Case Law Details

Case Name : CCE Vs Hindustan Unilever (Supreme Court of India)
Appeal Number : Civil Appeal No: 1941 of 2006
Date of Judgement/Order : 25/08/2015
Related Assessment Year :
Courts : Supreme Court of India (1025)

Brief of the case

Supreme Court held In the case of CCE v. Hindustan Unilever that Vaseline intensive Care Heel Guard is a medicament as it is produced under the Drug Licence and also before classifying any particular product the dominant function have to be considered.

Facts of the Case

In the present case the issue before the Hon’ble Supreme Court of India is regarding classification of Vaseline Intensive Care Heel Guard that whether it is a skin care preparation or it is a medicament having curing properties. The Revenue wants to cover it under Chapter 33 of Central excise Tariff Act, 1985. If any particular product is to be classified under the said chapter then the said product should be related to skin care. On the other hand, the assessee wants it to be classified under the Chapter 30 of the Act i.e. pharmaceutical products. After referring to Chapter 30 the assessee contended that the VHG patent or proprietary medicament is classifiable under Chapter 30 Heading 3003.10 and only 15% duty is paid.

Held by the Hon’ble Supreme Court

The Hon’ble Supreme Court while referring to both the entries observed that if it is a product for care of the skin, then it would fall under Chapter Heading 3304.00 but if it is for the cure of skin disease then the product in-question would be medicament. Also, Entry 3304.00 specifically excludes medicaments. The obvious purpose is that if it is a medicament, it has to fall under Chapter 30. Reading of this Entry along with chapter notes 2 and 5, would indicate that if pharmaceutical or antiseptic constituents contained in the product are only subsidiary in nature, or having subsidiary curative or prophylactic value, then that would not make the product as medicament. Further, it was observed that the heading of chapter note no. 1(d) of Chapter 30 which specifically excludes preparation of Chapter 33 even if they have therapeutic or prophylactic properties. If a particular product is substantially for the skin care and simply because it contains subsidiary pharmaceutical or antiseptic constituents or is having subsidiary curative or prophylactic value, it would not become medicament and would still qualify as the product for the care of the skin.

The Hon’ble Supreme Court further relied on the Judgement of BPL Pharmaceuticals Ltd. v. CCE, Vadodra (1995) Supp 3 SCC 1, where certain principles were laid down before classifying any particular product whether under Chapter 30 or 33 and also in this Judgment a distinction was drawn between “cosmetic” and “drug”. Also, the most important point which was mentioned in this Judgement was that if the product is registered as the Medicament with the Drug Controller, then it could be a strong factor to determine that the particular product is not used for skin care.

Then, further the Hon’ble Supreme Court relied on the Judgment of Muller & Phipps (India) Ltd. v. Collector of Central Excise, Bombay-I 2004 (167) ELT 374 (SC), where the “prickly heat powder” was considered, where it was found that it is manufactured under the Drug license under the Drug and Cosmetics Act, 1940 and have been treated as a drug and not a cosmetic under the Drugs Act.

Then, the Hon’ble Supreme Court relied on the Judgment of Commissioner of Central Excise v. Wockhardt Life Sciences Limited (2012) 5 SCC 585, where the “common parlance test” was considered. In the para 36 of this Judgment, it was observed that the functional utility and predominant or primary usage of the commodity have to be taken into account while classifying the product. Another important aspect which needs to be noted is that the combined effect of the aforesaid factors is to be taken into consideration, which would include composition, the product literature, the label, the character of the product and the user to which the product is put.

The Hon’ble Supreme Court after the whole discussion held that the said product was manufactured under a “Drug Licence” and was a medicament. The effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament and classified under Chapter 30.

Accordingly, the Appeals of the Revenue was dismissed.

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Category : Excise Duty (4175)
Type : Judiciary

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