Important PointIn order to determine whether a product is a cosmetic or a medicament and twin test would be whether the item is commonly understood as a medicament and that are the ingredients used in the product mentioned in the authoritative text books on Ayurveda.

Headnote:Central Excise Tariff Act, 1985—Chapter 33—Cosmetics—Chapter 30—Medicaments—Appellant manufactured Ayurvedic products and question was if it fell in category of medicaments or cosmetics—Twin test determinative for the issue involved were; whether item was commonly understood as a medicament and whether ingredients used in product were mentioned in authoritative text books on Ayurveda—Burden of showing correct classification was on revenue—Opinion of Chief Chemist was of no relevance for determining classification of the product—Opinion of Directorate of Ayurved, State was of great relevance and Directorate opined that products in question were meant for treatment of certain skin diseases and type of ingredients used in the product were described in Ayurvedic Texts—Extent or quantity of medicament used in a particular product will not be a relevant factor—Preparations falling in Chapter 33 even if they had therapeutic or proplylactic properties will not fall under Chapter 30.
       Held : In order to determine whether a product is a cosmetic or a medicament a twin test has found favour with the Courts. The test has approval of this Court also vide Collector Vs. Richardson Hindustan Ltd. [1989(42) ELT A100 (SC) 2004 (9) SCC 156. There is no dispute about this as even the Revenue accepts that the test is determinative for the issue involved. The tests are :
       I. Whether the item is commonly understood as a medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it 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. 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.
       II. Are the ingredients used in the product mentioned in the authoritative text books on Ayurveda? (Para 2)
       Now we will take up each item of the products of appellant and examine as to under which classification they fall. The products at Serial Nos. 1, 2, 3, 4, 7, 9, 10 & 11 viz. Puma Neem Facial Pack (Neemal), Puma Anti-Pimple Herbal Powder (Pimplex), Puma Herbal Facial Pack (Herbaucare), Puma Herbal remedy for Facial Blemishes, Puma Hair Tonic Powder (Sukeshi), Puma Anti-Dandruff Oil (Dandika), Puma Shishu Rakshan Tel and Puma Neem Tulsi are clearly medicinal products and are intended to treat certain medical conditions of the human body and therefore, in view of the above tests, are liable to be classified as medicaments falling under Chapter 30 and Note 3003.20/3003.30 Items at Serial No. 5, 6 and 8 viz. Puma Herbal Massage Oil, Puma Herbal Massage Oil for Women and Puma Scalp Tonic Powder (Scalpton) however do not appear to be of any medicinal property and it is difficult to classify them under the head of medicament. In fact the learned counsel for appellant conceded that these three items do not qualify to be treated as medicaments. Therefore, the same will be liable to be classified as "cosmetic" under Chapter head 33.04. Regarding these 3 items the matter will have to go to the Assistant Collector for quantification of the duty for the relevant period. Subject to this, the appeals are allowed. (Para 28)

Judgment

Arun Kumar, J.—The appellant claims to be a manufacturer of Ayurvedic products which are intended to cure certain ailments of the human body. A question has arisen as to whether the products manufactured by the appellant fall within the category of medicaments or cosmetics. Answer to this question determines as to whether the goods are classifiable under the Central Excise Tariff Act, 1985 as cosmetics under Chapter 33 or as medicaments under Chapter 30. As cosmetics the rate of excise duty is quite high while as medicament the products attract nil duty. The following products manufactured by the appellant are under consideration :

1. (xvii) Puma Neem Facial Pack (Neemal)

2. (xviii) Puma Anti-Pimple Herbal Powder (Pimplex)

3. (xix) Puma Herbal Facial Pack (Herbaucare)

4. (xx) Puma Herbal remedy for Facial Blemishes

5. (xxi) Puma Herbal Massage Oil

6. (xxii) Puma Herbal Massage Oil for Women

7. (xxiii) Puma Hair Tonic Powder (Sukeshi)

8. (xxiv) Puma Scalp Tonic Powder (Scalpton)

9. (xxv) Puma Anti-Dandruff Oil (Dandika)

10. (xxvi) Puma Shishu Rakshan Tel

11. (xxvii) Puma Neem Tulsi.

2. The appellant has a licence to manufacture these and other products from the Drug Controller under the Drugs and Cosmetics Act. According to the learned counsel for the appellant all the above items are produced from ingredients found in Ayurveda text books. They are manufactured as per the Ayurveda pharmacopaeia and have curative, therapeutic or prophylactic value. They are basically meant to give relief in body ailments. They are not items of cosmetics. In order to determine whether a product is a cosmetic or a medicament a twin test has found favour with the Courts. The test has approval of this Court also vide Collector Vs. Richardson Hindustan Ltd. [1989(42) ELT A100 (SC) 2004 (9) SCC 156. There is no dispute about this as even the Revenue accepts that the test is determinative for the issue involved. The tests are :

I. Whether the item is commonly understood as a medicament which is called the common parlance test. For this test it will have to be seen whether in common parlance the item is accepted as a medicament. If a product falls in the category of medicament it 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. 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.

II. Are the ingredients used in the product mentioned in the authoritative text books on Ayurveda?

3. The two tests are recognized even by the Central Board of Excise and Customs and the Board had vide its letters dated 3rd October 1991 and 5th December, 1991 directed the Assistant Collector to decide the classification of the products in question by applying the aforesaid two tests.

4. The learned counsel for the appellant has argued that the products of the appellant satisfy both the above tests and, therefore, the CEGAT was wrong in classifying them under Chapter 33 as cosmetics. According to the learned counsel the products in question have a special use. They are not items of common use. Only those who want to treat a particular ailment will go for the particular product of the appellant. The use of a product by the customers i.e. how the consumers take to a product is a very useful method of determining the classification of products. What is to be seen is whether the products are likely to be in common use by normal consumers. Common parlance meaning and understanding is a strong factor in the determination of classification of products. One need not resort to scientific or technical meaning of the terms used.

5. So far as the other test is concerned, the learned counsel for the appellant has placed on record material from the Ayurvedic t

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2006 Supreme(SC) 217

Important PointIn order to determine whether a product is a cosmetic or a medicament and twin test would be whether the item is commonly understood as a medicament and that are the ingredients used in the product mentioned in the authoritative text books on Ayurveda.

Cases Referred (9)