Puma Ayurvedic Herbal (P) Ltd Vs. Commissioner,
Central Excise, Nagpur  Insc
121 (8 March 2006)
Ashok Bhan & Arun
WITH CIVIL APPEAL NOS.1414-1416/2004 Arun
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:
Facial Pack (Neemal)
(xviii)Puma Anti-Pimple Herbal
(xix) Puma Herbal Facial Pack (Herbaucare)
xx) Puma Herbal remedy for Facial
(xxi) Puma Herbal Massage Oil
(xxii) Puma Herbal Massage Oil for
(xxiii) Puma Hair Tonic Powder (Sukeshi)
(xxiv) Puma Scalp Tonic Powder (Scalpton)
(xxv) Puma Anti-Dandruff Oil (Dandika)
(xxvi) Puma Shishu
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 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:
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.
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.
Are the ingredients used in the
product mentioned in the authoritative text books on Ayurveda?
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.
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.
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
as the other test is concerned, the learned counsel for the appellant has
placed on record material from the Ayurvedic texts or
Pharmacopoeia in support of each product which is subject matter of the present
appeal to show that the ingredients of each product are independently mentioned
in the Ayurvedic texts. The ingredients are natural Ayurvedic product like shrubs, herbs, leaves, fruits, nuts,
flowers, wood and bark of particular trees. In support of his contention the
learned counsel for the appellant placed before the departmental authorities
lot of material in the shape of certificates and letters from doctors, Ayurvedic practitioners, experts and above all from the
users of the products in question.
Collector (Appeals) who decided the issue in favour
of the appellant among other things, relied on the opinion obtained by the
Assistant Collector as per Board's Circular from the Directorate of Ayurveda Maharashtra, Bombay vide
their letter No.AYURVEDIC- 2/Misc/PUMA/1989/10563
dated 1.12.89 which is quoted as under:
reference to your letter dated 12.9.89 on the subject opted above, the samples
of products of M/s. Puma Ayurvedic Herbals (P) Ltd., Nagpur (i.e.11 items) were referred to Dravyaguna
Department of one of our institution for carrying out tosts.
These items were tested by Organoloptic Method.
Now the Professor and Incharge of Dravyaguna Department
has opined that the raw materials used for preparation
of the above items are described in Ayurvedic texts.
As such, all ingredients are Ayurvedic raw material.
Treatment of certain skin diseases is done by Lep, Pralep and Pradheh. This type of
treatment is described in Ayurvedic Texts.
In view of the above, the samples of
11 items sent by you vide your letter under reference can be classified as
"Proprietary Ayurvedic Medicines".
opinion coming from a competent and authorised source, is of great relevance so far as the case in hand is
concerned. Besides this the evidence produced by the appellant before the
authorities in the shape of letters from consumers, from doctors and from Ayurvedic physicians satisfies the common parlance test.
other hand the revenue led no evidence of any sort to rebut the evidence led by
the assessee. It is settled law that burden of
showing correct classification lies on the revenue. The revenue has done
precious little in this case to discharge this burden. The Collector (Appeals)
further relied on the following evidence in support of his finding that the
products in question fall in the category of medicaments:
licence No.A/40/888 granted by the Drug
inscription of the words on the wrapper "Ayurvedic
Proprietory medicines or and Ayurvedic
licence No.A/888 on the wrapper mentioning of
percentage of ingredients as approved by the Drug Controller.
of Therapeutic Index of the products for the use of Doctors/Vaidyas.
issued by Dr. Narendra Agashe,
M.D. Medical Superintendent, Dr. Dalvi Memorial
Hospital, Nagpur, the relevant extract of which is
is to certify that we in this hospital have extensively tried the following Ayurvedic Medicinal Products from Puma Ayurvedic
& Herbal Cosmetics Co., Nagpur. We have found them to be of good therapeautic value and prescribe them regularly whenever
the need arises." We may note here that the Chief Chemist had opined about
the classification of these products under the Chapter 233 i.e.
"Cosmetic" but the opinion of the Chief Chemist on the question of
classification has no relevance. We agree with the Collector (Appeals) that the
opinion of the Chief Chemist has no relevance for determining classification of
the products. The role of the Chief Chemist is only to supply the analytical
other hand the opinion of the Directorate of Ayurved,
Maharashtra referred to above is of great relevance. The said
Directorate has clearly and unambiguously stated that the products in question
are meant for treatment of certain skin diseases and the type of ingredients
used in the products are described in Ayurvedic
texts, being useful in such treatments.
learned counsel for the appellant drew our attention to certain decisions of
this Court wherein Ayurvedic products have been held
to be falling in Chapter 30 of the Central Excise Tariff Act, 1985 and not
under Chapter 33. In C.C.E. vs. Sharma Chemical Works 2003 (154) ELT 328 it was
held that the onus to prove that a particular product falls under a particular
head of the Central Excise Tariff is on the Revenue. It was for the Revenue to
show and establish that the product in question was not a medicament or that
the common man did not understand the product as a medicament. In the present
case the Revenue has miserably failed to discharge this burden.
C.C.E. vs. Sharma Chemicals Works 2003 (154) ELT 328 this Court was considering
whether "Banphool oil" could be classified
as medicament. The product was a hair oil and all its
ingredients were said to be Ayurvedic which were
found in Ayurveda text books. It had 98% Til oil and 2% Camphor, Amla and Chandan (sandalwood). It
was found that all the ingredients of the hair oil were mentioned in Ayurveda text books and, therefore, the product was liable
to be classified as medicament.
vs. Pandit D.P. Sharma 2003 (154) ELT 324 was again a
case of hair oil named "Himtaj Hair Oil".
The Court emphasized the common parlance test and found that a common man
understood the said hair oil as a medicinal hair oil and not hair oil of common
use as a hair oil. Accordingly, this Court upheld its
classification as a medicament.
Naturalle Health Product
(P) Ltd. vs. C.C.E. 2003 (158) ELT 257.
appeals were under consideration in this case. One was with respect to Vicks Vapo Rub and Vicks Cough Drops while the other was with
respect to Sloan's Balm and Sloan's Rub. Both the appeals were allowed holding
that the items in question were classifiable under the Chapter dealing with
medicament in the Central Excise Tariff Act. In this case this Court followed
the twin test earlier upheld by this Court in C.C.E vs. Richardson Hindustan
Ltd. 1989 (42) ELT A100. Further this Court observed:
We are also of the opinion that when there is no definition of any kind in the
relevant taxing statute, the articles enumerated in the tariff schedules must
be construed as far as possible in their ordinary or popular sense, that is,
how the common man and persons dealing with it understand it. If the customers
and the practitioners in Ayurvedic medicine, the
dealers and the licensing officials treat the products in question as Ayurvedic medicines and not as Allopathic medicines, that
fact gives an indication that they are exclusively Ayurvedic
medicines or that they are used in Ayurvedic system
of medicine, though it is a patented medicine.
is especially so when all the ingredients used are
mentioned in the authoritative books on Ayurveda. As
rightly contended by the Counsel for the appellants, the essential character of
the medicine and the primary function of the medicine is
derived from the active ingredients contained therein and it has certainly a
bearing on the determination of classification under the Central Excise Act. As
held in Amruthanjan case, the mere fact that the
ingredients are purified or added with some preservatives does not really alter
their character." In Amritanjan vs. C.C.E. 1995
(77) ELT 500(SC) this Court held that Amritanjan Pain
Balm having Menthol IP, Camphor IP, Turpantine IP and
Methyl IP, Salicylate IP as main ingredients, was
classifiable as Ayurvedic medicine under Chapter 30
of the Tariff. It was noticed that the ingredients were known both to Ayurvedic and western sciences. Still the classification as
medicament was upheld.
vs. C.C.E. (1995) Suppl.3 SCC 1 was a case in which "Selsun
Shampoo" was under consideration for purposes of classification under the
Tariff Act. According to the manufacturers this shampoo was a medicated shampoo
meant to treat dandruff which is a disease of the hair. This Court held that
having regard to the preparation, label, literature, character, common and
commercial parlance, the product was liable to be classified as a medicament.
It was not an ordinary shampoo which could be of common use by common people.
The shampoo was meant to cure a particular disease of hair and after the cure
it was not meant to be used in ordinary course.
& Phipps (India) Ltd .vs. C.C.E. 2004 (167) ELT374
was a case of Johnson Prickly Heat Powder. This powder was again held to be a
medicament because it was not an ordinary talcum powder but a powder to be used
to get rid of the problem of prickly heat. Similar was the case reported in
1999 (112) ELT 22 Manisha PharmaPlasto
Pvt. Ltd. vs. .Union of India. In this case the product under
consideration was Nycil Prickly Heat Powder. The
ingredients whereof were Chlorphensesin IP - 1% w/w
Zinc Oxide IP - 16% w/w Starch IP - 51% w/w Talc Purified IP to - 100% w/w The
powder was held to be not an ordinary talcum powder but one falling in the
category of medicament.
we were referred to Dabur (India) Ltd. vs. C.C.E. 2005 (182) ELT 290
(SC). This is a judgment of three Judge Bench of this Court and the products
under consideration were Janam Ghunti
and Lal Tail. Regarding Lal
Tail, this Court held that it was liable to be classified as medicament under
Chapter 30 as all its imgredients were found to be in
Ayurvedic texts. However, regarding other product the
matter was remanded for further consideration on basis of evidence to be
the above judgments it follows that the law is settled on the applicability of
the twin test for determination of classification of a product.
have already found that the twin test is satisfied in the present case
regarding most of the items under consideration.
word 'medicament' is not defined anywhere while the word "cosmetic"
is defined in the Drugs and Cosmetics Act, 1940 as under:
'cosmetic' means any article intended to be rubbed, poured, sprinkled or
sprayed on, or introduced into, or otherwise applied to, the human body or any
part thereof for cleansing, beautifying, promoting attractiveness, or altering
the appearance, and includes any article intended for use as a component of
cosmetic." It will be seen from the above definition of cosmetic that the
cosmetic products are meant to improve appearance of a person, that is, they
enhance beauty. Whereas a medicinal product or a medicament
is meant to treat some medical condition. It may happen that while
treating a particular medical problem, after the problem is cured, the
appearance of the person concerned may improve. What is to be seen is the
primary use of the product. To illustrate, a particular Ayurvedic
product may be used for treating baldness. Baldness is a medical problem. By
use of the product if a person is able to grow hair on his head, his ailment of
baldness is cured and the person's appearance may improve. The product used for
the purpose cannot be described as cosmetic simply because it has ultimately
led to improvement in appearance of the person. The primary role of the product
was to grow hair on his head and cure his baldness.
extent or the quantity of medicament used in a particular product will also not
be a relevant factor. Normally, the extent of use of medicinal ingredients is
very low because a larger use may be harmful for the human body. The medical
ingredients are mixed with what is in the trade parlance called fillers or
vehicles in order to make the medicament useful. To illustrate an example of
Vicks Vaporub is given in which 98% is said to be paraffine wax, while the medicinal part i.e. Menthol is
only 2%. Vicks Vaporub has been held to be medicament
by this Court in CCE vs. Richardson Hindustan Ltd. 1989 (42) ELT A100.
Therefore, the fact that use of medicinal element in a product was minimal does
not detract from it being classified as a medicament.
order to be a medicinal preparation or a medicament it is not necessary that
the item must be sold under a doctor's prescription. Similarly availability of
the products across the counter in shops is not relevant as it makes no
difference either way.
learned counsel for the respondent drew our attention to Note 2 of Chapter 33
of the Central Excise Tariff which is as under:
"Note 2. Heading Nos.33.03 to 33.07 apply, inter alia,
to products, whether or not mixed (other than aqueous distillates and aqueous
solutions of essential oils), suitable for use as goods of these headings and
put up in packings with labels literature or other
indications that they are for use as cosmetics or toilet preparations or put up
in a form clearly specialized to such use and includes products whether or not
they contain subsidiary pharmaceutical or antiseptic constituents, or are held
out as having subsidiary curative or prophylactic value." On the basis of
this Note it was argued that even if a product had some curative or
prophylactic value, it will still be cosmetic. We cannot accept this argument.
The learned counsel has overlooked the use of the word 'subsidiary' in the said
note from which it follows that a subsidiary curative or prophylactic use will
not convert a cosmetic into medicament. We have tried to illustrate this by
giving the example of bald man treating his baldness by use of Ayurvedic product. The curative use of the product is
primary in that example and not subsidiary. The subsidiary result is
improvement in appearance. Therefore, in our view, Note 2 to Chapter 33 does
not help the respondent. Rather Note 5 to the said Chapter,
makes it clear that the products which fall under heading 33.04 are primarily
beauty or make up preparations. They may incidentally help in protection
against skin irritants. They may also help as a skin tonic, yet they are
cosmetics because skin protection is subsidiary benefit.
this connection reference may also be made to Note 1(d) to Chapter 30 of the
Central Excise Tariff. The said Note reads as under:
starts with "This Chapter does not cover".
(a) (b) (c) (d) "Preparations of Chapter 33 even if
they have therapeutic or prophylactic properties." Thus preparations
falling in Chapter 33 even if they have therapeutic or prophylactic properties
will not fall under Chapter 30 which deals with pharmaceutical products. The reasons for this appears to be that even cosmetics may have
something to improve skin or other parts of the body where they are used. In
that sense they may have some therapeutic value yet they remain cosmetic.
the above discussion it is clear to us that the Revenue has failed to make out
any case in support of its stand that all the products in question fall under
Chapter 33 i.e. under Heading Note 33.04.
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.
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. I n 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
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. No costs.
Appeals No.1414-1416/2004 In view of the above these appeals stand dismissed.