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JUDGMENT RAJENDRA BABU, CJI. :

In these appeals arising out of an order passed by the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as the 'Tribunal') question raised for our consideration is whether Johnson's Prickly Heat Powder and Phipps Processed Talc are patent or proprietary medicines classifiable for the purposes of excise duty under the erstwhile tariff item 14E (as prior to 1.3.1986) and Heading 30.03 (subsequent to 1.3.1986) as claimed by the appellants or whether they are cosmetics or toilet preparations falling under the erstwhile tariff item 14F (prior to 1.3.1986) and Heading 33.04 (after 1.3.1986) as claimed by the Department.

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.

Explanation III.- this Item includes, unmixed products, only when they are in packing of a kind sold to the consumer and put up 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 value."

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

The case put forth before us on behalf of the appellants is that prickly heat powder contains a range of medicines and are used only for the treatment and prevention of a skin ailment known as Milaria Rubra commonly known as prickly heat; that prickly heat powders are manufactured under a Drug Licence issued under the Drug and Cosmetics Act, 1940 and have been treated as a drug and not a cosmetic by the authorities under the Drugs Act; that on a reference made by the Finance Ministry, the Drug Controller of India has opined that due to the high content of 5% boric acid in a prickly heat powder, it would be classifiable as a drug or medicament and not as cosmetics; that from 1970 till 1985 prickly heat powders have been classified and assessed under tariff item 14E of the old tariff as "Patent or Proprietary Medicines"; that the Collector (Appeals), disagreeing with the authorities, has taken the view that in view of the medicinal ingredients, namely, salicylic acid and boric acid which are meant to cure the disease called Milaria Rubra, prickly heat powder is a drug and, therefore, classifiable as a drug or a medicinal preparation; that whereas the Tribunal reversing the order of the Collector took the view that prickly heat powders are cosmetics and not 'medicament'. It is contended that prickly heat powder not only relieves prickly heat faster but actually helps prevent it; that when a person perspires profusely the sweat stays on the skin too long and the person becomes a potential victim of prickly heat; that specially formulated prickly heat powder absorbs the sweat better and faster and prevents the build-up of bacteria on the skin; that, therefore, the person avoids getting a red rash, itching and burning; that no person who requires ordinary talc for the purposes of beautifying her or himself would use the said products, which contain the aforesaid active therapeutic ingredients; that the said products are known as prickly heat/Milaria Rubra; that the sale of the said products are much higher in hot summer months when this disease frequently erupts. It is further submitted that the Central Government by its order dated 22.3.1970 held that the product was a drug; that the Sales Tax Tribunal by its order dated 4.2.1970 held that the product was a drug and not a cosmetic; that the Central Board of Excise and Customs had also passed an order dated 17.1.1981 holding that selsum shampoo was not a cosmetic but was a drug and the basis for arriving at that decision was that Johnsons' prickly heat powder and NYCIL have been recognised as a drug and selsum stood on a stronger ground. Our notice was drawn to the decision of this Court in BPL Pharmaceuticals Ltd. vs. CCE, 1995 Supp. (3) SCC 1, and the decision of the Andhra Pradesh High Court in State of A.P. vs. Koduri Satyanarayana & Co., 1988 STC 233 (AP) wherein it was held that Sales Tax Tribunal was right in considering Johnson's prickly heat powder as falling under Entry 37 (drugs) and not under Entry 36 (cosmetics). It is further contended that the price of the product was fixed under the Drug Price Control Order, 1970 as it had been manufactured under a Drug Licence issued under the Drugs Act; that under the Drug Act there are two regimes, namely, one for drugs and the other for cosmetics; that before a drug licence is issued various conditions as required by Rule 17 of the Drugs and Cosmetics Rules, 1945 have to be complied with; that the product is known and understood in commercial parlance as a patent or proprietary medicine used for the prevention and treatment of the disease, prickly heat; that the Head of the Pharmacology Department of the Grant Medical College, Mumbai has also opined that Johnson's prickly heat powder contains active ingredients like salicylic acid and boric acid and it is of medicinal value and can be used in the treatment of skin disorders. Various text books have been referred in support of the argument. In analysing and understanding the meaning of the relevant entries of the tariff items our attention is drawn to various tariff items. It was noticed by the Secretariat of the HSN that it had no specific information concerning a classification practice with regard to prickly heat powders in other countries and that a product known as Dakosan, which was described as prickly heat powder had been classified under heading 33.07, that is, deodorant. The Government, however, pointed out to the Secretariat of the HSN that Dakosan could not be compared with the prickly heat powder whose classification was under scrutiny because of the 5% content of boric acid. It was pointed out that the Government had consulted the Drug Controller who had opined that because of the high concentration of boric acid the product may be treated as a drug.

The view of the Secretariat of HSN is under strong attack before us. It is stated that the question to be considered is whether the product had the essential character of preparations of heading 33.03 or medicaments of heading 30.04. the Secretariat thereafter purported to consider certain examples given in Martindale's Extra Pharmacopoeia and came to the conclusion that in those examples the active ingredients were higher. It is stated that boric acid was described in pharmaceutical literature as having feeble antibacterial and antifungal properties and that the European Committees had issued a directive relating to cosmetic products indicating that boric acid could be used in cosmetics in specified maximum concentration limited to 5% Salicylic acid was described as a keratolytic substance having bacteriostatic and fungicidal properties used in the treatment of fungus infections of the skin, zinc oxide was stated tobe applied externally in dusting powders and a mild astringent, Chlorphensin which is the active ingredient in Nycil was described as having antibacterial antifungal and antitrichomanal properties and was used in dusting powders in concentration of 1%. In that view, the Secretariat questioned the classification of Johnson's prickly heat powder and Shower to Shower as a medicament and stated that in view of its use and composition it would lean towards classification of these two products as preparations for the care of the skin falling under Heading 33.04. however, it is stated that Nycil should be considered as a medicament falling under Heading 30.04.