Meghdoot Gramodyog Sewa Sansthan, U.p v. Commissioner Of Central Excise, Lucknow

1. The question has arisen whether the following six items should be classified under the Central Excise Tariff Act, 1985 as medicaments under Sub-Heading 3003.30 or under Sub-Headings 3305.10 and 3305.50 which deal with perfumed hair oil and other preparations for use on the hair. The six items are:

(1) Bhringraj Tail

(2) Trifla Brahmi Tail

(3) Neem Herbal Sat

(4) Sat Reetha

(5) Meghdoot Herbal Sat

(6) Meghdoot Herbal Powder

2. The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) was of the view that the products were properly classifiable under Tariff Sub-Headings 3305.10 and 3305.50. The appellant has challenged the finding of the Tribunal and contended that each of these six products referred to above was classifiable under Sub-Heading 3003.30.

3. The two competing headings read as follows:

“30.03 — Medicaments (including veterinary medicaments)

3003.30 — Medicaments, including those used in Ayurvedic, Unani, Siddha, homoeopathic or biochemic systems.

33.05 — Preparations for use on the hair

3305.10 — Perfumed hair oils

3305.50 — Other”

4. In coming to the conclusion that all the six products were classifiable under preparation for use on the hair, the Tribunal held that except for certain letters from doctors, the appellants had not produced any evidence to show that the products were prescribed by medical practitioners as medicines for various diseases. The second basis of the Tribunal’s conclusion was that there was nothing to show that patients were kept under observation, or that the results said to have been achieved by the use of the products were obtained by keeping the patients in hospitals over a period of time. Thirdly, it was held that the Commissioner had found that the packing of the products would indicate that the products were cosmetics and not medicines or drugs since it depicted “a lady with black flowing hair” and other similar images.

5. The decision of the Tribunal is unsustainable on the reasoning given. 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 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.

6. The appellant has drawn our attention to the composition of the six products and the uses in respect of each of these six products. This has not been doubted by the Tribunal nor indeed by the departmental authority. The composition and the curative properties being admitted, it was not open either to the Department or the Tribunal to hold that the items were cosmetics merely by reason of the outward packing.

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. Pharmaceuticals Ltd. v. CCE, 1995 Suppl. (3) SCC 1 [LQ/SC/1995/622] : (1995) 77 ELT 485. [LQ/SC/1995/622]

8. As far as the first three items listed earlier are concerned, this Court has in CCE v. Pandit D.P. Sharma, III (2003) SLT 787=(2003) 5 SCC 288 [LQ/SC/2003/569] : (2003) 154 ELT 324 [LQ/SC/2003/569] ; CCE v. Himtaj Ayurvedic Udyog Kendra, III (2003) SLT 804=(2003) 5 SCC 290 [LQ/SC/2003/570] : (2003) 154 ELT 323 [LQ/SC/2003/570] , 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 3005.10 or 3305.50. Indeed the learned Counsel appearing on behalf of the respondent has not seriously contended otherwise in respect of the first three items.

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.

10. The appeal is, accordingly, allowed and the decision of the Tribunal is set aside.