Case Law Details

Case Name : In re Inspiration Idea & Innovations & Productions Pvt. Ltd. (CAAR Delhi)
Appeal Number : CAAR/Del/Inspiration/08/2021
Date of Judgement/Order : 31/05/2021
Related Assessment Year :

In re Inspiration Idea & Innovations & Productions Pvt. Ltd. (CAAR Delhi)

Goods are described in the advance ruling application as – Preparation of Essential Oils manufactured by ‘Bertram’ and sold under Siang Pure Brand, which are commonly used for applying on human body/skin without the prescription of medical practitioner. They are claimed to provide relief from headache, motion sickness, dizziness, coughing (throat irritation), stomach ache, inspect bites, joinmerit classification under 3004,t and muscle pain etc. answer to the description of herbal medicinal products in retail consumer packs, and therefore merit classification under 3004, more specifically sub-heading 3004 90 11 of the First Schedule to the Customs Tariff Act, 1975.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI

M/s Inspiration Idea & Innovations & Productions Pvt. Ltd., New Delhi, a company having IEC No. 0512003157 & PAN No. AAAC18799R (M/s Inspiration Idea, in short), had tiled an application dated 03.07.2020 seeking advance ruling under section 28-1-1 of the Customs Act, 1962 before the Advance Ruling Authority (Central Excise, Customs & Service Tax), New Delhi (AAR. in short). The said application was received in the 0/o of AAR on 05.08.2020.

2. The said application was being processed in terms of section 28-1 ibid by the O/o AAR. Consequent upon the appointment of Customs Authority for Advance Rulings (CAAR, in short) in New Delhi and Mumbai with effect from 04.01.2021, the said application was transferred to CAAR, New Delhi in terms of section 28-F (3) ibid and regulation 3I of CAAR Regulations, 2021.

3. On perusal thereof, and in view of the time limit of three months for pronouncing its advance rulings from the date of receipt of this application prescribed under section 28-1 (6) ibid, it was held that the albresaid application received in the O/o AAR, New Delhi on 05.08.2020 had become time barred for CAAR, New Delhi.

4. However, on constructive interpretation of the powers vested with this Authority, vide letter dated 23.02.2021, the applicant was advised to intimate whether M/s Inspiration Idea continued to be interested in obtaining ruling of this Authority, and if so either resubmit their application in the Form CAAR-I appended to Customs Authority for Advance Rulings Regulations, 2021, or simply affirm that the declarations made in the earlier application remain valid and unchanged at the earliest to this Authority. It was also informed that the date of receipt of such resubmitted application or affirmation, as the case may be, shall be taken as the date of receipt of their application under regulation 8(4); and no separate payment of the prescribed fee under regulation 6 (6) of CAAR Regulations, 2021 is required to be made.

5. M/s Inspiration Idea vide an email dated 01.03.2021 affirmed that the declarations made by them in their earlier application remain valid and unchanged, and requested to consider the application for giving advance ruling. Therefore, 01.03.2021 has been taken as the relevant date for reckoning the time limits prescribed under the Customs Act, 1962.

6. The applicant has mentioned that ‘Preparation of Essential Oils’ intended to be imported in retail packs for distribution & marketing in India through General Provision Stores and online Channels-containing Mint Oil (Menthol), Peppermint Oil, Cinnamon Oil, Clove Oil, Mineral Oil & Camphor Oil, Clove Oil, Mineral Oil & Camphor Oil in set % as per product formula of the manufacturer. It is also mentioned that they plan to start distribution & marketing of products manufactured by M/s Bertram (1958) Company Limited, Thailand (Bertram, in short) in India on exclusive basis and Letter of Intent (LOI) has already been signed with the foreign manufacturer to start the business activities immediately. The products intended to be imported are manufactured by “Bertram” and sold under the brand name “Siang Pure Oil”, which are commonly used for applying on human body/skin without the prescription of a medical practitioner. The products made from essential oils with proven and tested formula since 1958 are natural in nature and are used by millions of customers in several countries to get relief from headache, motion sickness, dizziness, coughing (throat irritation) stomach-ache, insect bites, joint and muscle pain etc. without any side effects. The applicant has further stated that the products intended to be imported do not fall in any chapter of Customs Tariff except under Chapter 33 where several kind of oils such as Mint oil (Menthol), Peppermint Oil, Cinnamon oil, Clove oil, Mineral oil & Camphor oil are included but products made from mixture (formula) of such oil and put up in packing of a kind sold by retail is not clearly defined in this chapter.

7. The question on which advance ruling has been sought is,

“Preparation of Essential Oils” intended to be imported in retail packs for distribution & marketing in India through General Provision Stores and online channel, containing Mint oil (Menthol), Peppermint oil, Cinnamon oil, Clove oil, Mineral oil & Camphor oil in set % as per product formula of the manufacturer. Whether the above products fall under Chapter 33? If the above products do not fall under Chapter 33, under which chapter it will fall?

8. As required under the Customs Act and the CAAR Regulations, 2021, comments of the concerned Principal Commissioner of Customs have been sought and obtained. The concerned Principal Commissioner of Customs (Import), 1CD Tughlakabad vide his office letter dated 22.04.2021 has commented that classification of the subject goods depends upon the purported usage of the goods, with or without prescription by Medical Practitioner. If the goods are having primarily or prophylactic use and require a prescription of Medical Practitioner, then as per explanatory notes of heading 30.04, the goods will be classified under CTH 30.04. If the goods are having subsidiary therapeutic or prophylactic use and do not require a prescription of Medical Practitioner, then as per para 3 of the General Notes of Chapter 33, “the products of heading 3303 to 3307 remain in these headings whether or not they contain subsidiary pharmaceutical or disinfectant constituents, or are held out as having therapeutic or prophylactic value”, the goods will be classified under Chapter 33.

9. During the subsequent personal hearing held on 28.04.2021 it was summarized that on the basis of the details submitted in the advance ruling application and comments of the concerned Principal Commissioner of Customs, it appears that the contending classification for the goods with medicinal properties would be either under Chapter 30 or 33. It was recognized that the classification would also have implications under the Drugs and Cosmetics Act. In this context, Shri Adarsh Gupta was requested to describe the product giving composition etc. It was also enquired as to whether they had ascertained the requirement for registration with CDSCO under the Drugs and Cosmetic Act. Shri Gupta submitted that as regards registration they had approached CDSCO. However, CDSCO has suggested that since the products are Ayurvedic in nature. Ministry of AYUSH may be approached for requisite information and registration. On being so approached, MA) AYUSH has informed, as the product are manufactured outside India, it is out of their jurisdiction. On being asked as to why this relevant information are not included in the application filed before AAR/CAAR, Shri Gupta informed that these developments had taken place after the submission of the advance ruling application. Shri Gupta was also requested to provide representative samples (which were shown during the virtual hearing), so as to expedite seeking specific opinion of ADC, if required. It was decided that a copy of the comments of the concerned Principal Commissioner of Customs be shared with the applicant. Upon receipt of details, as agreed during the Pli, if required the next date for PH would be communicated.

10. Accordingly, vide email, comments of the Principal Commissioner of Customs were shared with the applicant. Further. the applicant furnished copies of the correspondence with CDSCO & M/o AYUSH, which arc discussed later in this order.

11. Finding that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021, having received the comments of the concerned Principal Commissioner of Customs, and having heard the applicant, I proceed to examine the question on merit.

12. The question on which advance ruling has been sought is,

“Preparation of Essential Oils” intended to be imported in retail packs for distribution & marketing in India through General Provision Stores and online channel, containing Mint oil (Menthol), Peppermint oil, Cinnamon oil, Clove oil, Mineral oil & Camphor oil in set % as per product formula of the manufacturer. Whether the above products fall under Chapter 33? If the above products do not fall under Chapter 33, under which chapter it will fall?

13. The details of the goods proposed to be imported, whose classification is to be determined has been gleaned from the application and the leaflets providing information about Bertram’s Siang Pure Oil. The information provided in the said leaflet describe the form as Topical solution, Analgesic (Non Opioid) product, clear oily liquid packed in colorless glass bottle containing medicated oil. The information regarding ingredients indicate that apart from Menthol, Peppermint Oil, Camphor, Clove Oil, Cinnamon Oil, the product contains D & C Yellow No. I I, D & C Red No. 17, D & C Green No. 6 and Mineral Oil. The Product literature of Siang Pure Oil describe that the exclusive formula of Siang Pure Oil made it a miracle remedy for various types of pain and discomfort. The literature further states that Siang Pure Oil is the product of Chinese wisdom for natural cure based on the principles of self-healing, the essence of Chinese medicine is to maintain `balance of life’ including that of the body and exterior nature as well as internal balance of all organs, each herbal ingredient works together to maximize the healing effect of one another mainly to improving blood circulation. I have also perused the details about the Bertram’s Siang Pure Oils available in public domain at https://www.bertram1958.com/en/sianu-pure/.

14. Further, from the application of M/s Inspiration Idea the following salient features of the goods being imported are discernible: they (a) they carry the brand name “Bertram”, (b) are already in retail packs, (c) have medicinal use, (d) are sold without the prescription of a medical practitioner, and (e) are primarily a blend of aromatic essential oils.

15. Since the goods may merit classification under chapter 30 of 33 of the Schedule 1 to the Custom Tariff Act, 1975 it will be useful to consider the relevant entries and guidance related

15.1 Chapter 30 covers Pharmaceutical products. Further, since the goods admittedly have medicinal use and they are in packing for retail sale, the appropriate contending classification would be 3004 which covers Medicaments (Excluding Goods of Heading 3002, 3005 OR 3006) Consisting of Mixed or Unmixed Products Ibr Therapeutic or Prophylactic Uses, Put Up in Measured Doses (Including Those in The Form of Transdermal Administration Systems) or in Forms or Packings for Retail Sale.

15.2 Further, Ayurvedic, Unani, Homoeopathic, S’iddha or Bio-chemic systems medicaments, put up for retail sale are classifiable under heading 3004.90, of which ayurvedic medicine is classifiable under sub-heading “3004 90 11 —- Of Ayurvedic system”.

15.3 However, as per Chapter Note 1 (e), which reads “preparations of headings 3303 to 3307, even if they have therapeutic or prophylactic properties” are excluded from the scope of Chapter 30.

15.4 On the other hand, Chapter 33 covers Essential oils and resinoids, perfumery, cosmetic or toilet preparations. The headings suggested by the concerned Principal Commissioner of Customs, viz. 3303 to 3307 cover:

3303 – PERFUMES AND TOILET WATERS;

3304 – BEAUTY OR MAKE-UP PREPARATIONS AND PREPARATIONS FOR THE CARE OF THE SKIN (OTHER THAN MEDICAMENTS), INCLUDING SUNSCREEN OR SUNTAN PREPARATIONS; MANICURE OR PEDICURE PREPARATIONS;

3305 – PREPARATIONS FOR USE ON THE HAIR;

3306 – PREPARATIONS FOR ORAL OR DENTAL HYGIENE, INCLUDING DENTURE FIXATIVE PASTES AND POWDERS; YARN USED TO CLEAN BETWEEN THE TEETH (DENTAL FLOSS), IN INDIVIDUAL RETAIL PACKAGES; and

3307 – PRE-SHAVE, SHAVING OR AFTER-SHAVE PREPARATIONS, PERSONAL DEODORANTS, BATH PREPARATIONS, DEPILATORIES AND OTHER PERFUMERY, COSMETIC OR TOILET PREPARATIONS, NOT ELSEWHERE SPECIFIED OR INCLUDED; PREPARED ROOM DEODORISERS, WHETHER OR NOT PERFUMED OR HAVING DISINFECTANT PROPERTIES.

15.5 In this regard, Chapter Note 3 provides that Headings 3303 to 3307 apply, inter alio, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packings of a kind sold by retail for such use.

16. Before proceeding further, 1 wish to take on board the comments of CDSCO and Ministry of A YUSH, as submitted b y the a pp licant. It is seen that these sets of communications are notertaken after between the applicant and the agencies mentioned. Further, while they appear to have been und the tiling of the application dated 03.07.2020 before the erstwhile AAR, they are definitely dated prior to 01.03.2021 when M/s Inspiration Idea affirmed to CAAR, New Delhi regarding their continued interest in pursuing the matter.

16. I Be that as it may, it is seen CDSCO vide email dated 20.09.2020 advised that “if the intended product falls under New Drug or phyto-pharmaceutical drug as per NDCT Rule, 2019 (New Drugs and Clinical Trials Rules, 2019) you are requested to submit application along with the data to the CDSCO (HQ) in accordance with the rules and if it is an Ayurvedic medicine, you may approach to Ministry of A YUSH/respective State Licensing Authority for further guidance/permission.”

16.2 Ministry of AYUSH vide letter F. No. T.1 3020/02/2019-DCC (AYUSH) dated 07.10.2020 has stated that the ingredients of the product in reference are described in the authoritative bodies of Ayurveda as listed in the Schedule —I of the Drugs and Cosmetics Act, 1940 but the products are manufactured in Thailand and legally not fall under the category of Ayurvedic, Siddha and Unani drugs as defined in section 3(a) & 3 (h) of the Drugs and Cosmetics Act, 1940 and the Rules thereunder. Also the provisions for the import of medicinal products in Drugs and Cosmetics Act, 1940 and Rules are not under the enforcement purview of this Ministry.

16.3 It is seen that in the letter by M/s Hello 10 Brands Pvt. Ltd. addressed to Ministry of AYUSH, the goods in question have been described as “Herbal Medicinal products in Retail consumer packs..”. The goods are described in the advance ruling application under examination as – Preparation of Essential Oils manufactured by “Bertram” and sold under Siang Pure Brand and are commonly used for applying on human body/skin without the prescription of medical practitioner. They are claimed to provide relief from headache, motion sickness, dizziness, coughing (throat irritation), stomach ache, inspect bites, joint and muscle pain etc.

16.4 Further, perusal of the details on the website of Bertram <https://www.bertram1958.corn/en/siang-pure/>. it is obvious that the products under consideration are herbal medicaments and are known and intended to be sold as such.

17. Under the schedule to the Customs Tariff Act, medicinal preparations are classifiable under Chapter 30, whereas cosmetics would be classifiable under Chapter 33. Headings 3303 to 3307 cover cosmetic items intended for specific kind of use, as is evident from the heading description. The words ‘cosmetic and drug’ are defined in the Drugs and Cosmetics Act, 1940. Based thereon, we can broadly distinguish cosmetic and drug as follows :- “A “Cosmetic” means any article intended to be rubbed, poured. sprinkled or sprayed on, or introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic.” Whereas, “A “Drug” includes all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatments, mitigation or prevention of any disease or disorder in human being or animals, including preparations applied on human body for the purpose of  repelling insects”. Relying India on the decision of the lion’ble Supreme Court of India B P. . Pharmaceuticals Ltd. Versus Collector a Central Excise, Vadodara [1995 (77) E. – 485 (S.C.), I find that “the product in question is not intended for cleansing, beautifying, promoting attractiveness or altering appearance. On the other hand. it is intended to cure certa diseases as mentioned supra. T Hon’ble herefore, Note 2 to chapter 33 is not attracted.” The Supreme Court had observed that “in order to attract Note 2 to Chapter 33 the product 33.08 and first be a cosmetic, that the product should be suitable for use as goods of Headings 33.0 they must be put in packing as labels, literature and other indications showing that they are for use as cosmetic or toilet.”

17.1 Hon’ble Supreme Court in the case of Commissioner of Central Excise, Mumbai-IV Versus Ciens Laboratories, Mumbai [2013 (295) E.L.T. 3 (S.C.)1 has laid down the test for classification of medicaments as follows: (i) When product contains pharmaceutical ingredients having therapeutic or prophylactic or curative properties, proportion of such ingredients was not invariably decisive – What is of importance is the curative attributes of such ingredients that render the product medicament and not a cosmetic – (ii) Though product is sold without prescription of medical practitioner, it does not lead to immediate conclusion that all products that are sold over/across the counter are cosmetics – (iii) Prior to adjudicating upon whether product is medicament or not, Courts have to see what people who actually use it understand it to be – If product’s primary function is “care” and not “cure”, it is not medicament – Cosmetic products are used in enhancing or improving a person’s appearance or beauty, whereas medicinal products are used to treat or cure some medical condition – Product used mainly in curing or treating ailments or diseases and contains curative ingredients even in small quantities, is to be branded as a medicament.

17.2 From the submissions made in the applicant and literature available in public domain, the goods covered by the application are clearly intended for “cure” and not -care”; and they are intended for sale based on their curative attributes. Further, in view of the aforesaid test laid down by the Hon’ble Supreme Court, the determining role ascribed by the Principal Commissioner of Customs to the requirement of prescription by medical practitioner for the goods to be classified as medicament under 3004 does not sustain.

17.3 Therefore, since the goods are proposed to be imported in retail packs, they are classifiable under heading 3004. Going further, relying on the communication of the Ministry of AYUSI-1, the ingredients of the goods are described in the authoritative bodies of Ayurveda as listed in the Schedule —I of the Drugs and Cosmetics Act, 1940, the goods are classifiable under sub-heading 3004 90 11.

18. Based on the above, 1 rule that the goods are described in the advance ruling application as – Preparation of Essential Oils manufactured by “Bertram” and sold under Siang Pure Brand, which are commonly used for applying on human body/skin without the prescription of medical practitioner. They are claimed to provide relief from headache, motion sickness, dizziness, coughing (throat irritation), stomach ache, inspect bites, joint and muscle pain etc. answer to the description of herbal medicinal products in retail consumer packs, and therefore merit classification under 3004, more specifically sub-heading 3004 90 11 of the First Schedule to the Customs Tariff Act, 1975.

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