Judgment

K. VENKATASWAMI, J.

(1) THESE two appeals preferred under Section 35-L of the central Excises and Salt Act, 1944 are directed against the orders of the Customs, Excise and Gold (Control) Appellate tribunal (hereinafter referred to as the CEGAT for short) in Orders Nos. 336 and 337/93-C dated 29/10/1993. By the orders impugned, the CEGAT has upheld the classification of the product manufactured by the appellants on behalf of their principals, Abbott Laboratories (India) Limited, Bombay and marketed under the brand name Selsun (hereinafter called as the product) as a cosmetic under Sub-heading 3305.90.

(2) BRIEF facts are the following: The appellants have a factory at 39 GIDC, Vapi, Bulsar and are engaged in the manufacture of "Selenium Sulfide Lotion USP" containing 2.5 Selenium Sulfide w/v. The said product was manufactured by the appellants under a loan licence from the Abbott Laboratories in accordance with Abbotts specifications, raw materials and packing materials and quality control. The said product was sold under the Abbott Laboratorys brand name Selsun. It is claimed that Selenium Sulfide is the only active ingredient and it is used in the required therapeutic quantity, i.e. 2.5 w/v and the other ingredients merely serve the purpose of a bare medium. It is not seriously disputed that the product namely, Selsun is prescribed by physicians for the treatment of skin diseases known as "Seborrhoeic Dermatitis" commonly known as dandruff and "Tinea Versicolour" which is caused by an organism known as "Pityriasis Versicolour". This product has been described and held out to be a drug or a medicinal product and is not held out to be a cosmetic or toilet preparation. In support of this claim, the appellants have produced the label and the literature connected with this product. Details in the label and also the literature will be referred to at the appropriate place. It is also claimed that this product is considered to be an ethical product in medical literature and the same should be used under medical advise.

(3) IT is also claimed that the product is manufactured under a drug licence dated 20/9/1981 issued by the Food and Drug Administration. The said Administration has given a certificate certifying that Selsun is a drug within the meaning of Section 3(b) of the Drugs and Cosmetics Act. It is the case of the appellants that Selsun is not available in the departmental stores, but only with chemists who have a licence under the Drugs and Cosmetics Act to sell the same. Abbott Laboratories send their literature only to physicians for their recommendations to their patients. To support the stand taken by the appellants that the product is a drug/medicine they have filed affidavits of chemists staling that the product is a patent and proprietary product and that the chemists require a valid drug licence to buy, stock and sell the same. Normally it is sold to the customers who come with a prescription for Selsun from a registered medical practitioner. In addition to that, the appellants have also filed letters from doctors and users of the product specifically staling that Selsun is a useful product in the treatment of the diseases already mentioned above.

(4) IT is an admitted fact that this product prior to 28/2/1986 (i.e. before the coming into force of the central Excise Tariff Act, 1985 was classified as a drug under Item 14-E of the First Schedule to the central Excises and Salt Act, 1944. As a matter of fact an issue was once raised whether the product in question would fall under the head medicine or cosmetic and the central Board of Excise and Customs by its detailed and exhaustive order dated 17/1/19811 held that the product was a drug or a medicine and the reasons for coming to that conclusion as given by the Board will be referred to later on while discussing the issue.

(5) AFTER the coming into force of the central Excise Tariff Act, 1985, the appellants f