the observations occurring in the said case of Bakson Homeo Pharmacy (supra) that all the ingredients of the product G involved in the present case (AHAHO) were equally the ingredients of the product under consideration therein, namely, Arnica Montana, Cantharis, Pilocarpine, Cinchona. As noticed from the relevant pages of Materia Medica placed before us, in the Homeopathic terminology, Cinchona Officinalis is also termed as China Officinalis; and Pilocarpine is essentially isolated from Jaborandi. The similar product involved in Bakson Homeo Pharmacy (supra) was said to be containing the ingredients Arnica H Mont, Jaborandi, Cantharis and China, apart from other ingredients.

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 341 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

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 label and observed that it did not contain any condition like “to be sold by authorized medical distributor or retailer under prescription from medical practitioner” even though such a mention was a mandatory requirement under the Act of 1940; and it did not contain any specification regarding the dosage to be used and the duration for which it is to be used, which is the norm for a medicament. The Adjudicating Authority yet further observed that there was no claim that the product could cure any particular disease like Alopecia (loss of hair); C that the medical conditions like Alopecia actually tend to happen all of a sudden with patches of baldness not only on the head but anywhere on the body; and that Insomnia was a medical condition resulting in sleeplessness due to stress and other neurological disorders. According to these observations, non-mention of Alopecia or Insomnia on the labels indicated that the product was not meant for any substantial curative purpose. The Adjudicating Authority also observed that by mentioning no contra-indications, it implied that irrespective of the quantum or duration of usage, there was no adverse effect on the scalp or skin, which was against the basic concept of a medicament, which is prescribed or used for a limited period and overdose is known to result in contra-indications like diarrhoea, acidity, ulceration, rashes etc. The Adjudicating Authority further observed that the label neither contained a positive indication that it was a medicament nor a negative indication that it was not a cosmetic but it was certainly labelled as a “Hair Oil”; and if the intention was to identify the product as medicament, there was no need to label it as “Hair Oil”. Hence, the Adjudicating Authority held that AHAHO could not be categorized as a medicament but had to be classified as “Hair oil”. As regards common parlance test, the Adjudicating Authority observed that AHAHO was accessible in both Medical and General Stores and could be bought across the counter. Moreover, the depiction of a lady with long, black flowing hair on its label indicated its categorisation as cosmetic and not as a medicament. The Adjudicating Authority even proceeded to observe that ‘Hair growth is at best a cosmetic necessity rather than a disease requiring immediate attention or treatment’. The Adjudicating Authority also observed that the drug licenses issued by respective authorities, per se did not make H

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A 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, B 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, C 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 the product in question for, a specific entry would take precedence over a general entry. The ASG has contended that the common parlance test of the product is not in favour of the respondent, as the product is not prescribed by any medical practitioner, is available freely without any prescription in Medical and General Stores, and could be purchased across the counter, as admitted by the respondent. Moreover, the label does not indicate the condition of sale by authorised medical distributor or retailer under prescription; it does not cure any particular disease; and the claims on the label are for marketing purposes only. The learned ASG has relied upon the decision in Alpine Industries (supra) 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. Learned ASG has also submitted 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 hair oil (cosmetic) and not as medicament. G 20.2. In contrast to what has been observed by the Adjudicating Authority and what has been argued by learned ASG, it is noticed that in the very first response to the show-cause notice, the respondent asserted that the twin tests for classification of the product as ‘medicament’ were duly satisfied in relation to its product AHAHO in view of the facts and factors: (i) that the manufacturing process, undertaken in terms of the H

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 343 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

manufacturing license issued by the Drug Controller and by the A Directorate of Ayush, would indicate the presence of four homeopathic drugs in the product namely, Arnica Montana, Cantharis, Pilocarpine and Cinchona; (ii) that the drugs so used are mentioned in the authoritative text books like Materia Medica of Homeopathic Drugs; (iii) that its label indicated the words “Homeopathic Medicine” under Schedule K to the B Rules of 1945; (iv) that the product is to be applied to the scalp and not consumed orally; it would cure/prevent the lack of blood circulation to the hair roots, hair fall (alopecia), dandruff, headache and lack of sleep (insomnia), and healing from the said diseases would lead to good health in terms of growth and maintenance of natural colour in the hair; and (v) that the product was a medicament in terms of market parlance, evidenced by its use over 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 hair care or enhancing beauty of hair; that the label indicated the product as Homeopathic medicine under Schedule K to the Rules of 1945, ingredients and their composition, indications, contra-indications and mode of application and such contents of label itself showed that even in common parlance, it was understood by the users and the traders as Homeopathic medicine; that there was no advice on the label nor did it suggest that it could be used as hair oil; and indisputably, the product was made of four Homeopathic medicines as ingredients namely Arnica Mont, Cantharis, Pilocarpine and Cinchona and was used to treat hair loss, insomnia, dandruff, headache and other ailments; and the product H

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A was manufactured under Drug Licence issued under the relevant rules which had been renewed from time to time by the Additional Director & Drug Controller (Homeo), Department of Ayush, Government of Telangana; that even as per analysis report of Drug Controller, Department of Ayush, the product was medicine; the product was covered by Serial No. 35 of Schedule K to the Rules of 1945 (Homeopathic Hair oils B having active ingredients upto 3X potency) and the said Schedule covered only drugs and not cosmetics. The Tribunal also observed that the product had already been held to be drug by the Andhra Pradesh High Court in reference to Commercial Taxes; and the Advance Ruling Authority of Commercial Taxes, Government of Tamil Nadu for the purpose of C TNVAT Act 2006, held the product to be a Homeopathic medicine. The Tribunal also took note of the fact that even in the past, the respondent was issued show-cause notices for classification of the product 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 was a Homeopathic medicine. The Tribunal distinguished D the case of Shree Baidyanath Ayurved Bhavan (supra) while observing that the product in question therein did not satisfy the common parlance test and the said product DML was known as toilet preparation in common parlance and not as Ayurvedic medicine. The Tribunal further pointed out that the decision of this Court in the case of Alpine Industries (supra) E was not applicable as in the said case, the drug license obtained by the assessee under the Drugs and Cosmetics Act, 1940, itself mentioned that it was a license for ointment and cream for external application as a non-pharmacopoeia item whereas in the present case, the product was registered as Homeopathic Medicine. F 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”.

21Copy pinpoint21. 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.

22Copy pinpoint22. Taking up the test relating to the ingredients, there appears absolutely no reason to suggest that the product in question, AHAHO,

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 345 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

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A 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 requiring immediate attention or treatment! The Tribunal has rightly observed that when hair fall or baldness is recognised as a medical condition, the Adjudicating Authority could not have taken a different view, which was not recognized by any branch of medicine. The Tribunal has also rightly pointed out that the product clearly mentioned that it could be used for other ailments like headache and that it induces good sleep. 22.³. Moreover, the Adjudicating Authority seems not to have given adequate attention to the contents of Chapter 30 and the fact that for being accepted as medicament, the product is not invariably required to carry only therapeutic use. A product having prophylactic use is also envisaged under the Headings 3003 and 3004. If the product claims to improve blood circulation to the hair roots and thereby controlling hair fall, its prophylactic use cannot be gainsaid. 22.4. The product in question, being undoubtedly covered by Serial No. 35 of Schedule K to the Rules of 1945 and being manufactured in terms of the license issued under the Act of 1940, in our view, clearly satisfies the ingredients test. In other words, on its ingredients, the product is indeed a medicament carrying the combination of Homeopathic medicines.

23Copy pinpoint23. In regard to the overt reliance of the appellant on the expression H “Hair Oil” used for the product by the respondent, it may also be observed

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 347 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

that small doses of the medicines in question would invariably require A some medium of administration. Learned counsel for the respondents has rightly submitted that in relation to the product in question, hair oil is only a medium through which the medicine is to be applied on the scalp, particularly when it is meant for nourishing the hair roots. 23.1. It is also apparent in the present case that the stand of the B Department to classify the product in question as ‘cosmetic’ under Chapter 33 is essentially based on the distinct entry “Hair Oil” occurring therein; and it appears that the expression “Hair Oil” occurring on the label of the product has been taken as decisive by them. For what has been discussed hereinabove, it would also follow as a natural corollary that the expression “Hair Oil” occurring on the label of the product is C only indicating the medium through which Homeopathic medicines comprising the product are to be applied. We are unable to accept the submissions and the 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 D “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 E 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, F 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 before us. Therein, this Court was considering a product G sold by the assessee under the brand name “Selsun shampoo”. This Court found it to be medicament with reference to a variety of tests applied from different angles and after finding that its active ingredient was selenium sulfide. In that context, this Court also indicated that an individual using such product may not be prepared to say that he or she H

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A was using a particular compound to get rid of dandruff or other similar diseases but would not hesitate to state that he or she was using a particular brand of shampoo. The observations in BPL Pharmaceuticals in this regard correlates with ingredient test as also the common parlance test; and in our view, fortify the case of the respondent. B 23.³. The submissions about specific entry to be preferred to the general entry do not take the case of appellant any further. In the present case, in fact, the referred entry of Chapter 33 relating to the Tariff Item ‘Hair oil’ under the Heading 3305 is itself to be taken as a general entry and in any case, when hair oil is being used only as a medium for use/ administration/application of the medicine, the case would fall in the specific entry pertaining to medicament under Headings 3003 or 3004; and it being of the medicines of Homeopathic system, it would fall either in Tariff Item 3003 90 14 or in Tariff Item 3004 90 14. In any case, the product in question cannot fall under Chapter 33.

24Copy pinpoint24. As observed, we have considered it appropriate to refer to the said decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra), which had all through been relied upon by the respondent for the reason that it related to a similar product marketed in the name of “Sunny Arnica Hair Oil”. The said decision clearly makes out the ingredient test in favour of the respondent and we are satisfied with the detailed analysis of the same ingredients by the Tribunal while holding the product to be a medicament. The ingredient test, as extensively dealt with in the leading opinion of majority of the Tribunal in the case of Bakson Homeo Pharmacy (supra), with reference to the fundamental principles of Homeopathy and the medicinal properties and therapeutic/ prophylactic use of several of the ingredients, inspires confidence and when AHAHO is found carrying all such Homeopathic medicines which were the ingredients of the product under 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. G Suffice it would be to observe that the product in question, AHAHO, passes the ingredients test beyond any doubt.

25Copy pinpoint25. 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 H Adjudicating Authority had been that AHAHO was accessible in both

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 349 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Medical and General Stores and could be bought across the counter. A 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 B that a product may be medicinal without having been prescribed by a medical practitioner. In Meghdoot, this Court has also made it clear with reference to other decided cases that the items which may be sold under names bearing a cosmetic connotation would nevertheless remain medicines based on the composition. Viewed from any angle, merely for being available across the counter, the product in question, AHAHO, C does not cease to be a medicament.

26Copy pinpoint26. Another essential feature while examining the question as to whether a particular product is classifiable as medicament under Chapter 30 or as cosmetic under Chapter 33 would be as to whether the preparation is essentially for cure or prevention of disease i.e., with therapeutic or prophylactic properties or only for care. Tersely put, 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). However, the product in question, AHAHO, does not fail on this count for the reason that it is a preparation of Homeopathic medicine and when it is marketed as carrying those medicines, in commercial as also common parlance, with its name carrying the significant expressions “Homeo” and “Arnica”, the product could only be understood as the one carrying predominantly pharmaceutical value and not mere cosmetic value. F

27Copy pinpoint27. The other suggestion on behalf of the Adjudicating Authority and the appellant, relating to the common parlance test with reference to the depiction of a lady with long black flowing hair on its label and thereby treating it as cosmetic, is also stretching the matter to the brink of absurdity. When the product in question is intended to control hair fall G as also to prevent dandruff and to induce good sleep, which all carry their own therapeutic and prophylactic connotations, the picture of a lady with long black flowing hair cannot be said to be unrelated to the indications related with the product. In any case, such a picture, by itself, cannot make the product in question a cosmetic. Interestingly, right at the top of the said picture and below the name of the product, it proclaims H

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A “Controls hair fall. Prevents dandruff”. The Adjudicating Authority has taken his process of analysis to further illogical heights by proclaiming that hair growth was at the best a cosmetic necessity rather than a disease requiring immediate attention or treatment. 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.

28Copy pinpoint28. 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 test as also the ingredients E test, this factor carries its own relevance even if not finally decisive of the matter. The submission about want of condition of sale by authorised medical distributor or retailer under prescription has its own shortcomings for it has not been shown if such a preparation falling under Schedule K to the Rules of 1945 was also requiring such a mention in terms of Rule

F 97. In any case, any such requirements for adherence to the Act of 1940 and the Rules of 1945 could only be a matter for consideration of the authorities dealing with licensing and regulating the manufacture and sale of drugs. The only relevant aspect for the present purpose is that the product in question being manufactured as a Homeopathy medicine, and being marketed and used as a Homeopathic medicine for its G pharmaceutical value, would fall in Chapter 30 and cannot be branded as cosmetic, so as to fall under Chapter 33 of the First Schedule to the Act of 1985.

29Copy pinpoint29. In the passing, we may also observe that the very product in question, in relation to the entry in the Andhra Pradesh General Sales H Tax Act, 1957, has been accepted by this Court to be answering the

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 351 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

description of a medicine and not being a cosmetic product, after it was A found that the respondent-assessee’s assertion about its ingredients and thereby the product qualifying to be a drug within the meaning of Section 3 of the Act of 1940 could not be refuted by the Revenue. The said decision of this Court may not have a direct bearing on the question of classification of the product in question for the purpose of the Act of B 1985 but, it cannot be denied that the product in question has been found answering to the description of a ‘drug’ for the purpose of the Act of 1940 as also for the purpose of the said Andhra Pradesh General Sales Tax Act, 1957. Viewed from any angle, it remains a medicament. Whether re-look at classification of the product in question justified C

30Copy pinpoint30. For what has discussed hereinabove, it is apparent that the product in question had rightly been classified as ‘medicament’ in the past and nothing material had changed so as to re-classify the same. However, the Revenue has attempted to rely on the amendment of the tariff structure in the year 2012 as justification for re-look at its classification. The Adjudicating Authority stated this justification in the manner that there were substantial 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 respondent, AHAHO, is concerned.

31Copy pinpoint31. In support of the proposition for re-classification, the decision in Andhra Sugar Ltd. (supra) has been cited on behalf of the appellant. H

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A We have extracted the relied upon paragraph of the said decision hereinbefore and it is difficult to accept that the proposition therein, to the effect that the meaning ascribed by the authorities issuing Notification is a good guide of a contemporaneous composition of exposition of law, has any application to the present case. The applicable principles, as noticed from the decisions in BPL Pharmaceuticals and Vicco B Laboratories (supra) remain that change of classification cannot be countenanced merely on the ground of coming into force of different tax structure without showing that the product has changed its character. The decision in Shree Baidyanath Ayurved Bhawan (supra) is pertinent to the point wherein, after an unsuccessful attempt to have the product C DML accepted as a medicinal preparation (in Baidyanath I), the assessee-company made another attempt for change of classification after coming into force of the Act of 1985. While rejecting such an attempt on the part of the assessee-company, this Court held that since the product in its composition, character and uses continued to be the same, even after insertion of new Sub-Heading 3301.30, change in D classification was not justified (vide paragraph 58 of the decision in Shree Baidyanath Ayurved Bhawan, reproduced hereinbefore). Thus, mere broad-basing of the entries in Chapter 30 and Chapter 33 of the First Schedule to the Act 1985, by itself, could not have been the justification for an attempt at re-classification of the product in question.

32Copy pinpoint32. Even as regards the amendment of the entries, as noticed, the stand of the appellant-Revenue has been that Chapter 30 was 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 sales or not. Further, it has been stated that F reference to the Act of 1940 and various pharmacopoeia had been deleted. Thirdly, it has been contended that in Chapter 33, the phrase hair oil had become prominent with subsidiary entries of perfumed hair oils and other. We could only reject such an attempt on the part of the Revenue as a hair-splitting exercise, away and detached from the substance. This is apart from the fact that the specification of medicament under Heading G 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 H (as could be seen from the entries extracted hereinbefore), it could never

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 353 HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

be taken to mean that anything which is prepared for being used on the A 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. B 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 uses put up in measured doses or in form of packing for retail sale. Viewed thus, we are inclined to accept the submissions on behalf of the respondent that even with reference to its packaging, the product AHAHO would remain a homeopathic medicament and would be covered under Chapter 30, where it could be placed in Sub-Heading 3004 90 14. Similarly, deletions of the reference to the Act of 1940 or to various pharmacopoeia cannot be interpreted to mean that a product like the one in question, which is otherwise a medicament, has to be classified on the basis of the base through which the application of medicine is being provided.

33Copy pinpoint33. We have already discussed hereinabove that with application of the relevant principles, the product in question, AHAHO, comes clean through the twin test. Therefore, in the ultimate analysis, we are clearly of the view that 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. Conclusion F

34Copy pinpoint34. For what has been discussed hereinabove, answers to the points arising for determination are that the product in question, 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 G by way of amendment brought about in the year 2012 did not justify any re-look at the classification of the product in question.

35Copy pinpoint35. In view of the above, this appeal fails and is, therefore, dismissed. No costs. H Nidhi Jain Appeal dismissed.