2018 (4) TMI 811 – AUTHORITY FOR ADVANCE RULING , WEST BENGAL – 2018 (12) G. S. T. L. 214 (A. A. R. – GST), [2018] 2 GSTL (AAR) 63 (AAR) – Classification of goods – skin care preparations – Appellant claims the goods to be Ayurvedic Medicaments. They are meant for therapeutic or prophylactic uses, put up in packaging for retail sale and entirely correspond to the description of goods under HSN 3004 – N/N. 1/2017-CT(Rate) dated 28/06/2017.
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Held that: – there is no dispute that the products are manufactured under valid drug license and following the formula prescribed in the authoritative textbooks of Ayurveda. A few ingredients may have been added for preservation of the quality of the product, which, as settled by the apex court on several occasions, should not be considered material while ascertaining the underlying Ayurvedic nature of the product.
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It appears only the products, Rupam (Pimple pack) and Pailab (Anti-crack cream) of the list of their products are offered fo
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cation – The remaining products mentioned in the list submitted by them are not offered primarily as medicaments and, therefore, not to be included under heading 3004. – Case Number 01 of 2018 Dated:- 9-4-2018 – Vishwanath Membe And Parthasarathi Dey Member Applicant s representative heard Sri Anjan Dasgupta, Advocate & Sri P K Mukherjee, Authorised Representative ORDER 1. The Applicant manufactures skin care preparations and wants an Advance Ruling on the Classification of 33 of its products. The Applicant declares that the question raised in this Application is not pending or decided in any proceedings under the CGST / WBGST Act, 2017 (hereinafter the GST Act). The officer concerned has not objected to the admission of the application. As such, the question raised is admissible for Advance Ruling under section 97 (2) (a) of the GST Act. The Application is, therefore, admitted. 2. The Applicant argues that its skin care preparations are Ayurvedic Medicaments. They are meant for t
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pam Pimple Pack Glossy skin without pimples and rashes Tanurima Baby Skin Care Fair and glossy skin for your baby Romancho (lavender) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and pimples. Romancho (Vanilla) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and pimples. Romancho (Kewra) Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and
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n. Instantly enhances glow and fairness. Improves the skin texture of skin and body Nabaroop (Lemon) Face & Body Wash Properly cleanses, exfoliate and moisturizes the skin. Helps for removing make-ups and sunscreen which, clog pores. Strengthens the natural protection of the skin. Instantly enhances glow and fairness. Improves the skin texture of skin and body Nabaroop (Neem) Face & Body Wash Properly cleanses, exfoliate and moisturizes the skin. Helps for removing make-ups and sunscreen which, clog pores. Strengthens the natural protection of the skin. Instantly enhances glow and fairness. Improves the skin texture of skin and body Nabaroop (Orange) Face & Body Wash Properly cleanses, exfoliate and moisturizes the skin. Helps for removing make-ups and sunscreen which, clog pores. Strengthens the natural protection of the skin. Instantly enhances glow and fairness. Improves the skin texture of skin and body Swarnali Fairness Cream Improve the skin complexion. Removes acne,
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l firming and toning of skin along with hydrating the skin to make it glow, fresh and smooth. Helps to skin and tighten skin pores. Make skin soft and more elastic, reduces skin oilyness. Sukhparash Face & Body Cream Prevents from pimples, blemishes and skin rashes. Helps to cure minor and sunburn quantity Namrata Moisturizer for normal to dry skin Helps to moisturize, soften and hydrate the skin. Prevents skin from rashes and burning sensation Pailab Anti-Crack cream antibacterial & anti-septic for removal of cracked feet Aadrita Moisturizer for Oily skin helps to moisturize, soften and hydrate the skin. Prevents the skin from rashes and burning sensation Komal Parash Baby Body Talc Soothing agent having anti-bacterial, anti-fungal anti-septic activity. Prevents excessive perspiration. Feeling of freshness, increases lustre of skin, gives relief from itching sensation and irritation of prickly heat, very helpful remedy in summer boils and pimples. Tanutra Sun & Pollution P
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hich has immense potential to cure acne. The fourth product, namely the mask, contains 6% sulphur as an ingredient, which too has therapeutic value. The first product, namely the toner, does not contain any active ingredient for curing the disease but is used for cleansing the skin as an aid to acne treatment. The petitioner sought an Advance Ruling on commodity Classification. After that, the AAR refers to several decisions of the Apex Court that have laid down common parlance as the appropriate test for determining the meaning or connotation of words or expressions describing an article in a Tariff Schedule. According to the AAR, common parlance test is not a rigid formula capable of being applied in all situations. The test ceases to be applicable if the products referred to are couched in technical/scientific language, or there is a definite indication in the Tariff Schedule negating application of this standard test. 5. The AAR also points out that most of the skin care or toilet
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icaments under heading 3004. In other words, it is not sufficient that a skin care preparation incidentally or in a small way helps in controlling skin disease. Its curative or preventive value must be substantial, and the product must be manufactured primarily to control or cure a skin-related disease. That is to say, if preparations for the care of skin contain sufficient medical ingredients to offer a cure for skin ailments, they stand excluded from the purview of 3304. 7. While discussing Note 1 to Chapter 30 in Puma Ayurvedic Herbal Pvt Ltd (supra) the Supreme Court observes, Thus preparations falling in Chapter 33 even if they have therapeutic or prophylactic properties will not fall under Chapter 30 which deals with pharmaceutical products. The reason for this appears to be that even cosmetics may have something to improve skin or other parts of the body where they are used. In that sense, they may have some therapeutic value, yet they remain cosmetic. The Supreme Court further
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ed the history of Supreme Court s observations on the related questions and issues while deciding upon the classification of the petitioner s skin care products. It has direct relevance to the Applicant s case and needs to be discussed in some detail for clarity on the legal position regarding classification of goods in the present context. 10. In Puma Ayurvedic Herbal Pvt Ltd (supra) the Court observes, In order to determine whether a product is a cosmetic or a medicament a twin test has found favour with the Courts. The test has the approval of this Court also vide Collector Vs. Richardson Hindustan Ltd [1989(42) ELT A100 (SC)/2004 (9) SCC 156]. There is no dispute about this as even the Revenue accepts that the test is determinative for the issue involved. The tests are I. Whether the item is commonly understood as a medicament which is called the common parlance test (emphasis added). For this test, it will have to be seen whether in common parlance the item is accepted as a medica
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the appellant has placed on record material from the Ayurvedic texts or Pharmacopoeia in support of each product which is the subject matter of the present appeal to show that the ingredients of each product are independently mentioned in the Ayurvedic texts. 11. In Puma Ayurvedic Herbal Pvt Ltd (supra) the Appellant had a license to manufacture Ayurvedic products obtained from the Drug Controller under the Drugs and Cosmetics Act, 1940. All the items under appeal before the Supreme Court were produced from ingredients found in Ayurveda textbooks. They are manufactured as per the Ayurveda pharmacopoeia and had curative, therapeutic or prophylactic value. They were meant to give relief from body ailments. As such, all ingredients were Ayurvedic raw material. Besides this, the evidence produced by the appellant before the authorities in the shape of letters from consumers, from doctors and from Ayurvedic physicians, according to the Apex Court, satisfied the common parlance test. The Co
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visited the question of the twin test for determining whether the product is an Ayurvedic Medicament or not. It observes that the twin test noticed in Puma Ayurvedic Herbal (P) Ltd continue to be relevant. The court holds that classification should be based on the popular meaning and understanding attached to such products by those using them and not the scientific and technical meaning of the terms and expressions used (emphasis added). The approach of the consumer or user towards the product, thus, assumes significance. What is important to be seen is how the consumer looks at a product and what is his perception in respect of such product. The user's understanding is a strong factor in the determination of the classification of the products. 13. In the light of the above discussion, we should now find out what are parameters and their relative importance in deciding whether a product should fall under subhead 3004 as an Ayurvedic Medicament or be classified as a skin care prepar
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ation. The Apex Court has long settled that classification for fixing tariff should be based on how the goods are understood in common parlance in the commercial world. 14. In subhead 3004 the emphasis is on therapeutic or prophylactic uses. Even if a product is manufactured using ingredients and according to the formula prescribed in the authoritative textbooks of Ayurveda, it should not be classified as a medicament under heading 3004 unless it is meant for therapeutic or prophylactic uses. In other words, it is not sufficient that a skin care preparation, manufactured following a formula in an authoritative textbook of Ayurveda, helps in controlling skin disease. Its curative or preventive value must be substantial, and the product must be manufactured primarily to control or cure a skin-related disease, and the consumers use it primarily for treatment, mitigation, cure or prevention of specific skin disease or skin disorder. 15. Note 1 (e) to Chapter 30 states that the Chapter does
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ed 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. On the basis of this Note it was argued that even if a product has some curative or prophylactic value, it will still be cosmetic. We cannot accept this argument. The learned counsel has overlooked the use of the word 'subsidiary' in the said note from which it follows that a subsidiary curative or prophylactic use will not convert a cosmetic into a medicament. We have tried to illustrate this by giving the example of a bald man treating his baldness by use of the Ayurvedic product. The curative use of the product is primary in that example and not subsidiary. The subsidiary result is an improvement in appearance. Therefore, in our view, Note 2 to Chapter 33 does not help the respondent. Rather Note 5 to the said Chapter, makes it clear that the products which fall under heading 33.04 are prim
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ase 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 (emphasis added) or put up in a form clearly specialized to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary (emphasis added) curative or prophylactic value in Note 2 to Chapter 33 and also the Note 5 do not exist for the purpose of the GST Act. 18. Conclusions reached in Puma Ayurvedic Herbal Pvt Ltd (supra) and followed by the AAR in M/s Guthy Renker Marketing Pvt Ltd [2009 (248) ELT 932 (AAR)], based on earlier constructions of Notes 2 and 5 to Chapter 33 in the Excise Tariff Act, 1985 are, therefore, need to be revisited in the context of the GST Act. In the absence of the restrictive phrases attributed to Notes 2 and 5 to Chapter 33, heading 3304 should now include all preparations for the care of skin, whether
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as they help in maintaining or improving the health of the skin. On the other hand, skin care preparations that are used as medicaments may have the effect of enhancing appearance and beauty by restoring skin health. The essential difference, therefore, lies in the user s perception of a particular product. If the user consumes the product primarily for cure from or treatment or mitigation of or for prevention of a specific skin disease or disorder, it should be treated as a medicament classifiable under heading 3004 (unless, of course, it has been specifically included under heading 3304). The effect of enhancing appearance of the skin or beauty is not what the product is offered for or used by the consumer. 20. In the context of the present application, there is no dispute that the products are manufactured under valid drug license and following the formula prescribed in the authoritative textbooks of Ayurveda. A few ingredients may have been added for preservation of the quality of
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he CD contains only snippets of different episodes of a TV show where the users are uniformly endorsing the Applicant s products as showing good results. It is not clear whether the good results relate to enhancing appearance of the skin or treatment of a disease. We are not to involve ourselves in examining efficacy of the Applicant s products. Our focus will be to ascertain from available materials what the Applicant is offering and consumer is using. A more objective way to examine it is to analyse the information contained in the labels attached to the product when offered in retail set up. The information provided on the labels may be considered as written communication from the manufacturer to the consumer as to what is being offered. If a customer purchases the product it may be presumed that he or she accepts the offer and believes in the information contained in the label. 22. In response to an enquiry made regarding the products in communication dated 03.04.2018 the Applicant
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