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Stamac Products Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1986)(6)LC370Tri(Delhi)
AppellantStamac Products
RespondentCollector of Central Excise
Excerpt:
.....help the appellants in the present case. in that case, the board found the product 'selsum' as a drug/medicine because it was recommended by physicians only for its medical effectiveness. here there is nothing on record to show that this product 'marylon medicated shampoo', is being recommended by physicians only for its medical effectiveness. a distinction was drawn between a 'medicated shampoo' and the product 'selsum' manufactured by abbot laboratories and it was observed that medicated shampoo are recommended mainly for the conditioning of the hair with subsidiary medicinal effect but 'selsum' is being recommended by physicians only for its medical effectiveness (emphasis provided). in this case we are concerned with 'medicated shampoo' which as per the roard's observations cannot.....
Judgment:
1. M/s. Stamac Products, Calcutta (hereinafter called the appellants) manufacture medicines and held Licence No. L-4/21/Med/ 65(v).One of the products manufactured by them is known in the trade as Marylon Medicated Shampoo' and the appellants also describe it as such.

2. They filed a classification list classifying this product (Marylon Medicated Shampoo) 100 ml under Tariff Item 14E (as patent or proprietary medicine) Along with this classification list, the appellants also produced a carton indicating in printing that the product is 'Marylon Medicated Shampoo' and it cleans, disinfects hair and controls dandruff. The ingredients of this product namely, Benzalkonium Chloride, Cetrimide, Undecenoic Acid, D-Panthenol in a non-ionic base have also been mentioned on this carton. A sample of product was drawn vide Test Memo No. 2, dated 12-12-78 and the Chemical Examiner in his report dated 1-1-79 opined as under : "The sample is in the form of pale yellow coloured viscous liquid with agreeable fragrance. It lathers well and has cleansing property. It is free from alcohol and other narcotic drugs. It has the composition of synthetic detergent based shampoo containing chemicals having antiseptic property." On the basis of this test report and in view of the definition of the term 'Toilet Preprations' as given in Section 2(k) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 which lays down that any preparation which is intended for use in the toilet of the human body or in perfuming apparel of any discription or any substance intended to cleanse, improve or alter the complexion, of the skin, hair or teeth, (containing) deodorants and perfumes is a toilet prepration, the Assistant Collector concerned classified this product under T.C.14F(ii)(c) and not under T.C. 14E (P or P Medicine).

3.Aggrieved with the said order passed by the Assistant Collector, the appelants filed an appeal before the Appellate Collector of Central Excise Calcutta,who by his order-in-appeal NO.1136/Cal/81, dated 11-8 81 confirmed the findings of the assistant collector classifying this product under T.I. (c) and rejected the appeal filed by the appellants 4. Not satisfied with the said order passed by the Appellate Collector, Central Excise, Calcutta, the appellants filed a Revision Application under Section 36 of the Central Excises and Salt Act, 1944 before the Govt. of India, Ministry of Finance (Department of Revenue) New Delhi, which now stands transferred to this Tribunal under Section 35P(2) of the Central Excises and Salt Act, 1944, to be heard as an appeal.

5. We have heard Shri B.M. Mitra, Advocate along with Shri D R. Basu, Advocate for the appellants and Mrs. V. Zutshi, SDR, for the department and gone through the record.

6. Shri Mitra, learned Counsel for the appellants argued that the product in dispute having its trade name as 'Marylon Medicated Shampoo' is a medicinal preparation and its ingredients are pharmacopoeal in nature. Benzalkonium Chloride Solutions B.P.C. is active against gram positive and gram negative bacteria and some fungi (including yeasts and certain protozoa i.e. Trichomonasvaginalis) as has been shown in the book Drug Evaluations 2nd Edition 1973 page 652 published by the American Medical Association- Drug Department. Its inclusion in the manufacture of the said goods is to arrest seborrhoes and dermatophytic infections of the scalp caused by certain types of bacteria.

7. The second ingredient i.e. Cetrimide I.P. is a relatively non-toxic antiseptic and is active against gram positive but less effective against gram negative. It has been categorised in B.P.C. as Bactericide.

8. The third ingredient i.e. Undecenoic Acid B.P.C. is a fungicide used for the propylaxis and treatment of superficial dermatophytoses of the scalp and other parts of the body. It has been classified as anti-fungal agent in Matindale's Extra Pharmacopoea.

9. The fourth ingrediant i.e. D-Panthenol promotes general healing in cases of Lesions and scars and has been used in this product as such.

It has also been included in the Extra Pharmacopoea as analogous V.P.Acid.

10. According to Shri Mitra, the learned Counsel, the ingredients of this product are all pharmacopoeal drugs and this product i.e. 'Marylon Medicated Shampoo' is a pharmacopoeal formulation with the prescribed strength of ingredients based on Benzalkonium Chloride Solutions and Cetrimide. Shri Mitra further argued that this product was approved by the Director of Drugs Control, West Bengal and it is being manufactured under drug licence. The Assistant Director of Drugs Control, West Bengal issued a Certificate No. DCWB/Drugs/22/4874, dated 17-12-81 to the effect that the said 'Marylon Medicated Shampoo' (i.e. the goods in dispute) manufactured by the appellants has been considered by them as a drug and Drug Licence No. 870-M has been granted accordingly to the appellants for the manufacture of the said drug for sale. Shri Mitra pointed out that this product 'Marylon Medicated Shampoo' is basically a preparation for medicinal purposes other than toilet, not injurious to health in view of the licence under Drugs & Cosmetics Act, 1945 as granted. This product is considered as a drug and therefore, it should be classified under Item 14E (CET) as patent or proprietary medicine.

Though it is named medicated shampoo, it is not a shampoo but a medicine which is being sold under the trade name of the appellants as 'Marylon Medicated Shampoo'. He also drew our attention towards the decision of C.B.E.C. in the case of Abbot Laboratories Pvt. Ltd., Bombay (1981 ECR 428 D) wherein it has been held that though 'Selsum' may be called a 'Shampoo' is more appropriately classifiable as a Patent or Proprietary Medicine assessable under Item 14E (CET) because nobody uses Selsum as a cosmetic and toilet preparation but it is accepted as patent or proprietary medicine because it prevents dandruffs. Taking benefit of this decision Shri Mitra, learned Counsel for the appellants, argued that this product manufactured by the appellants i.e. 'Marylon Medicated Shampoo' is not used as a cosmetic or toilet preparation but it is accepted as patent or proprietary medicine for prevention of dandruffs and the correct classification of this product is under Item 14E (CET) as patent or proprietary medicine and not under 14F (ii)(c) of CET as a toilet preparation.

11. Mrs. Zutshi, the learned Senior Departmental Representative, pointed out that this product i.e. 'Marylon Medicated Shampoo' is being sold in the market as Shampoo though it may be medicated. Shampoo has been specifically mentioned in the Tariff Entry 14F (ii)(c) (CET) and it cannot be said that a patent or proprietary medicine has been manufactured by the appellants. The word 'Shampoo' is for the care of hair. It may be a cosmetic. She pointed out that on the carton of this product its use has been shown as a shampoo and it is used by the public at large as a shampoo. Even in the pamphlet issued by the appellants for this product, its mode of application has been: shown as 'Shampoo'. How can it be said that it is a patent or proprietary medicine and not a shampoo She pointed out that the Board's decision is; not applicable in the present case. In that case technical data has not been considered and the facts of that case cannot be made applicable to this case. She cited a decision of the Bombay High Court in the case of Subhash Chandarnishat v. Union of India and Anr (1979 E.L.T. J 212) in support of her contention that the correct principle of the interpretation of the items or entries occurring in the First Schedule to the Central Excises Act would be that these items or entries should be construed not in the sense in which it is understood in technical matters or scientific laboratories, but in the sense which the people dealing in, or commercially conversant with the items would attribute to them. As per own showings of the appellants this product 'Marylon Medicated Shampoo' is being used as'Shampoo'and not as a medicine, though it may be medicated and therefore, the correct classification is as Shampoo under 14F (ii)(c) and not as a patent or proprietary medicine under Tariff Item 14E(CET).

12. There are certain undisputed facts regarding this product which find mention on the carton and the pamphlet issued by the appellants regarding this product 'Marylon Medicated Shampoo'. The ingredients of this product are pharmacopoeal in nature and have been shown as such and, therefore, the appellants have described it as a medicated shampoo. Its mode of application has been shown that it should be used as a Shampoo. The pamphlet which is Annexure F/2 on the file reads as under : Use as a Shampoo : Apply 10 ml (2 tea spoonfuls) Marylon thoroughly* on dry scalp. Allow to stay for 2 or 3 minutes. Rinse well. Use Marylom Shampoo to form a lather. Rinse and repeat application if necessary". Use no soap." Its use as a shampoo shows that it is actually a'shampoo. It is for the care of hair. It may have some medicinal properties but it is known in common parlance and trade as a shampoo. The plea of the learned Counsel for the assessee that it is a medicated product so it should be treated as a medicine cannot be accepted as correct.Commissioner of Sales Tax, U.P.v. Sarin Chemicals (24 STC 406) held that tooth powder used for cleansing the teeth is an Article of cosmetics or toilet requisites. In that case, the manufacturer had claimed medicinal properties for their products and this is what the Judges observed on the point : ". . . . Some of them do posses some prophylactic and remedial properties but whether they do or do not possess the medicinal properties claimed by their manufacturers, the fact remains that they are used for dental cleanliness which is an essential act of toilet." 'Marylon Medicated Shampoo' which may possess some medicinal properties as claimed by the appellants and its ingredients may also possess some remedial properties, but the fact remains that it is used as a shampoo for the protection of hair and therefore, it is to be classified as a shampoo under Tariff Item 14F (ii)(c) which is a specific entry for the product shampoo. This product which has been described by the appellants themselves as a medicated shampoo cannot be classified as a patent or proprietary medicine under Tariff Item 14E (GET). There is not an iota of evidence on record to show and prove that the public at large use this product 'Marylon Medicated Shampoo' as a medicine and not, as a shampoo. The appellants themselves have mentioned on the carton "Use as Shampoo". The mere fact that it is being manufactured under a drug licence and a certificate by the Assistant Director of Drugs Control has been issued to this effect, does not show and prove that it is a drug or medicine to be classified under 14E (CET). Drug Licence is issued to avoid manufacture of sub-standard products. For the purpose of classification, we have to take into account the Excise Tariff and not Drugs & Cosmetics Act. In common parlance this product is known as shampoo and it is also used as shampoo. It has been laid down by the Hon'ble Judges of the Bombay High Court in the case of Subhash Chandarnishat v. Union of India and Anr., (1979 E.L.T. J 212) that the correct principle of the interpretation of the items or entries occurring in the First Schedule to the Central Excises Act would be that these items or entries should be construed not in the sense in which it is understood in technical matters or scientific laboratories, but in the sense which the people dealing in or commercially conversant with the items would attribute to them.

Therefore, the meaning suggested by technical and scientific tests can never be preferred to the meaning gathered from the common parlance of the people in trade and commerce conversant with the subject-matter.

14. In common parlance and as per own showings of the appellants this product 'Marylon Medicated Shampoo' is used as a shampoo and is also known as shampoo. The mere fact that it has been described as a medicated shampoo does not take away this product from the tariff entry meant for classifying the product 'shampoo'. The C.E.T. makes a specific mention of the item "shampoo whether or not containing soaps or detergent" under its sub-item 14F(ii)(c) and 'Marylon Medicated Shampoo' being a shampoo falls under this category of cosmetic and toilet preparations. The decision of the Central Board of Excise and Customs in the case of Abbot Laboratories (P) Ltd., Bombay (supra) does not help the appellants in the present case. In that case, the Board found the product 'Selsum' as a drug/medicine because it was recommended by physicians only for its medical effectiveness. Here there is nothing on record to show that this product 'Marylon Medicated Shampoo', is being recommended by physicians only for its medical effectiveness. A distinction was drawn between a 'medicated shampoo' and the product 'Selsum' manufactured by Abbot Laboratories and it was observed that medicated shampoo are recommended mainly for the conditioning of the hair with subsidiary medicinal effect but 'Selsum' is being recommended by physicians only for its medical effectiveness (emphasis provided). In this case we are concerned with 'medicated shampoo' which as per the Roard's observations cannot be a drug/medicine.

15. We, therefore, confirm the findings of the authorities below and dismiss this appeal.


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