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

Citation: [2023] 6 S.C.R. 281 · Decided: 03-05-2023 · Supreme Court of India · Bench: DINESH MAHESHWARI · Disposal: Dismissed

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Judgment (excerpt)

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[2023] 6 S.C.R. 281
281
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND
SERVICE TAX, HYDERABAD
v.
ASHWANI HOMEO PHARMACY
(Civil Appeal No. 9525 of 2018)
MAY 03, 2023
[DINESH MAHESHWARI AND VIKRAM NATH, JJ.]
Central Excise Tariff Act, 1985: Chapter 30, First Schedule,
Tariff Item 3003 90 14 – Product “Aswini Homeo Arnica Hair Oil”
– Classification of, as ‘medicament’ under Tariff Item 3003 90 14
in Chapter 30 or as ‘cosmetic or toilet preparations’ under Tariff
Item 3305 90 19 in Chapter 33 – Held: Product Aswini Homeo Arnica
Hair Oil merits classification as ‘medicament’ under Chapter 30
and not as ‘cosmetic or toilet preparations’ under Chapter 33 – On
basis of the twin test-common parlance test as also the ingredients
test, it is rightly held to be medicament – Furthermore, when the
said product is intended to control hair fall, 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 make the product a cosmetic one – Change in
tariff structure by way of amendment brought about in the year
2012 did not justify a re-look into the classification of the product
– 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.
Dismissing the appeal, the Court
HELD: 1. The product Aswini Homeo Arnica Hair Oil-
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 by way of amendment brought about
in the year 2012 did not justify any re-look at the classification of
the product in question. [Para 34][353-F-G]
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SUPREME COURT REPORTS
[2023] 6 S.C.R.
2.1 As regards the question as to whether the product,
Aswini Homeo Arnica Hair Oil-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, 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. The connotations of common parlance
test could further be understood, that the primary object of such
taxing statute being to raise 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, 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.
Moreover, 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 that a product may be
medicinal without having been prescribed by a medical
practitioner. 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
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essentially for cure or prevention of disease (medicament) or for
care (cosmetic); and the preparation having only subsidiary
curative or prophy

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