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IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE  JURISDICTION

CIVIL APPEAL NO. 6988 OF 2003

Commissioner of Central Excise, Mumbai IV …  Appellant (s)   

Versus

M/s. Ciens Laboratories, Mumbai …  Respondent (s)

WITH

CIVIL APPEAL NO. 4434 OF 2004

Commissioner of Central Excise, Thane-II … Appellant (s)   

Versus

M/s. Time Pharma, Mumbai …  Respondent (s)

J U D G M E N T  

KURIAN, J.:   

1.  ‘Care or cure’, is the clue for the resolution of the  lis  

arising in these cases. If the product by name ‘Moisturex’ is  

held to be a medicament for cure, the decision goes in favour  

of the assessee and if the product is held to be one for care  

of  the  skin,  the  decision  benefits  the  Central  Excise.  The  

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Tribunal has held in favour of the assessee and, thus, the  

Central Excise is in appeals.

2. The Central Excise Tariff Act, 1985 (hereinafter referred  

to as ‘CETA’) under Chapter 30 of the Schedule (2) deals with  

pharmaceutical  products  for  the  purposes of  tariff.  At  the  

relevant time, if a product is held to be medicament, then,  

the rate of duty was 15% and, if not, 70%. Heading 30.03  

deals  with  the  medicaments  including  veterinary  

medicaments. The same reads as follows:

“Headin g

No.

Sub- headin g No.

Description of goods Rate of  duty

(1) (2) (3) (4) 30.03

3003.1

0

Medicaments  (including  veterinary  medicaments) -Patent  or  proprietary  medicaments,  other  than those medicaments  which  are  exclusively  Ayurvedic,  Unani,  Siddha,  Homoeopathic  or Bio-chemic.”

15%

3. ‘Medicaments’ is defined under Note 2(i) under Chapter  

30 which reads as follows:  

“2. For the purposes of heading No. 30.03:

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(i) ‘Medicaments’ means goods (other than foods  or  beverages  such  as  dietetic,  diabetic  or  fortified  foods,  tonic  beverages)  not  falling  within  heading  No.30.02  or  30.04  which  are  either:- (a) products  comprising  two  or  more  

constituents  which  have  been  mixed  or  compounded  together  for  therapeutic  or  prophylactic uses; or

(b) unmixed  products  suitable  for  such  uses  put up in measured doses or in packings  for retail sale or for use in hospitals.”

(Emphasis supplied)

4. ‘Patent  or  proprietary  medicaments’  is  defined  under  

Note 2(ii) which reads as under:  

“2(ii) ‘Patent  or  proprietary  medicaments’  means  any drug or medicinal preparation, in whatever form,  for use in the internal or external treatment of, or for  the  prevention  of  ailments  in  human  beings  or  animals,  which  bears  either  on  itself  or  on  its  container or both, a name which is not specified in a  monograph, in a Pharmacopoeia, Formulary or other  publications, namely:- (a) The Indian Pharmacopoeia; (b) The International Pharmacopoeia; (c) The National Formulary of India; (d) The British Pharmacopoeia; (e) The British Pharmaceutical Codex; (f) The British Veterinary Codex; (g) The United States Pharmacopoeia; (h) The National Formulary of the U.S.A.; (i) The Dental Formulary of the U.S.A.; and (j) The State Pharmacopoeia of the U.S.S.R.; or  which  is  a  brand  name,  that  is,  a  name  or  a  registered  trade  mark  under  the  Trade  and  Merchandise Marks Act,  1958 (43 of 1958),  or any  other  mark  such  as  a  symbol,  monogram,  label,  signature or invented words or any writing which is  used in relation to that medicine for the purpose of  indicating or so as  to  indicate a  connection in  the  

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course  of  trade  between  the  medicine  and  some  person,  having  the  right  either  as  proprietor  or  otherwise to use the name or mark with or without  any indication of the identity of that person.”

5. The Chapter Note has explained Heading No.30.03 as  under:   

“This heading covers medicinal preparations for  use  in  the  internal  or  external  treatment  or  prevention  of  human  or  animal  ailments.  These  preparations are obtained by mixing together two or  more substances.  However,  of  put  up in  measures  doses or in forms or packings for retail sale, they fall  in heading 30.04.

The heading includes : (1) Mixed  medicinal  preparations  such  as  those  

listed in an official pharmacopoeia, proprietary  medicines, etc., including those in the form of  gargles,  eye  drops,  ointments,  liniments,  injections,  counter-irritant  and  other  preparations  not  falling  in  heading  30.02,  30.05 or 30.06.”

Entry 33.04 dealing with cosmetics reads as follows:  

“Headin g

No.

Sub- headin g No.

Description of goods Rate of  duty

(1) (2) (3) (4) 33.04 3304.0

0 Beauty  or  make-up  preparations  and  preparations  for  the  care  of  the  skin  (other  than  medicaments),  including  sunscreen  and  suntan  preparations;  manicure or pedicure  

70%

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preparations.”

The  Chapter  Notes  on  this  Entry  has  explained  the  

products as under:

“33.04 - BEAUTY OR MAKE-UP PREPARATIONS AND  PREPARATIONS  FOR  THE  CARE  OF  THE  SKIN  (OTHER  THAN  MEDICAMENTS),  INCLUDING  SUNSCREEN  OR  SUN  TAN  PREPARATIONS;  MANICURE  OR  PEDICURE  PREPARATIONS. 3304.10 - Lip make-up preparations. 3304.20 - Eye make-up preparations. 3304.30 - Manicure  or  pedicure  

preparations.      - Other :

3304.91 - - Powders,     whether      or  not                                           compressed.

3304.99 - - Other (A) BEAUTY OR MAKE-UP PREPARATIONS AND  

PREPARATIONS  FOR  THE  CARE  OF  THE  SKIN, INCLUDING SUNSCREEN OR SUN TAN  PREPARATIONS This part covers:

(1) Lipsticks  and  other  lip  make-up  preparations.

(2) Eye  shadow,  mascara,  eyebrow  pencils  and other eye make-up preparations.

(3) Other beauty or make-up preparations and    preparations for the care of the skin (other  than medicaments), such as: face powders  (whether  or  not  compressed),  baby  powders  (including  talcum  powder,  not  mixed,  not  perfumed,  put  up  for  retail  sale),  other  powders  and  grease  paints;  beauty  creams,  cold  creams,  make-up  creams,  cleansing  creams,  skin  foods  (including  those  containing  bees’  royal  jelly)  and  skin  tonics  or  body  lotions;  petroleum  jelly,  put  up  in  packings  of  a  

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kind sold by retail for the care of the skin;  barrier  creams to give protection against  skin  irritants;  anti-acne  preparations  (other  than soaps  of  heading  34.01)  which  are  designed  primarily  to  cleanse  the  skin  and  which  do  not  contain  sufficiently high levels of active ingredients  to  be  regarded  as  having  a  primary  therapeutic  or  prophylactic  effect  against  acne; toilet vinegars which are mixtures of  vinegars  or  acetic  acid  and  perfumed  alcohol.

Sunscreen  or  sun  tan  preparations  are also included.

(B) MANICURE OR PEDICURE PREPARATIONS This  part  covers  nail  polishes,  nail  varnishes,  nail  varnish  removers,  cuticle  removers and other preparations for use in  manicure or pedicure. The heading does not cover: (a) Medicinal  preparations used to treat  

certain skin complaints, e.g., creams  for  the  treatment  of  eczema  (  heading 30.03 or 30.04  )  .

(b) Foot  deodorants  and preparations for  treating  nails or claws on animals (heading 33.07).”

(Emphasis supplied)

6. Entry 30.04 reads as follows:

“Headin g

No.

Sub- headin g No.

Description of goods Rate of duty

(1) (2) (3) (4) 30.04 3004.0

0 Wadding,  gauze,  bandages  and  similar  articles  (for  example,  dressings,  adhesive  plasters,  

15%

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poultices),  impregnated  or  coated  with  pharmaceutical  substances  or  put  up  in  forms  or  packings  for  medical,  surgical,  dental  or  veterinary  purpose.”

7. The pharmaceutical contents of the product ‘Moisturex’  

are as follows:

“Urea I.P. -10%   Propylene Glycol I.P. -10%   Lactic Acid I.P. -10%   Liquid Paraffin I.P. -10%   Cream Base.”

8. It  is  the  contention  of  the  learned  counsel  for  the  

Central Excise-appellants herein that the product ‘Moisturex’  

is mainly used for care of the skin and thus, they are to be  

classified as cosmetic  or toilet  preparations and are to be  

treated  under  Heading  33.04.  It  is  further  contended  that  

even  if  such  cosmetic  products  contain  certain  subsidiary  

pharmaceutical  contents  or  even  if  they  have  certain  

subsidiary curative or prophylactic value, still, they are to be  

treated  as  cosmetics  only.  It  is  also  contended  that  the  

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product is sold across or under the counter and the same can  

be purchased without prescription of a medical practitioner  

and hence it is not medicament.

9. On  the  other  hand,  it  is  submitted  on  behalf  of  the  

assessee  that  the  very  presence  of  pharmaceutical  

substances will change the identity of the product since such  

constituents are used not for care of the skin but for cure of  

certain diseases relating to skin. The container of the product  

has given the following indications for use:

“Ichthyosis  vulgaris,  Fissure  foot,  Dry  Scaly  Skin  

conditions”

10. In the product literature, the cream is indicated for any  

dryness of skin associated with winter, fissure feet, cracked  

nipples, in the treatment of pathological dry skin conditions  

and also for dryness associated with leprosy and clofazimine.  

Detailed discussion on the pharmaceutical  content  and its  

use  for  treatment  of dry skin  conditions of  human skin  is  

given at Paragraph 12 in Time Pharma vs. Commissioner  

of  Central  Excise,  Mumbai-II1,  wherein  the Customs,  

Excise  and  Gold  (Control)  Appellate  Tribunal,  West  Zonal  

1 1998 (99) E.L.T. 643 (Tri. Mumbai)

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Bench, Mumbai held that the product is a medicament. Since  

there is no dispute as to the description of the product, the  

contents and the usage, we shall extract paragraph 12: -

“12. It is further stated that the product literature is  given for use by medical practitioners. This gives the  pharmacology  of  the  ingredients  in  the  product;  under the heading, "Indications & usage", it is stated  that  Moisturex cream is indicated in dryness of skin  associated with winter, fissure feet, cracked nipples,  in the treatment of pathological dry skin conditions  like  ichthyosis  and  it  is  also  indicated  in  dryness  associated with leprosy and clofazimine. It contain a  precaution and warning against application in large  quantities as it contains keratolytic moisturing agent  that  have potential  to cause irritation and stinging  sensation; it is not to be used near eyes and mucous  membranes.  The  dosage  and  administration  is  indicated  that  thin  layer  of  the  cream  should  be  applied  to  the affected  area (emphasis  supplied)  once or twice daily and in case of severe dry skin  conditions three times application may be required.”

(Emphasis supplied)

It is brought to our notice that the said decision has attained  

finality  qua the  assessee  therein  since  the  Special  Leave  

Petition filed by the Central Excise was dismissed.  

11. In the Chapter Note dealing with cosmetics, it is clearly  

provided that the preparations for the care of skin, beauty or  

make-up preparations are the ones covered by the Heading  

33.04  for  the  care  of  the  skin.  The  Note  has  specifically  

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excluded  medicaments.  Still  further,  in  the  Chapter  Note  

under  Heading  33.04(B)  also,  it  is  clarified  that  medicinal  

preparations used to treat certain skin complaints are to be  

covered under the Heading 30.03 (medicaments) or Heading  

30.04 (products containing pharmaceutical substances used  

for medical, surgical, dental or veterinary purposes).  

12. Thus, if a product comprises of two or more constituents  

which  have  been  mixed  or  compounded  together  for  

therapeutic or prophylactic use, the same is to be covered by  

Heading  30.03.  Urea,  lactic  acid,  propylene  glycol  are  

pharmaceutical  constituents  as  per  as  Indian  

Pharmacopoeia.  

13. The contention that ‘Moisturex’ is a moisturizing cream  

used for  softening the  skin  cannot be appreciated.  As  we  

have already discussed, the use of the cream is not for the  

care of the skin. ‘Moisturex’ is also not primarily intended to  

protect the skin from sun, tan or dryness, etc. On the other  

hand,  it  is  intended  for  treating  or  curing  the  dry  skin  

conditions  of  the  human  skin  and  for  a  few  other  skin  

complaints  like  fissure  feet,  dry  scaly  skin  conditions,  

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ichthyosis,  etc.  The  argument  advanced  on  behalf  of  the  

Central Excise that use of urea or lactic acid or propylene  

glycol, etc., is only as subsidiary pharmaceutical constituents  

and,  hence,  they  cannot  be  held  out  as  having  curative,  

therapeutic  or  prophylactic  value,  cannot  also  be  

appreciated.  It  is  the  presence  of  the  ingredients  of  the  

pharmaceutical constituents which makes the difference and  

not the percentage of the ingredients as held by this Court in  

Meghdoot  Gramodyog  Sewa  Sansthan vs.  

Commissioner of Central Excise, Lucknow2. It was held  

that the composition and the curative properties would make  

the difference in the classification. If the product is composed  

of  pharmaceutical  constituents  which  have  curative  

properties, the product is to be classified as medicament. To  

quote:

“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.”

(Emphasis supplied)

2 (2004) 174 E.L.T. 14 (S.C.)

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14.  Another contention advanced by the appellant-Central  

Excise  is  that  the  product  is  sold  not  under  any  medical  

prescription but the same is available across or under the  

counter  and,  hence,  the  same  cannot  be  treated  as  

medicament. This contention also has been rejected by this  

Court  in  Commissioner of  Central  Excise, Calcutta vs.  

Sharma Chemical Works3. To quote:

“12. …  Mere fact that a product is sold across the  counters and not under a Doctors prescription, does  not by itself lead to the conclusion that it  is not a  medicament.   We  are  also  in  agreement  with  the  submission  of  Mr.  Lakshmikumarn  that  merely  because the percentage of medicament in a product  is less, does also ipso facto mean that the product is  not  a  medicament.  Generally  the  percentage  or  dosage of the medicament  will  be such as can be  absorbed  by  the  human  body.  The  medicament  would  necessarily  be  covered  by  fillers/vehicles  in  order to make the product usable.  It could not be  denied that all the ingredients used in Banphool Oil  are  those  which  are  set  out  in  the  Ayurveda  text  books.  Of course the formula may not be as per the  text books but a medicament can also be under a  patented or proprietary formula. The main criteria for  determining classification is normally the use it is put  to by the customers who use it. ...”

(Emphasis supplied)

3 2003 (154) E.L.T. 328 (S.C.)

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15. In  Puma  Ayurvedic  Herbal  (P)  Ltd. vs.  

Commissioner of  Central  Excise, Nagpur4,  it  was held  

that  the  purpose  of  cosmetic  product  is  to  improve  the  

appearance  of  a  person  and  for  enhancing  the  beauty  

whereas  a  medicinal  product  or  medicament  is  meant  to  

treat some medical condition. It was also held that merely  

because a product is sold not under a doctor’s prescription,  

the same does not cease to be a medicament. In both these  

cases,  it  was  held  that  minimal  presence  of  medicinal  

element does not detract the product from being classified  

as a medicament. To quote:

“20.  It  will  be  seen  from  the  above  definition  of  cosmetic  that  the  cosmetic  products  are meant  to  improve  appearance  of  a  person,  that  is,  they  enhance beauty. Whereas a medicinal product or a  medicament  is  meant  to  treat  some  medical  condition.  It  may  happen  that  while  treating  a  particular  medical  problem,  after  the  problem  is  cured, the appearance of the person concerned may  improve. What is to be seen is the primary use of the  product. To illustrate, a particular Ayurvedic product  may  be  used  for  treating  baldness.  Baldness  is  a  medical problem. By use of the product if a person is  able to grow hair on his head, his ailment of baldness  is cured and the person's appearance may improve.  The  product  used  for  the  purpose  cannot  be  described  as  cosmetic  simply  because  it  has  ultimately led to improvement in appearance of the  

4 2006 (196) E.L.T. 3 (S.C.)

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person. The primary role of the product was to grow  hair on his head and cure his baldness. 21. The extent or the quantity of medicament used in  a particular product will also not be a relevant factor.  Normally, the extent of use of medicinal ingredients  is very low because a larger use may be harmful for  the human body. The medical ingredients are mixed  with what is in  the trade parlance called fillers,  or  vehicles in order to make the medicament useful. To  illustrate  an  example  of  Vicks  Vaporub is  given  in  which  98% is  said  to  be  paraffine  wax,  while  the  medicinal part i.e. Menthol is only 2%. Vicks Vaporub  has been held to be medicament by this Court in CCE  v.  Richardson  Hindustan  Ltd. 1989  (42)  ELT  A100.  Therefore, the fact that use of medicinal element in a  product was minimal does not detract from it being  classified as a medicament. 22.  In  order  to  be  a  medicinal  preparation  or  a  medicament it is not necessary that the item must  be  sold  under  a  doctor's  prescription.  Similarly  availability  of  the  products  across  the  counter  in  shops is not relevant as it makes no difference either  way.”

(Emphasis supplied)

16.  In Union of India vs. G. D. Pharmaceutical Limited5,  

the  Calcutta  High  Court  considered  the  question  as  to  

whether the product ‘Boroline’ containing boric acid with zinc  

oxide would be a medicament or cosmetic. It was held that  

the  very  presence  of  the  pharmaceutical  constituents  like  

boric acid and zinc oxide will make the product medicament  

and not cosmetic. We are in respectful agreement with the  

views taken in the above-mentioned decisions.

5 1998 (100) E.L.T. 24 (Cal.)

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17. We shall also refer to the decision in Alpine Industries  

vs. Collector of Central Excise, New Delhi6, wherein this  

Court  despite  a  certificate from Army that  the  cream ‘Lip  

Salve’ is used for treatment of sore, inflamed, roughened and  

cracked lips, declined to include the same in the category of  

medicament. It has been found that the product is meant for  

the care of the lips and not for the cure of the skin, being a  

protective/preventive preparation for chapping of lips though  

it  has  an  incidental  use  on cracked  and  chapped  lips.  To  

quote:

“7. We have gone through the pharmaceutical and  medical literature produced before us in the course  of hearing and which has been duly dealt with by the  Tribunal  in  its  minority  and  majority  opinion.  The  certificate  issued  by  the  Army Authorities  and  the  chemical 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  product  under  Central  Excise Tariff Act, "commercial parlance theory" has  to be applied. It is true that the entire supply by the  appellant of its product 'Lip Salve' has been to the  Defence 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". It 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  

6 2003 (152) E.L.T. 16 (S.C.)

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not find that the claim of the appellant is acceptable  that it is primarily for therapeutic use. What we find  from the  material  produced  before  the  Tribunal  is  that  essentially  the  product  is  a  protective/preventive  preparation  for  chapping  of  lips.  It  is  not  a  curative  product  maybe  that  incidentally on cracked and chapped lips, it has some  curative effect. It is also not denied that the product  'Lip  Salve'  is  not  suitable  for  use  only  for  soldiers  operating in high altitude areas but it is of use for  every one as  protection from dry,  cold weather  or  sun  rays.  The  product,  therefore,  essentially  is  protective of skin of lip. It is lip care product and not  a 'medicament'. It is neither prescribed by any doctor  nor obtainable from the Chemist or Pharmaceutical  shops in the market.”

(Emphasis supplied)

18. Similarly,  in  Sunny Industries  Private  Limited vs.  

Collector of Central Excise, Calcutta  7  , while considering  

the question as to whether the Ad-vitamin Massage Oil forte  

could be medicament, it  has been held that the same not  

being used for cure of skin but for care of skin, it can only be  

classified under 33.04 as a skin care oil. To quote:

“11. From the aforesaid Chapter notes, it is clear that  heading 33.03 would include products whether or not  they contain subsidiary pharmaceutical or 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  

7 2003 (153) E.L.T. 259 (S.C.)

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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  medicaments.”

(Emphasis supplied)

19. Thus, the following guiding principles emerge from the  

above  discussion.  Firstly,  when  a  product  contains  

pharmaceutical  ingredients  that  have  therapeutic  or  

prophylactic  or  curative  properties,  the  proportion of  such  

ingredients is not invariably decisive. What is of importance  

is the curative attributes of such ingredients that render the  

product a medicament and not a cosmetic. Secondly, though  

a  product  is  sold  without  a  prescription  of  a  medical  

practitioner,  it  does not  lead  to  the  immediate  conclusion  

that all products that are sold over / across the counter are  

cosmetics. There are several products that are sold over-the-

counter  and  are  yet,  medicaments.  Thirdly,  prior  to  

adjudicating upon whether a product is a medicament or not,  

Courts have to see what the people who actually use the  

product understand the product to be. If a product’s primary  

function is “care” and not “cure”, it  is not a medicament.  

Cosmetic  products  are  used  in  enhancing  or  improving  a  

person’s appearance or beauty, whereas medicinal products  

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are used to treat or cure some medical condition. A product  

that is used mainly in curing or treating ailments or diseases  

and contains curative ingredients even in small quantities, is  

to be branded as a medicament.  

20. In the case of ‘Moisturex’, there is no dispute that the  

said cream is prescribed by the dermatologist  for  treating  

the dry skin conditions and that the same is also available in  

chemist or pharmaceutical shops in the market. The cream is  

not primarily intended for protection of skin. The ingredients  

in the cream, the pharmaceutical substances do show that it  

is  used  for  prophylactic  and  therapeutic  purposes.  The  

Central  Excise Tariff Act has unambiguously clarified as to  

what is a medicament for curing an ailment relating to skin.  

Heading 33.04 dealing with beauty or make-up preparations  

and  preparations  for  the  care  of  the  skin  has  specifically  

excluded medicaments. There is also an indication under the  

same entry that medicinal preparations used to treat certain  

complaints  are  to  be  provided  under  the  Heading  30.03  

(medicaments) or 30.04 (products containing pharmaceutical  

substances used for medical,  surgical, dental or veterinary  

purpose).

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21. Tribunals,  the Customs,  Excise  and  Gold  (Control)  

Appellate Tribunal, West Zonal Bench at Mumbai in the first  

case  and  Customs,  Excise  and  Service  Tax  Appellate  

Tribunal, West Zonal Bench at Mumbai in the other,  having  

regard  to  the  pharmaceutical  constituents  present  in  the  

cream ‘Moisturex’  and its  use for  the  cure of certain  skin  

diseases, have rightly held that the same is a medicament  

liable  to  be  classified  under  the  Heading  30.03  

(medicament). Thus, there is no merit in these appeals. They  

are accordingly dismissed. No costs.  

                                             ....……... ……………………………..………J.

                                        (SUDHANSU JYOTI  

MUKHOPADHAYA)

....……..…………………………………..…J.                                                  (KURIAN JOSEPH)

New Delhi; August 14, 2013.

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