Holding

The product is a cosmetic/toilet preparation falling under tariff heading 33.04 and not a medicament.

Summary

M/s Sunny Industries Pvt. Ltd. manufactured an Ad‑vitamin Massage Oil Forte and claimed it to be a patent or proprietary medicine, seeking classification under tariff heading 30.03 (medicaments). The Assistant Collector and the Collector (Appeals) classified it as a cosmetic product under heading 33.04, a decision upheld by the Customs, Excise and Gold (Control) Appellate Tribunal. The company appealed to the Supreme Court, arguing that the presence of vitamins and its use for skin care made it a medicament. The Court examined the Central Excise Tariff Act, 1985, its chapter notes and explanations, and held that heading 33.04 expressly covers such oil‑based skin‑care preparations even if they contain pharmaceutical constituents, and that chapter notes exclude them from the definition of medicaments. Consequently, the product is a cosmetic/toilet preparation, not a medicament, and the classification under heading 33.04 is correct. The appeal was dismissed.

Issues considered

Whether the Ad‑vitamin Massage Oil Forte should be classified as a medicament (patent or proprietary medicine) under tariff heading 30.03 or as a cosmetic/toilet preparation under heading 33.04 for the purpose of levying excise duty.

Legislation cited

Subjects

excise dutyclassificationtariff headingcosmeticsmedicamentsCentral Excise Tariff Actvitamin massage oilpatent medicine

Judgment

A M/S. SUNNY INDUSTRIES PVT. LTD. T
v.
COLLECTOR OF CENTRAL EXCISE, CALCUTT A

MARCH 25. 2003

B [M.B. SHAH AND ARUN KUMAR, JJ.)

Central Excise Tariff Act, 1985--Tarijf Heading 33.04 and 30.03-Ad
vitamin Massage Oil forte-Classification of-For levy of excise duty-Held,
product is classifiable as cosmetics and toilet preparation falling under tariff
c Item 33.04 and not as medicaments under Heading 30.03 since it is oil
containing some A and D vitamins which is used for massage, intending lo
take care of skin and no/ for cure of the skin.

Appellant-Company manufactured Ad-vitamin Massage Oil forte on
D the basis of sanction accorded by the Drug Control Authorities. It was
classified under Tariff Item No.14-E (Medicaments) of the First Schedule
to the Central Excise and Salt Act, 1944 for the levy of excise duty.
Assistant Collector classified it undler Tariff Item No.14-F excisable as
cosmetics goods. Collector (Appeals) upheld the order. Aggrieved appellant
filed appeal before the Tribunal which was dismissed. Hence the appeal.
E Meanwhile, Central Excise Tariff was reconstituted and Tariff Item 14E
was made equivalent to Tariff Item 30.03 and Tariff Item 14-F to Tariff
Item No.33.04 of the Central Excise Tariff Act, 1985. Appellant then
claimed classification of its product under heading 3003.19 as patent and
proprietary medicine. However, Assistant Collector approved classification
under heading 3304.00. Appellant filed appeals. Both Collector (Appeals)
F
and the Tribunal dismissed the samie. Hence the other civil appeal.
,
Appellant contended that the p1roduct Ad-vitamin massage Oil Forte
was considered as medicine and it would he covered under heading 3003.19
as patent and proprietary medicine; and that the product is primarily a
G drug.

Dismissing the appeal, the Court

HELD: From the Chapter notes 2 and 5 of Chapter 33 of the Central
Excise Tariff Act, 1985, it is clear that heading 33.03 would include
H 18 \,
SUNNY INDUSTRIES PVT.LTD. v. C.C.E. [M.B. SHAH, J.] 19

products whether or not they contain subsidiary pharmaceutical or A.
antiseptic constituents, or are held out as having subsidiary curative or
prophylactic value and heading 33.04 would inter alia include the products
specified therein and .other preparations for use in manicure or chiropody
and barrier creams to give protection against skin irritants. Therefore,
the product-Ad-vitamin massage Oil Forte, mainly oil containing some B
A&D vitamins which is used for massage, even if it prevents aliment or
rickets and treats the same, it cannot be held to be medicaments. Further,
after verification of the entire evidence and the certificate produced on
record as well as the report of the Chemical Analyser, the Tribunal rightly
arrived at the conclusion that the product in question is oil used for
massage and would be covered by heading 33.04. [23-E-G] C
Mis. Alpine Industries v. Collector of Central Excise, New Delhi, JT
(2003] I SC 130, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4589of1995.
D
From the Judgment and Order dated 30.11.1994 of the Central Excise·
Customs and Gold (Control) Appellate Tribunal New Delhi in A. No. E./
2025/88-C in F.O. No. 363 of 1994-C.

WITH
E
CJ,. No. 138 of 1989.

Raj Kumar Gupta, Sheokumar Gupta and A.N. Bardiyar, for the
Appellant.

Anoop G. Choudhary, Ashok K. Srivastava and B. Krishna Prasad, for p
the Respondent.
'
The Judgment of the Court was delivered by

SHAH, J. It is the contention of the appellant Company that 1t 1s
engaged in manufacture inter alia of Ad-vitamin Massage Oil forte (Patent G
or Proprietary Medicines) since 1949 on the basis of sanction accorded by
the Drug Control Authorities. This preparation was brought and classified for
levy of duty of Excise with effect from 1.3.1961 falling under Tariff Item
No.14-E of the First Schedule to the Central Excise and Salt Act, 1944
(hereinafter referred to as "the Act").By order dated 26.12.1985, the Assistant
Collector classified the said product under Tariff Item No.14-F (Heading H
20 SUPREME COURT REPORTS [2003] 3 S.C.R.

A 3304.00) excisable as cosmetics goods. Collector (Appeals) also affirmed the
order of the Assistant Collector by order dated 29.4.1986. Against that order, I I

appellant preferred appeal No.E-2226/86-C before the Customs, Excise and
Gold (Control) Appellate Tribunal ("Tribunal" for short) which was also
dismissed by order dated 26.10.1988. Aggrieved thereby, appellant filed Civil
B Appeal No.138 of 1%9 before this Court.
In the meanwhile, the Central Excise Tariff was reconstituted with
effect from 28.2.1986 as follows:-

(i) 14E is equivalent to T.l. 30.03 of the Central Excise Tariff Act,
1985. (Medicaments)
c (ii) 14-F is equivalent to Tariff Item No. 33.04 of the Central Excise
Tariff Act, 1985. (Cosmetic Goods)

On re-construct.on of the tariff as aforesaid, the appellant submitted its
classification list No. 2/86 dated 3.3.1986 claiming classification of its product
D under heading 3003.19 as patent and proprietary medicine. Upon receipt
thereof, the Assistant Collector issued notice to the appellant to show cause
as to why the product should not be classified under sub-heading No.3304.00
in view of the change of Tariff des·~ription after 1985 budget. Being not
satisfied with reply of the appellant, the Assistant Collector modified the
classification of the said product from Chapter 30 to Chapter 33 and approved
E classification heading 3304.00. Appeals filed by the appellants before the
Collector (Appeals) and the Tribunal were also dismissed.

The Tribunal observed that the vitamins are added in several cosmetic
preparations, skin care lotion etc. but mere addition of vitamins would not
F render the product as a drug. The product has to be judged entirely in the
light of the words in tariff and not with reference to the licence under the
Drug Control Act. After detailed scrutiny of the documents filed by the
appellant and the contentions raised by the parties, the Tribunal arrived at the
conclusion that the classification done by the authorities below under sub-
heading 3304.00 is correct and the product in question is clearly a massage
G oil, intended for care of the skin but possibly having some marginal medicinal
properties.

Aggrieved by the order of the Tribunal, the appellant has preferred
Civil Appeal N<?.4589 of 1995.

H It is contended by the learned counsel for the appellant that the product
SUNNY INDUSTRIES PVT. LTD. v. C.C.E. [M.B. SHAH, J.] 21

Ad-vitamin massage Oil Forte was considered as medicine and it would be A
covered under heading 3003 .19 as patent and proprietary medicine. It is
submitted that the product is primarily a drug. This is because: (i)It contains
a drug or medicinal preparation in Oil form;

(ii) It is used for massage;
(iii) It prevents the ailment or rickets and treats the same;
B
(iv) It has a trade mark and symbol including that it is a proprietary.

The question that arises for consideration in these appeals is whether
the product in question can be classified as a cosmetics and toilet preparation
falling under Tariff Item 33.04 or as patent or proprietary medicine under C
Tariff Item No.30.03?

For this purpose, we would refer to the relevant part of tariff entries as
under:

Old Tariff Entries: D

- Item No.14E-Patent or Proprietary Medicines.

Item No. Tariff Description Rate of Duty
14E. Patent or Proprietary medicines Twelve and a half
E
not containing alcohol, opium per cent ad valorem.
Indian hemp or other narcotics
other than those medicines which
are exclusively Ayurvedic, Unani
Sidha or Homoeopathic.
Item No.14F-Cosmetics and Toilet Preparations. F
Item No. Tariff Description Rate of Duty
14F. Cosmetics and toilet preparations One hundred per
not containing alcohol or opium, cent ad valorem.
Indian Hemp or other narcotic G
Drugs or narcotics, namely
(i) Preparations for the care
of the skin including
beauty creams, vanishing
creams, cold creams,
make-up creams, H
22 SUPREME COURT REPORTS [2003) 3 S.C. R.

A cleansing creams, skin
foods and tonics, face • I
powders, baby powders,
toilet powders, talcum
powders and lipsticks.

B (ii) - (iii) ....."

By introduction of Finance Bill, 1985. explanations II and Ill were
added to the said tariff item No.14-F of the Central Excise Tariff. Relevant
Explanation II reads as under:

c Explanation-II: This item includes cosmetics and toilet preparations
whether or not they contain subsidiary pharmaceutical or antiseptic
constituents, or are held out as having subsidiary curative or
prophylactic value."

Equivalent Tariff Items After Reconstitution w.e.f. 28.2.1986
D
Entry No. Description of Goods

30.03 Medicaments (including veterinary medicaments)

33.04 Beauty or make-up preparations and preparations
E for the ca.re of the skin (other than medicaments),
including sunscreen and suntan preparations,
manicure or pedicure preparation,.

Chapter Notes l(c) and (d) of Chapter 30 coupled with Chapter Notes
F 2 and 5 of Chapter 33 would c.learly reveal that the product in question
cannot be termed as medicaments. The aforesaid Chapter Notes are as under:

Chapter 30 (Pharmaceutical Products)
-
Note:
G
I. This Chapter does not cover:

(c) Aqueous distillates or aqueous solutions of essential oils, suitable
for medicinal uses {Chapter 33 );

(d) Preparations of Chapter 33 even if they have therapeutic or
H
SUNNY INDUSTRIES PVT. LTD. v. C.C.E. [M.B. SHAH, J.] 23
prophylactic properties." A
Chapter 33 (Essential Oils and Resinoids; Perfumery, Cosmetic
or Toilet Preparations):

"2. Heading Nos.33.03 to 33.07 apply, inter a/ia, to products,
whether or not mixed (other than aqueous distillates and aqueous B
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 specialised 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. C
5. Heading No.33.04 applies, inter alia, to the following products:
beauty creams, vanishing creams, cold creams, make-up creams,
cleansing creams, skinfoods, skin tonics, face powders, baby powders,
toilet powders, talcum powders and grease paints, lipstics, eye shadow D
and eyebrow pencils, nail polishes and varnishes, cuticle removers
and other preparations for use in manicure or chiropody and barrier
creams to give protection against skin irritants. "

From the aforesaid Chapter notes, it is clear that heading 33 .03 would
include products whether or not they contain subsidiary pharmaceutical or E
antiseptic constituents, or are held out as having subsidiary curative or
prophylactic value and heading 33 .04 would inter a/ia include the products
specified therein and other preparations for use in manicure or chiropody and
barrier creams to give protection against skin irritants. Therefore, the product
mainly oil containing some A&D vitamins which is used for massage, even
if it prevents ailment of rickets and treats the same, it cannot be held to be F
medicaments.

Hence, in our view, after verification of the entire evidence and the
certificates produced on record as well as the report of the Chemical Analyser,
the Tribunal rightly arrived at the conclusion that the product in question is G
oil used for massage and would be covered by heading 33.04. Similar
contention was raised in Mis. Alpine Industries v. Collector ofCentral Excise,
New Delhi, [JT 2003 (l) SC 130]. The Court observed that 'Medicament' has
been defined in note No.2(i) to mean 'goods which are either products
comprising two or more constituents which have been mixed or compounded
together for therapeutic or prophylactic use.' On a reading of note No. I (d) H
24 SUPREME COURT REPORTS (2003] 3 S.C.R.

A with note No.2(i) of Chapter 30 under Heading 'Pharmaceutical Products', it
is clear that preparations which fali under Chapter 33 even if they have
therapeutic or prophylactic propen:ies are not covered under Heading 30.03
as 'medicaments'. The Court thereafter held thus:

"The certificate issued by the Army Authorities alld the chemical
B ingredients of the product are not decisive on the question of classification
of the product for levy of excise duty. It is firmly established that on the
question of classification of the product under Central Excise Tariff Act,
"commercial parlance theory" has to be applied. It is true that the entry
supply by the appellant of its product "Lip Salve" has been to the Defence
C Department for use of military personnel but that would also not be
determinative of the nature of the product for classifying it. It is not disputed
that the product 'Lip Salve" is used for the care of the lips. It is a product
essentially for "care of skin" and not for "cure of skin".lt is therefore,
classifiable as a skin care cream and not a medicament. From the nature of
the product and the use to which it is put, we do not find that the claim of
D the appellant is acceptable that it i.s primarily for therapeutic use."

The sam<: would be the position in the present case. Th.: oil is not used
for cure of skin but is oil for massage and it takes care of the skin.

In this view of the matter, we: find no substance in these appeals and
E they are accordingly dismissed. There shall be no order as to costs.

N.J. Appeals dismissed.

,-