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Varma Pharmacy Pvt. Ltd. Vs. Commissioner of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1999)(65)ECC241
AppellantVarma Pharmacy Pvt. Ltd.
RespondentCommissioner of Central Excise
Excerpt:
.....in that decision and the product manufactured by the appellant is that both are used to kill lice. the active ingredient in both the cases is different. unlike d-phenothrin, the active ingredient of "mediker" the appellant product is not considered by the drug control administration as a drug. the label of the product did not indicate it to be as drug or that it required prescription by a physician. extracts of amla, brahmi, bringaraj and sikakai in vegetable oil base directions for its use contain in the carton used to the package ask for it to be lightly massaged on the head. the packing says that it not "only destroys lice infestation by killing lice and also their larva but also relieves from the nasty itching." heading 3808.10, as it stood at the relevant time was for.....
Judgment:
1. The appellant manufactured and sold a product under a brand name "Oona". It did not pay any duty on the clearances of this commodity.

The officers of the department found that the appellant had classified the goods as an insecticide under Heading 3808.10 of the tariff. The department noted the presence in the product of neem and karanj oils of 5% each by weight, with extracts of amla, brahmi, bhringaraj and sikakai. It was of the view that the product should be classified under Heading 3003.10 of the tariff as a patent or proprietary medicine.

Notice was issued proposing reclassification of the product and demanding duty on the goods already cleared. The notice invoked the extended period contained in the proviso to Section 11A. Adjudicating on the notice, the Collector found that the extended period was not available because the appellant before him had not suppressed any facts. Since the notice proposed recovery only for the period beyond six months, he held that no such duty would be payable. He however ordered the product to be classifiable under Heading 3003.10. The appeal challenges this part of the order.

2. Representative of the appellant raises the following contentions.

The product is an insecticide and therefore rightly classifiable under Heading 3808.10. The appellant is registered under the Insecticides Act. Appellant is not required to hold, and does not hold, a licence under the Drugs and Cosmetics Act for the manufacture of this commodity. None of the criteria which the Supreme Court applied in its judgment in BPL Pharmaceuticals Ltd. v. C.C.E. -1995 (77) E.L.T. 485 (S.C.) to hold that the product 'Selsun' a medicament would apply to this product. The reliance by the Collector upon the Tribunal decision in C.C.E. v. Pharmasia Pvt. Ltd. -1990 (47) E.L.T. 658 is misplaced.

The only similarity between the product "Mediker" considered in that decision and the product manufactured by the appellant is that both are used to kill lice. The active ingredient in both the cases is different. Unlike D-phenothrin, the active ingredient of "Mediker" the appellant product is not considered by the Drug Control Administration as a drug. The label of the product did not indicate it to be as drug or that it required prescription by a physician.

Extracts of Amla, Brahmi, Bringaraj and Sikakai in vegetable oil base Directions for its use contain in the carton used to the package ask for it to be lightly massaged on the head. The packing says that it not "only destroys lice infestation by killing lice and also their larva but also relieves from the nasty itching." Heading 3808.10, as it stood at the relevant time was for Insecticides, fungicides, herbicides, weedicides and pesticides and other goods. Note l(c) to Chapter 38 excluded from its scope medicaments classifiable under Heading 3303.

The product in question is not an insecticide simpliciter. Malathion the active ingredient again is only 0.25% by weight of the entire product. It is evident that it is a preparation containing malathion to be used in the treatment of pediculosis (infestation of the body or head with lice) and for this purpose have been added to it other products such as amla,Jbrahmi extracts and neem and karanja oil. These would not be required to be present, if were not to be used by human beings. Each of them is used in ayurvedic preparation for us on the hair or scalp. It is therefore something other than an insecticide classifiable under Heading 3808.

4. The fact that the product might require a licence under the Insecticides Act, as it claimed, does not necessarily show that it is considered to be treated as a medicament. There is no indication that the Drugs Control Authority has said that it does not require a licence under the Drugs and Cosmetic Act, 1940 and the Rules. On the other hand, the product appears to be covered by the definition of "drug" contained in Section 3(b)(i) of the Act, which includes substances intended to be used or in the diagnosis, treatment, mitigation or prevention of any disease or disorder human beings or animals.

Pediculosis finds mention at paragraph 1429 of the Extra Pharmacopeia by Martindale, 31st Edition published by the Pharmaceutical Society, London, as a disease. Malathion an active ingredient in the product figures at page 1437 of the Extra Pharmacopoeia. The product is listed under the category of pesticides and repellents. It further says "It is used as an insecticide and acaricide in the treatment of pediculosis." It says (at page 1429) that "Pesticides used in the treatment of pediculosis include malathion, and some pyrethroids such as permethrin and phenothrin." Phenothrin is the active ingredient in "Mediker" which the Tribunal held to be a drug in C.C.E. v. Phartnasia Pvt. Ltd. The only difference between the two cases appears to be that there is no specific certification by drug control authority that malathion is a drug. However, there is no such requirement that in each case the drug control authority has to certify that the active ingredient in the product is a drug before it can be classified as medicament under Heading 30.03. The Tribunal has cited fact of acceptance of phenotrin as a drug control authority as an additional factor. It did not rest its case entirely on this.BPL Pharmaceuticals Ltd. v. C.C.E. the Supreme Court did not lay down any specific criteria to be applied to determine whether a particular product is a medicament or not. It only recalled the criteria that had been applied by the Board to say that 'Selsun' was a pharmaceutical product. The observation of the Supreme Court in para 32 therefore cannot be said to have universal application.

6. A consideration of the evidence that we have discussed above impels us to conclude that it is correctly classifiable under Heading 30.03.

It is preven-tative as a lice killer, and the claim that it also relieves, in addition killing lice, from nasty itchingiurther reinforces that it is used as a medicament that the appellant may be required to be licensed under the Insecticide Act for malathion does not rule out its use as a drug. It has not been shown that a licence under the Durgs and Cosmetic Act is not required for manufacturing the product. It is not required that all medicaments are to be prescribed by a physician. The fact that a product is prescribed by a physician may confirm its use as a medicament but is not an essential requirement.


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