Holding

AHAHO is a medicament under Chapter 30 of the Central Excise Tariff Act, 1985 and the 2012 tariff amendment does not warrant re‑classification.

Summary

The case concerned the classification of Aswini Homeo Arnica Hair Oil (AHAHO) under the Central Excise Tariff Act, 1985 – whether it should be taxed as a medicament (Chapter 30) or as a cosmetic/toilet preparation (Chapter 33). The Revenue, relying on the 2012 amendment of the tariff schedule, sought a re‑examination of the earlier settled classification of the product as a medicament. The Supreme Court applied the twin‑test approach – the common‑parlance test and the ingredients test – and held that AHAHO, containing four homeopathic medicines and marketed as a homeopathic drug, clearly satisfies both tests and is a medicament. The Court further ruled that mere broad‑basing of tariff entries or the 2012 amendment does not alter the product’s character, so no re‑classification is justified. Consequently, the appeal was dismissed and the product remains classified under Chapter 30.

Issues considered

Whether Aswini Homeo Arnica Hair Oil merits classification as a medicament under Chapter 30 or as a cosmetic/toilet preparation under Chapter 33 of the Central Excise Tariff Act, 1985.
Whether the amendment to the tariff structure in 2012 justifies a re‑examination of the product’s classification.

Legislation cited

Central Excise Act, 1944s. Section 11-A, s. Section 11-AA
Central Excise Rules, 2002s. Rule 25
Central Excise Tariff Act, 1985s. Chapter 30, s. Chapter 33, s. Tariff Item 3003 90 14, s. Tariff Item 3305 90 19
Drugs and Cosmetics Act, 1940s. Section 3, s. Section 97(1)
Rules of 1945 (Schedule K)

Subjects

medicamentcosmeticcentral excise tariffproduct classificationcommon parlance testingredients testhomeopathic medicinetariff amendmentexcise duty

Judgment

[2023] 6 S.C.R. 281 281

COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND A
SERVICE TAX, HYDERABAD
v.
ASHWANI HOMEO PHARMACY
(Civil Appeal No. 9525 of 2018) B
MAY 03, 2023
[DINESH MAHESHWARI AND VIKRAM NATH, JJ.]
Central Excise Tariff Act, 1985: Chapter 30, First Schedule,
Tariff Item 3003 90 14 – Product “Aswini Homeo Arnica Hair Oil” C
– Classification of, as ‘medicament’ under Tariff Item 3003 90 14
in Chapter 30 or as ‘cosmetic or toilet preparations’ under Tariff
Item 3305 90 19 in Chapter 33 – Held: Product Aswini Homeo Arnica
Hair Oil merits classification as ‘medicament’ under Chapter 30
and not as ‘cosmetic or toilet preparations’ under Chapter 33 – On
basis of the twin test-common parlance test as also the ingredients D
test, it is rightly held to be medicament – Furthermore, when the
said product is intended to control hair fall, prevent dandruff and
to induce good sleep, which all carry their own therapeutic and
prophylactic connotations, the picture of a lady with long black
flowing hair cannot make the product a cosmetic one – Change in E
tariff structure by way of amendment brought about in the year
2012 did not justify a re-look into the classification of the product
– Mere broad-basing of the entries in Chapter 30 and Chapter 33
of the First Schedule to the Act 1985, by itself, could not have been
the justification for an attempt at re-classification of the product.
F
Dismissing the appeal, the Court

HELD: 1. The product Aswini Homeo Arnica Hair Oil-
AHAHO, merits classification as ‘medicament’ under Chapter
30 and not as ‘cosmetic or toilet preparations’ under Chapter 33
G
of the First Schedule to the Central Excise Tariff Act, 1985; and
the change in tariff structure by way of amendment brought about
in the year 2012 did not justify any re-look at the classification of
the product in question. [Para 34][353-F-G]

H
281
282 SUPREME COURT REPORTS [2023] 6 S.C.R.

A 2.1 As regards the question as to whether the product,
Aswini Homeo Arnica Hair Oil-AHAHO, merits classification as
‘medicament’ under Chapter 30 or as ‘cosmetic or toilet
preparations’ under Chapter 33, the inquiry shall be directed
towards a couple of tests taken together, being the common/
commercial parlance test i.e., how the product is understood
B
commonly, including by the persons dealing in the same and by
the end- users; and the ingredients test i.e., whether the
ingredients used in the product are found mentioned in
authoritative textbooks. The connotations of common parlance
test could further be understood, that the primary object of such
C taxing statute being to raise revenue and various products being
differently classified for that purpose, the entries are not to be
understood in their scientific and technical meaning; rather the
terms and expressions used in tariff have to be understood by
their popular meaning, that is the meaning attached to them by
those dealing with or using the product. Further, the words and
D
expressions, unless defined in the statute have to be construed
in the sense in which persons dealing with them understand i.e.,
as per trade understanding and usage. Yet further, there is no
fixed test or static parameter for correct classification of a product
and it essentially depends on the meaning assigned to it by the
E persons concerned with it. One of the essential factors for
determining whether a product falls under Chapter 30 or not is
as to whether the product is understood as a pharmaceutical
product in common parlance. However, the quantity of
medicament used in a particular product is not a relevant factor
because, ordinarily, the extent of use of medical ingredients is
F
very low as a larger use may be harmful for the human body.
Moreover, the mere fact that a product is sold across the counters
and not under a doctor’s prescription, does not by itself lead to a
conclusion that it is not a medicament; and that a product may be
medicinal without having been prescribed by a medical
G practitioner. The items which may be sold under names bearing
a cosmetic connotation would nevertheless remain medicines
based on the composition. As regards the question as to whether
a particular product is classifiable under Chapter 30 as
‘medicament’ or under Chapter 33 as ‘cosmetic’, one of the
essential features would be as to whether the preparation is
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 283
HYDERABAD v. ASHWANI HOMEO PHARMACY

essentially for cure or prevention of disease (medicament) or for A
care (cosmetic); and the preparation having only subsidiary
curative or prophylactic value would fall under Chapter 33. [Para
18.1][338-F-H; 339-A-F]
2.2 In an overall comprehension of the matter, and with
application of the relevant principles to the facts of the instant B
case, the product in question sails through the twin tests without
any doubt and has rightly been held as medicament by the tribunal.
[Para 21][344-G-H]
2.3 Taking up the test relating to the ingredients, there
appears absolutely no reason to suggest that the product in C
question, AHAHO, does not pass this test. It remains indisputable
that the product has been manufactured as a drug after being
duly licensed by the competent authorities and carries the
combination of as many as four Homeopathic medicines, Arnica
Montana, Cantharis, Pilocarpine, and Cinchona in its preparation.
These Homeopathic medicines are duly found mentioned in D
Homeopathic Pharmacopoeia of India as also in the Dictionary of
Practical Materia Medica. [Para 22][344-H; 355-A-B]
2.4 The Adjudicating Authority in its elaborate order could
not otherwise doubt the recognition of other ingredients of
AHAHO as being Homeopathic drugs. The approach of the E
Adjudicating Authority in his micro analysis of the contents of
label had also been in the nature of a fishing inquiry as if only to
find some gap or some loophole therein, without looking at the
substance of the matter that the product in question was clearly
indicated to be a Homeopathic medicine under Schedule K to F
the Rules of 1945. Looking to the nature of the product and its
properties, the relevant indications have also been specified in
reasonable terms and looking to its nature and purpose, directions
for use have also been given in the manner that it was to be
massaged directly on the scalp and should be left overnight for
best results. Hence, the Adjudicating Authority’s observations G
about want of specification regarding the dosage to be used and
the duration f or which it is to be used carry their own
shortcomings. The product in question is essentially meant for
dealing with the conditions arising in and on the scalp with hair
being the integral part thereof. The product consists of H
284 SUPREME COURT REPORTS [2023] 6 S.C.R.

A Homeopathic medicines. Its manner of use is to put the same on
the scalp and to leave it overnight. Looking to the nature of the
product and its uses, the observations about want of specification
regarding the dosage do not take the product out of its
pharmaceutical value. Further, the Adjudicating Authority’s
observations of dissatisfaction because of there being no contra-
B
indications have gone miles away from the reasonableness of
approach. If the respondent has stated in clear terms on the label
that the product carried nil contra- indications, looking to its
nature, purpose and the manner of use, it does not cease to be a
medicament. [Para 22.1][345-C-G; 346-A-B]
C 2.5 The perversity and unreasonableness of approach of
the Adjudicating Authority is also noticed from the observations
that, if the intention was to identify the product as medicament,
there was no need to label it as “Hair Oil”. While the expression
“Hair Oil” does appear on the label, the other integral
D expressions “Homeo” and “Arnica” preceding the expression
“Hair Oil” could not have been ignored and could not have been
left aside. The Adjudicating Authority had gone to the extent of
observing that hair growth was at best a cosmetic necessity rather
than a disease requiring immediate attention or treatment. The
tribunal rightly observed that when hair fall or baldness is
E recognised as a medical condition, the Adjudicating Authority
could not have taken a different view, which was not recognized
by any branch of medicine. The tribunal rightly pointed out that
the product clearly mentioned that it could be used for other
ailments like headache and that it induces good sleep. Moreover,
F the Adjudicating Authority seems not to have given adequate
attention to the contents of Chapter 30 and the fact that for being
accepted as medicament, the product is not invariably required
to carry only therapeutic use. A product having prophylactic use
is also envisaged under the Headings 3003 and 3004. If the
product claims to improve blood circulation to the hair roots and
G thereby controlling hair fall, its prophylactic use cannot be
gainsaid. [Para 22.2-22.3][346-C-F]
2.6 The product in question, being undoubtedly covered
by Serial No. 35 of Schedule K to the Rules of 1945 and being

H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 285
HYDERABAD v. ASHWANI HOMEO PHARMACY

manufactured in terms of the license issued under the Act of 1940, A
clearly satisfies the ingredients test. In other words, on its
ingredients, the product is indeed a medicament carrying the
combination of Homeopathic medicines. [Para 22.4][346-G]
2.7 It is also apparent in the present case that the stand of
the Department to classify the product in question as ‘cosmetic’ B
under Chapter 33 is essentially based on the distinct entry “Hair
Oil” occurring therein; and it appears that the expression “Hair
Oil” occurring on the label of the product has been taken as
decisive by them. It would also follow as a natural corollary that
the expression “Hair Oil” occurring on the label of the product
is only indicating the medium through which Homeopathic C
medicines comprising the product are to be applied. The
submissions and the efforts on the part of the appellant to take
the product in question to Chapter 33 merely because of its label
carrying the expression “Hair Oil” while ignoring the preceding
significant expressions “Homeo” and “Arnica” cannot be D
accepted. Reference to Note 1(e) of Chapter 30 also turns out to
be of no relevance because the product in question cannot be
said to be a preparation of Heading 3305 and then having
insignificant or subsidiary therapeutic or prophylactic properties.
As regards the product in question, which is essentially made of
Homeopathic medicines which have therapeutic and prophylactic E
uses, it cannot be said to be carrying only subsidiary pharmaceutical
value. Putting it differently, the product in question, AHAHO, is
predominantly of pharmaceutical value and the item of cosmetic
therein, i.e., hair oil, is nothing but a medium for appropriate use
of that pharmaceutical value. [Para 23.1][345-C-G; 346-A-B] F
2.8 The submissions about specific entry to be preferred
to the general entry do not take the case of appellant any further.
The referred entry of Chapter 33 relating to the Tariff Item ‘Hair
oil’ under the Heading 3305 is itself to be taken as a general
entry and in any case, when hair oil is being used only as a medium G
for use/administration/application of the medicine, the case would
fall in the specific entry pertaining to medicament under Headings
3003 or 3004; and it being of the medicines of Homeopathic

H
286 SUPREME COURT REPORTS [2023] 6 S.C.R.

A system, it would fall either in Tariff Item 3003 90 14 or Item 3004
90 14. In any case, the product cannot fall under Chapter 33.
[Para 23.3][348-B-D]
2.9 On the other features of common parlance test, i.e.,
the manner in which the product in question is commonly
B understood, it is noticed that one of the grounds placed at the
forefront by the appellants and the Adjudicating Authority had
been that AHAHO was accessible in both Medical and General
Stores and could be bought across the counter. This feature of
availability of the product in question has absolutely no relevance.
Merely for being available across the counter, the product in
C question, AHAHO, does not cease to be a medicament. [Para
25][348-G-H; 349-A-C]
2.10 When the preparation is for cure or prevention, it
would be medicament but, if only for care, it would be cosmetic.
Of course, a cosmetic would not become medicament even if
D having subsidiary curative or prophylactic value. However, the
product in question, AHAHO, does not fail on this count for the
reason that it is a preparation of Homeopathic medicine and when
it is marketed as carrying those medicines, in commercial as also
common parlance, with its name carrying the significant
E expressions “Homeo” and “Arnica”, the product could only be
understood as the one carrying predominantly pharmaceutical
value and not mere cosmetic value. [Para 26][349-D-F]
2.11 When the product in question is intended to control
hair fall as also to prevent dandruff and to induce good sleep,
F which all carry their own therapeutic and prophylactic
connotations, the picture of a lady with long black flowing hair
cannot be said to be unrelated to the indications related with the
product. In any case, such a picture, by itself, cannot make the
product in question a cosmetic. Interestingly, right at the top of
the said picture and below the name of the product, it proclaims
G “Controls hair fall. Prevents dandruff”. The Adjudicating
Authority has taken his process of analysis to further illogical
heights by proclaiming that hair growth was at the best a cosmetic
necessity rather than a disease requiring immediate attention or
treatment. Such approach could only be disapproved. [Para
H 27][349-G-H; 350-A-B]
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 287
HYDERABAD v. ASHWANI HOMEO PHARMACY

2.12 The substance of the matter remains that in common A
parlance, the product in question would be approached essentially
for its claimed medicinal qualities and not as another hair oil.
The tribunal rightly dealt with the matter in accordance with the
law applicable to the facts of the instant case. [Para 27.1][350-C-
D]
B
2.13 The Adjudicating Authority also observed that drug
licenses issued by respective authorities per se did not make
AHAHO a preparation of Homeopathic medicine. However, the
Adjudicating Authority failed to consider that such drug license
issued under Schedule K to the Rules of 1945 had not been a
factor to be ignored altogether. Both in relation to common C
parlance test as also the ingredients test, this factor carries its
own relevance even if not finally decisive of the matter. The
submission about want of condition of sale by authorised medical
distributor or retailer under prescription has its own shortcomings
for it has not been shown if such a preparation falling under D
Schedule K to the Rules of 1945 was also requiring such a mention
in terms of Rule 97. In any case, any such requirements for
adherence to the Act of 1940 and the Rules of 1945 could only be
a matter for consideration of the authorities dealing with licensing
and regulating the manufacture and sale of drugs. The only
relevant aspect for the present purpose is that the product in E
question being manufactured as a Homeopathy medicine, and
being marketed and used as a Homeopathic medicine for its
pharmaceutical value, would fall in Chapter 30 and cannot be
branded as cosmetic, so as to fall under Chapter 33 of the First
Schedule to the Act of 1985. [Para 28][350-D-G] F
2.14 The very product in question, in relation to the entry
in the Andhra Pradesh General Sales Tax Act, 1957, has been
accepted by this Court to be answering the description of a
medicine and not being a cosmetic product, after it was found
that the respondent-assessee’s assertion about its ingredients G
and thereby the product qualifying to be a drug within the meaning
of Section 3 of the Act of 1940 could not be refuted by the
Revenue. The said decision of this Court may not have a direct
bearing on the question of classification of the product in question

H
288 SUPREME COURT REPORTS [2023] 6 S.C.R.

A for the purpose of the Act of 1985 but, it cannot be denied that
the product in question has been found answering to the
description of a ‘drug’ for the purpose of the Act of 1940 as also
for the purpose of the said Andhra Pradesh General Sales Tax
Act, 1957. Viewed from any angle, it remains a medicament. [Para
29][350-H; 351-A-C]
B
3.1 It is apparent that the product in question had rightly
been classified as ‘medicament’ in the past and nothing material
had changed so as to re-classify the same. However, the Revenue
has attempted to rely on the amendment of the tariff structure in
the year 2012 as justification for re-look at its classification. The
C Adjudicating Authority stated this justification in the manner that
there were substantial changes in the tariff headings, particularly
when Chapter 30 came to be reworded so as to remove the
distinction between patent/proprietary and generic medicaments
and to classify them according to whether they are put up in unit
D containers for retail sale or not; the mention about the Act of
1940 and the various Pharmacopeia came to be deleted; and under
Chapter 33, the phrase ‘Hair oil’ became prominent under which,
subsidiary headings of ‘perfumed hair oil’ and ‘others’ came to
be specified. According to the Adjudicating Authority, all these
changes merited interpretation of the new entries vis-à-vis the
E product in question than what was decided or settled earlier.
There had been no justification in the Department seeking to re-
open the settled position in relation to the product in question
merely with reference to certain changes made in Chapter 30
and Chapter 33, which had essentially broadened their ambit and
F scope and provided modified marginal notes and tariff entries
with detailed specifications. These changes had otherwise no
impact, so far as AHAHO, is concerned. [Para 30][351-C-G]
3.2 The change of classification cannot be accepted merely
on the ground of coming into force of different tax structure
G without showing that the product has changed its character. Thus,
mere broad-basing of the entries in Chapter 30 and Chapter 33
of the First Schedule to the Act 1985, by itself, could not have
been the justification for an attempt at re-classification of the
product in question. [Para 31][352-B, D]

H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 289
HYDERABAD v. ASHWANI HOMEO PHARMACY

3.3 Even as regards the amendment of the entries, the stand A
of the appellant-Revenue has been that Chapter 30 was reworded
so as to remove the distinction between patent/proprietary and
generic medicaments and to classify them according to whether
they are put up in unit containers for retail sales or not. Further,
it has been stated that reference to the Act of 1940 and various
B
pharmacopoeia had been deleted. Thirdly, it has been contended
that in Chapter 33, the phrase hair oil had become prominent
with subsidiary entries of perfumed hair oils and other. This Court
could only reject such an attempt on the part of the Revenue as a
hair- splitting exercise, away and detached from the substance.
This is apart from the fact that the specification of medicament C
under Heading 3004 would, in any case, cover the product in
question in the form it is marketed for retail sale. [Para 32][352-
E-G]
3.4 By way of the amendment of 2012, even if the relevant
entries pertaining to preparation for use on the hair have been D
provided with micro classifications in comparison to the entries
standing earlier (as could be seen from the entries, it could never
be taken to mean that anything which is prepared for being used
on the hair and carries the name “Hair Oil”, would lose its
character as medicament if otherwise it has been prepared for
therapeutic or prophylactic uses. Moreover, rewording and E
regrouping of different entries in medicaments are hardly of any
impact on the character of the product in question. [Para 32.1][352-
G-H; 353-A-B]
3.5 Chapter 30, apart from Heading 3003 relating to
F
medicaments consisting of two or more constituents which have
been mixed together for therapeutic or prophylactic uses not put
up in measured doses or in forms or packing for retail sale,
Heading 3004 pertains to the medicaments consisting of mixed
or un-mixed product for therapeutic or prophylactic uses put up
in measured doses or in form of packing for retail sale. Viewed G
thus, the submissions that even with reference to its packaging,
the product AHAHO would remain a homeopathic medicament
and would be covered under Chapter 30, where it could be placed
in Sub-Heading 3004 90 14 is accepted. Similarly, deletions of
the reference to the Act of 1940 or to various pharmacopoeia
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290 SUPREME COURT REPORTS [2023] 6 S.C.R.

A cannot be interpreted to mean that a product like the one in
question, which is otherwise a medicament, has to be classified
on the basis of the base through which the application of medicine
is being provided. [Para 32.2][353-B-E]

3.6 Application of the relevant principles, the product
B AHAHO, comes clean through the twin test. Therefore, there
had been no justification for making any attempt to re-classify
the product in question with reference to the amendments brought
about in Chapters 30 and 33 in the year 2012. [Para 33][353-E-F]

C Bakson Homeo Pharmacy (P) Ltd. v. Collector of Central
Excise, New Delhi (2001) 136 ELT 485; Alpine
Industries v. Collector of Central Excise, New Delhi
(2003) 3 SCC 111 : [2003] 1 SCR 313; BPL
Pharmaceuticals v. Collector of Central Excise,
Vadodara (1995) 3 Supp SCC 1 : [1995] 3 SCR 1235;
D Commissioner of Central Excise, Calcutta v. Sharma
Chemical Works (2003) 5 SCC 60 : [2003] 3 SCR 1027;
Meghdoot Gramodyog Sewa Sansthan, U.P. v.
Commissioner of Central Excise, Lucknow (2005) 4
SCC 15; Commissionerof Central Excise, Nagpur v.
E Shree Baidyanath Ayurved Bhavan Ltd. (2009) 12 SCC
419 : [2009] 5 SCR 879; Commissioner of Central
Excise v. Wockhardt Life Sciences Limited (2012) 5 SCC
585 – relied on.

Collector of Central Excise, Guntur v. Andhra Sugar
F Ltd. Venkataraypuram (1989) 1 Supp SCC 144 : [1988]
3 Suppl. SCR 543; Sunny Industries (P) Ltd. v. Collector
of Central Excise, Calcutta (2003) 4 SCC 280 : [2003]
3 SCR 18; Commissioner of Customs, Calcutta v. G.C.
Jain and Anr. (2011) 12 SCC 713 : [2011] 8 SCR 798;
Commissioner of Central Excise, Nagpur v. Vicco
G
Laboratories (2005) 4 SCC 17; Commissioner of
Commercial Taxes v. M/s Aswini Homeo Pharmacy Civil
Appeal No. 9494-9495 of 2011; Shree Baidyanath
Ayurved Bhavan Ltd. v. Collector of Central Excise,
Nagpur (1996) 9 SCC 402 – referred to.
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COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 291
HYDERABAD v. ASHWANI HOMEO PHARMACY

Case Law Reference A

[1988] 3 Suppl. SCR 543 referred to Para 8.1

[2009] 5 SCR 879 referred to Para 8.3

[2003] 3 SCR 18 referred to Para 8.4 B

[2011] 8 SCR 798 referred to Para 8.4.1

(2012) 5 SCC 585 referred to Para 9.1

(2005) 4 SCC 17 referred to Para 9.4 C

(1996) 9 SCC 402 referred to Para 14.1

[1995] 3 SCR 1235 relied on Para 18.1, 23.2

[2003] 3 SCR 1027 relied on Para 18.1, 25 D

(2005) 4 SCC 15 relied on Para 18.1, 25

[2003] 1 SCR 313 relied on Para 18.1, 26

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9525 E
of 2018.

From the Judgment and Order dated 31.01.2018 of the Customs
Excise And Service Tax Appellate Tribunal, Circuit Bench Hyderabad
in EA No. 30050 of 2016.
F
Vikramjit Banerjee, ASG, Akshay Amritanshu, Abhishek, Adit
Khorana, Prashant Rawat, Tathagat Sharma, Shivam Singhania, Sunil
Kumar Srivastava, Brajesh Kumar, Sudhakar Kulwant, Mukesh Kumar
Maroria, Advs. for the Appellant.
G
V. V. S. Rao, Sr. Adv., D. Bharat Kumar, Tadimalla Bhaskar
Gowtham, Aman Shukla, Siddhartha Sinha, Gopal Jha, Advs. for the
Respondent.

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292 SUPREME COURT REPORTS [2023] 6 S.C.R.

A The Judgment of the Court was delivered by

DINESH MAHESHWARI, J.

Table of Contents*

B Preliminary and brief outline ............................................................... 2

The Background: Show-Cause Notice and Reply .............................. 4

Before the Commissioner of Customs and Central Excise ................ 9

C Before the Customs, Excise and Service Tax Appellate
Tribunal ............................................................................................. 18
Rival Submissions ............................................................................. 24
Points for determination .................................................................... 31
D The principles in the cited decisions ................................................. 33
Application of the principles and twin test ........................................ 55
Whether re-look at classification of the product in question
justified .............................................................................................. 72
E Conclusion ......................................................................................... 76
Preliminary and brief outline
1. This appeal is directed against the common judgment and order
dated 31.01.2018, as passed by the Customs, Excise and Service Tax
F Appellate Tribunal1, insofar as relating to Appeal No. E/30050/20162,
whereby the Tribunal has disapproved and reversed the order dated
16.10.2015, as passed by the Commissioner of Customs and Central
Excise, Hyderabad3 in HYD-EXCUS-004-COM-042-15-16.
1.1. By the aforesaid order dated 16.10.2015 in relation to the
G period from December 2013 to November 2014, the Adjudicating
Authority held that the product in question, known as “Aswini Homeo
Arnica Hair Oil”4 could not be classified as ‘medicament’ under Tariff
1
Hereinafter also referred to as ‘the Tribunal’.
2
The order bearing No. 30121 of 2018.
3
Hereinafter also referred to as ‘the Adjudicating Authority’.
4
H For short, ‘AHAHO’.
*Ed. Note : Pagination in the table is as per the original judgment.
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 293
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Item 3003 90 14 or under any item stated in Chapter 30 of the First A
Schedule to the Central Excise Tariff Act, 19855-6; and that the product
in question, being “Hair oil”, was required to be classified as ‘cosmetic’
under Tariff Item 3305 90 19. Accordingly, the Adjudicating Authority
confirmed the demand to the tune of Rs.2,72,14,266/- on the respondent
for the differential duty payable in terms of Section 11-A (10) of the
B
Central Excise Act, 19447; ordered payment of interest on the said
differential duty in terms of Section 11-AA of the Act of 1944; and
imposed penalty in the sum of Rs.54,00,000/- under Rule 25 of the Central
Excise Rules, 2002.
1.2. However, the appeal preferred by the respondent was allowed
by the Tribunal by its impugned order dated 31.01.2018 and the aforesaid C
order dated 16.10.2015 passed by the Adjudicating Authority was set
aside. The Tribunal held that the product in question, AHAHO, fell in the
category of ‘medicament’ and hence, was rightly classified under Chapter
30 of the First Schedule to the Act of 1985.
1.3. An ancillary but intertwined aspect of the matter had been D
that the product in question was being classified as ‘medicament’ under
the said Chapter 30 since the year 1994. According to the respondent,
this classification was regularly accepted by the Department in the past
with at least two successive orders of the Commissioner (Appeals) and
hence, there was no justification in re-examining the issue. The E
Adjudicating Authority expressed the view that because of material
amendment of the tariff entries in Chapters 30 and 33 in the year 2012,
classification of the product in question required re-examination. The
Tribunal, however, did not approve of this proposition of the Adjudicating
Authority.
F
1.4. The appellant is aggrieved of the order so passed by the
Tribunal and hence, has preferred this appeal while asserting that the
product in question had rightly been classified by the Adjudicating
Authority as ‘cosmetic’ in terms of Chapter 33 and hence, the demand
in question deserves to be maintained. On the other hand, the respondent
G

5
Hereinafter also referred to as ‘the Act of 1985’.
6
In the discussion hereinafter, reference to the relevant Chapter or the relevant Tariff
Item is always pertaining to the ‘First Schedule to the Act of 1985’, unless indicated
otherwise.
7
Hereinafter also referred to as ‘the Act of 1944’. H
294 SUPREME COURT REPORTS [2023] 6 S.C.R.

A supports the order impugned while asserting that the product in question
has rightly been classified as ‘medicament’ in terms of Chapter 30.
2. In view of the above, the primary question in this appeal is as to
whether the product in question, AHAHO, would be classified as
‘medicament’ under Chapter 30 or as ‘cosmetic’ under Chapter 33 of
B the First Schedule to the Act of 1985. The other question is as to whether
because of amendment of the entries in the said Chapters 30 and 33 in
the year 2012, classification of the product in question required re-
examination, even though the same was classified as ‘medicament’ under
the said Chapter 30 since the year 1994.
C 2.1. With reference to the aforementioned questions, we may take
note of the relevant background aspects and stand of the respective
parties with reference to the show-cause notice to the respondent and
its reply.
The Background: Show-Cause Notice and Reply
D 3. The respondent, having registration number
ADHPB1884HEM003 under the central excise, is engaged in the
manufacture of the product in question, AHAHO, in its units at Moosapet
(since the year 1994), Maheshwaram and Bala Nagar. Further, the
respondent had classified the product under Tariff Item 3003 90 14 as
E ‘medicament’ and paid the excise duty at concessional rate accordingly.
This classification of the product in question was examined as many as
four times during the period 1994-2004 and, according to the respondent,
was duly accepted by the Department.
4. It appears that even when classification of the product in question
F as ‘medicament’ had been accepted during the period 1994-2004, this
classification remained in doubt and, particularly after changes in the
Act of 1985 in the year 2012, the respondent was served with different
show-cause notices pertaining to different periods of consideration,
essentially to the effect that the product in question was classifiable as
‘cosmetic or toilet preparations’ under Chapter 33, Tariff Item 3305 09
G 19. In the show-cause notice dated 26.12.2014, which forms the subject-
matter of this appeal, the Adjudicating Authority, inter alia, stated as
under: -
“02. The assessees are engaged in the manufacture of ‘Aswini
Homeo Arnica Hair Oil’ which was classified by them under Tariff
H Item No. 3003 9014 of the First Schedule to the Central Excise
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 295
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Tariff Act, 1985. However, as per Chapter 33 of the Central Excise A
Tariff Act, 1985, preparations for use on the hair are rightly
classifiable under Chapter Sub Heading No. 33050919 and shall
be liable for assessment under Section 4A of the Central Excise
Act, 1944 @12% adv. creating them as ‘Cosmetic or Toilet
preparations’. Accordingly, show cause notices as under were
B
issued to the assessees.
Sr. O.R. No. Period Duty
No.

1 O.R. No. 21/2013- April’ 2012 Rs. 73,71,267/-
Adjn (Commr) CE to Sept’ C
dt. 31.1.2013 OC No. 2012
33/2013 (GGP/S-II)

2 O.R. No. 170/2013- Sept’ 2012 Rs. 1,33,21,827/-
Adjn (Commr) CE, to March’
dt. 6.9.2013 C. No. 2013
V/15/14/CE/Adjn/20
13 Divn. M) D
3 O.R. No.49/2014 – April’ 2013 Rs. 1,73,17,151/-
Adjn (Commr) CE, to Nov’
dt. 14.3.2014 C. No. 2013
V/15/02/CE/Adjn/20
14-CE(Divn-M)
E
03. The present show cause notice is a statement under Section
11A (7A) of the Act covering the demand of duty for the
subsequent period, and the grounds are the same as are mentioned
in the earlier show cause notices. The details of the short payment
of duty for the period from December, 2013 to November, 2014 F
are as under: -
(Amount in Rs.)

G

04. It appears that the assessees have contravened the provisions
of Rule 4, 6, 8, 10 and 11 of the Central Excise Rules, 2002 in as H
296 SUPREME COURT REPORTS [2023] 6 S.C.R.

A much as they have wrongly classified ‘Aswini Homeo Arnica
Hair Oil’ and short the duty of Rs. 2,72,14,266/- which appears to
be recoverable from them under Section 11A of the Central Excise
Act, 1944. It also appears that they are liable for payment of
interest on the said amount of Central Excise duty under Section
11AA of the Central Excise Act, 1944. It also appears that they
B
are liable for penal action under Rule 25 of the Central Excise
Rules, 2002 for adopting incorrect classification and thus resorting
to short payment of duty and for contravening the provisions of
the Central Excise Act, 1944, and the rules made there under
with intention to evade payment of duty.
C 05. Now, therefore, M/s Aswini Homeo Pharmacy, 6-48,49,6-50
Aswini Homeo Pharmacy Unit, Balanagar Hyderabad are hereby
required to show cause to the Commissioner of Customs & Central
Excise, Hyderabad-IV Commissionerate, Ground Floor, Posnett
Bhavan, Tilak Road, Hyderabad within thirty (30) days of receipt
D of this notice, as to why;
i) Central Excise duty of Rs. 2,72,14,266/ (Rupees Two Crores
seventy two lakhs fourteen thousand two hundred sixty six
only), should not be demanded from them under sub section
(7A) of Section 11A read with sub section (1)(a) of Section
E 11A of the Central Excise Act, 1944- for the period from
December, 2013 to November, 2014.
ii) Interest on the amount of duty mentioned at SI. N. (i) above,
should not be demanded from them at applicable rates, in terms
of Section 11AA of the Central Excise Act 1944-and
F iii) Penalty under Rub 25 of the Central Excise Rules, 2002
should not be imposed on them for contravention of the Central
Excise-Rules, 2002 mentioned supra.
06. M/s Aswini Homeo Pharmacy are further required to produce
all the evidence upon which they intend to rely in support of their
G defense at the time of showing the cause. They are further required
to mention in their written reply whether they wish to be heard in
person before the case is adjudicated. If no cause is shown within
the stipulated period or if they do not appear before the adjudicating
authority when the case is posted for hearing, the case will be
decided on merits on the basis of the evidence available on record.
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 297
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

07. The Department reserves its right to amend, modify or A
supplement or do addition to this notice on the basis of further
evidence made available to it prior to the adjudication of this case.
This notice is issued without prejudice to any other action that
may initiated under the provisions of the Central Excise Act, 1944
and the rules made there under or any other law for the time
B
being in force in India.
08. Reliance for the issuance is based on ER-1 returns furnished
by the assessees during the period from December, 2013 to
November, 2014 and Labels affixed to the containers cleared by
the assessees.”
C
5. The respondent-assessee, in its reply dated 07.04.2015, stated
that the product was classified as ‘medicament’ under Chapter 30 by
two successive Commissioner (Appeals) and two subordinate officers
during 1994-2004; and the said orders were accepted by appellant, which
had attained finality.
D
5.1. The respondent, inter alia, stated the following reasons for
which its product, AHAHO, was required to be, and had rightly been,
classified as ‘medicament’:
(i) That the manufacturing process would indicate the presence
of four homeopathic drugs namely, Arnica Montana, Cantharis, E
Pilocarpine and Cinchona in its preparation, which is to be applied to the
scalp and not consumed orally.
(ii) That its label indicated the words “Homeopathic Medicine”
under Schedule K to the Drugs and Cosmetics Rules, 19458; that the
product would cure/prevent the lack of blood circulation to the hair roots, F
hair fall (alopecia), dandruff, headache and lack of sleep (insomnia);
and that healing from the said diseases would lead to good health in
terms of growth and maintenance of natural colour in the hair.
(iii) That AHAHO was a medicament in terms of market parlance,
evidenced by its use over a period of nearly 19 years; by its
G
manufacturing license issued by the Drug Controller and by the
Directorate of Ayush; and from listing of the drugs used, in authoritative
text books like Materia Medica of Homeopathic Drugs. Thus, the twin
tests as accepted by this Court for classification of the product as
‘medicament’ were duly satisfied.
8
Hereinafter also referred to as ‘the Rules of 1945’. H
298 SUPREME COURT REPORTS [2023] 6 S.C.R.

A 5.2. The respondent further elaborated in its reply that the product
was not ‘cosmetic’, as the ingredients used had prophylactic properties
and it was not applied for cleansing or beautifying or promoting
attractiveness or altering the appearance. The depiction of a lady with
long flowing hair on its label was only subjective and could be interpreted
as indicative of good health evidenced by the long flowing hair upon
B
being treated for hair fall and dandruff.
5.3. It was further submitted that a close look at Circular No.333/
49/97-CX dated 10.09.1997 would show that in popular parlance,
AHAHO was a medicament in the light of its advertisement, marketing
and claims on the label and, therefore, the said circular did not justify
C revising its classification to that of ‘cosmetic or toilet preparations’. The
respondent asserted that due to the absence of any change in its tariff
description, ingredients, process of manufacture and use, the question
would not arise of re-classification of the product in question. The
respondent also requested that the proceedings be dropped or be kept
D pending until the Tribunal had adjudicated on the pending issues
concerning classification of the product in question.
5.4. The respondent, in order to support its assertion that AHAHO
is a medicament, placed reliance on a decision of the Tribunal in Bakson
Homeo Pharmacy (P) Ltd. v. Collector of Central Excise, New Delhi:
E (2001) 136 ELT 485, wherein a similar product named “Sunny Arnica
Hair Oil” was held to be a medicament.
Before the Commissioner of Customs and Central Excise
6. The Adjudicating Authority framed two issues for its adjudication
as follows: -
F
“(i) Whether the notice has disturbed the settled position of law
by reagitating the classification matter, and if not
(ii) whether the impugned product viz. AHAHO merits
classification as a medicament under chapter sub-heading
30039014 or as Hair oil under chapter sub-heading 33059019.”
G
6.1. In the first issue, it was observed by the Adjudicating Authority
that the notices were not issued on account of any given judgment but
those judgments were mentioned to point out that the classification would
need a revision. It was further observed that the changes incorporated
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 299
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

in the Act of 1985 from the year 2012 strengthened the view that the A
classification required reconsideration. The Adjudicating Authority
proceeded to reproduce the old tariff entries and the new tariff entries
under Chapters 30 and 33 as under: -
“OLD ENTRIES (as per Central Excise Tariff, 2004):
Chapter 30: B

30.03 Medicaments (including veterinary medicaments).
3003.10 – Patent or proprietary medicaments, other than those
medicaments which are exclusively Ayurvedic Unani, Siddha,
Homeopathic or Bio-chemic C
3003.20 – Medicaments (other than patent or proprietary) other
than those which are exclusively Ayurvedic, Unani, Siddha,
Homeopathic or Biochemic systems:
3003.31 — Manufactured exclusively in accordance with the
formulae described in the authoritative books specified in the First D
Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940) or
Homeopathic Pharmacopeia of India or the United States of
America or the United Kingdom or the German Homeopathic
Pharmacopeia, as the case may be, and sold under the name as
specified in such books or pharmacopeia
E
3003.32 — Medicaments (including veterinary medicaments) used
in bio-chemic system and not bearing a brand name
3003.39 — Other
Chapter 33:
F
33.05 Preparations for use on the hair
3305.10 - Perfumed hair oils
- Other
3305.91 — Hair fixer
G
3305.99 — Other
PRESENT TARIFF HEADINGS (as per Central Excise Tariff,
2012);

H
300 SUPREME COURT REPORTS [2023] 6 S.C.R.

A 3003 MEDICAMENTS (EXCLUDING GOODS OF HEADING
3002, 3005 OR 3006) CONSISTING OF TWO OR MORE
CONSTITUENTS WHICH HAVE BEEN MIXED TOGETHER
FOR THERAPEUTIC OR PROPHYLACTIC USES, NOT PUT
UP IN MEASURED DOSES OR IN FORMS OR PACKINGS
FOR RETAIL SALE
B
3003 90 - - Other :
- - - Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemic
systems medicaments:
3003 90 14 - - - - Of Homeopathic system
C
3305 PREPARATIONS FOR USE ON THE HAIR
3305 10 – Shampoos:
3305 10 10 - - - Containing spirit
3305 10 90 - - - Other
D
3305 20 00 – Preparations for permanent waving or straightening
3305 30 00 – Hair lacquers
3305 90 - Other:

E - - - Hair oil:
3305 90 11- - - - Perfumed
3305 90 19 - - - - Other
3305 90 20 - - - Brilliantines (spirituous)
F 3305 90 30 — Hair cream
3305 90 40 — Hair dyes (natural, herbal or synthetic)
3305 90 50 — Hair fixers
3305 90 90 - - - Other”
G 6.2. At this juncture, we may also take note of a few other contents
of Chapter 30, which carries the heading ‘Pharmaceutical Products’.
6.2.1. Note 1 of Chapter 30 specifies the items not covered
thereunder. Clause (e) of this Note 1 has been referred to by the
Adjudicating Authority, which reads as under: -
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 301
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

“Notes: A
1. This Chapter does not cover :
——
(e) preparations of headings 3303 to 3307, even if they have
therapeutic or prophylactic properties; B
——-”
6.2.2. In this Chapter 30, apart from heading 3003, medicaments
have also been specified under heading 3004, the relevant contents
whereof read as under: -
C
“3004 Medicaments (excluding goods of heading 3002, 3005 or
3006) consisting of mixed or unmixed products for 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
D
3004 90 - - Other :
- - - Ayurvedic, Unani, Homoeopathic, Siddha or Bio-chemic
systems medicaments, put up for retail sale :
3004 90 14 - - - - Of Homeopathic system”
6.3. Reverting to the analysis by the Adjudicating Authority, it is E
noticed that the Adjudicating Authority referred to the changes made in
Chapters 30 and 33 and proceeded to hold that the notice did not suffer
from any imperfection while observing as under: -
“10.6 It can be seen that there is substantial change in the tariff
headings requiring a relook into the classification of the impugned F
product. Particularly, Chapter 30 came to be reworded so as to
remove the distinction between Patent/proprietary and generic
medicaments and classify them according to whether they are
put up in unit containers for retail sale or not. Secondly, the mention
about the Drugs and Cosmetics Act and the various Pharmacopeia G
came to be deleted. Similarly, under Chapter 33 also, the phrase
Hair Oil became prominent under which, subsidiary headings of
“perfumed hair oil” and “others” came to be specified. All these
changes certainly merit interpretation of the new entries vis-à-vis
the product in question, than what was decided or settled earlier.
H
302 SUPREME COURT REPORTS [2023] 6 S.C.R.

A Thus, even by applying the very ratio of Vicco Laboratories
judgment, a different interpretation of tariff can lead to change of
classification of a product even though the constituents and use
of the product has not undergone any change. Secondly, the
additional evidence adduced in the notices certainly merit
consideration. Accordingly, I hold that the impugned notice do not
B
suffer from any imperfection on account of the said judgment.
Hence the first question is answered in the negative”
6.4. The Adjudicating Authority also observed that the impugned
notice had been issued in the normal period and it was not a case where
issue was sought to be reopened for the period for which it was settled.
C However, according to the learned Adjudicating Authority, the criteria
and ideology in the matter of classification of such products was dynamic
in character and hence, revision of classification in view of fresh facts
coming to light could not be held to be improper.
6.5. As regards second issue, the Adjudicating Authority in the
D first place observed that classification of the product in question under
Tariff Item 3003 90 14 was itself questionable inasmuch that item covered
only the medicaments not put up in measured doses or packing whereas
AHAHO was indisputably put up for sale in packing of 50ml, 100ml,
200ml and 400ml bottles for retail sale. The Adjudicating Authority
E observed that the claim of the respondent for classifying the product in
question under the said heading remained baseless. However, the
Adjudicating Authority proceeded to observe that Tariff Item 3004 90
14 was covering similar goods put up in measured doses and packings
and hence, the matter required consideration vis-à-vis Tariff Item 3305
90 19. Thereafter, the Adjudicating Authority pointed out that the main
F prerequisite for the classification as a ‘medicament’ was that the product
must be for ‘therapeutic’ or ‘prophylactic’ use; and with reference to
the dictionary meaning, observed that a medicament with ‘therapeutic’
or ‘prophylactic’ use would mean that it was for healing or for preventing
a disease. The Adjudicating Authority also referred to Circular No. 333/
G 49/97-CX dated 10.09.1997 issued by the Central Board of Excise and
Customs9, which laid down certain criteria for the classification of
products under the Act of 1985, which are claimed by the manufacturers
as ayurvedic medicines whereas claimed by Department as cosmetics.
The Board gave overriding effect to this circular over all previous
9
H Hereinafter also referred to as ‘the Board’.
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 303
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

circulars/instructions unless specified otherwise by Courts/Tribunal. The A
Adjudicating Authority made reference to the basis laid down by the
Board to decide the classification of product to be a medicament or not
in the following terms: -
“- whether the product has substantial therapeutic or prophylactic
properties and whether it is prescribed as a medicine by a Medical B
Practitioner for curing of a disease and is prescribed for a limited
time & use;
- how the product is construed in the popular sense i.e., how it is
advertized and how it is understood by the people who normally
sell it or use it; C
- the drug license is only a guiding factor and not a decisive one
since in terms of Chapter note under Chapter 33, goods falling
under sub-headings 3303 to 3307 would merit classification under
these headings, irrespective of the subsidiary therapeutic properties
of the product.” D
6.6. The Adjudicating Authority was of the view that AHAHO
did not qualify the first criteria as specified by the Board as, though
availability of AHAHO in General Stores cannot be sole criteria but, it
was common knowledge that one was not required to go to Homeo
Stores or Homeo Physician to buy AHAHO; it did not contain the E
mandatory conditions as prescribed under the Drugs and Cosmetics Act,
194010 on contents of the label; there were no specifications relating to
its dosage and duration of use and no contra-indications were stated
irrespective of quantum or duration of use, which was against the basic
concept of a medicament whose overdose result in contra-indications
like diarrhoea, acidity, ulceration, rashes, etc.; and it did not claim to F
cure any particular diseases like alopecia or insomnia but only claimed
to be able to prevent and control such diseases.
6.7. The analysis of the learned Adjudicating Authority in relation
to the ingredients of the product in question and its properties, leading to
the finding that it cannot be categorised as medicament, read as under: - G
“11.6 I have perused the labels of the product which are on record.
The contents are declared on the label as follows:

10
Hereinafter also referred to as ‘the Act of 1940’. H
304 SUPREME COURT REPORTS [2023] 6 S.C.R.

A i) Arnica Mont Q 0.5 ml
ii) Cantharis Q 0.5 ml
iii) Cinchona Q 0.2 ml
iv) Piocarpine Q 0.2 ml
B (Q= lX in pure coconut oil q.s. Alcohol 0.9°/o V/V)
11.7 On perusal of the label of AHAHO, it was observed that the
front side of the label, there is a caption which reads “controls
hair fall”; “prevents dandruff”. On the reverse of the label i.e. the
bottle hind side, it is mentioned that “Indication: Improves blood ,
C circulation to the hair roots, thereby stops hair fall and promotes
hair growth. Also controls dandruff, removes headache, induces
good sleep and maintains natural color of the hair; “Contra
Indications: NIL”. “Directions for use: Massage directly on the
scalp, for best results leave it on overnight.” The label also reads
D “Aswini Homeo Arnica Hair Oil”. It does not contain any condition
like “to be sold by authorized medical distributor or retailer under
prescription from medical practitioner” even though such mention
is a mandatory requirement under Section 97(1) of the Drugs &
Cosmetics Act, 1940. Secondly, it does not contain any specification
regarding the dosage to be used and the duration for which it is to
E be used, which is the norm for a medicament. In case of a drug or
medicament, we certainly find a direction with regard to prescribed
amount of dosage to be used and in addition a direction that “ ...
or as directed by the physician”. These specifications are not to
be found on the product labels in this case. Thirdly, it does not
F claim that it can cure any particular disease like Alopecia (loss of
hair). Medical conditions like Alopecia actually tend to happen all
of a sudden with patches of baldness not only on the head but
anywhere on the body. Similarly lack of sleep i.e. Insomnia is a
medical condition which results in sleeplessness emanating from
stress and other neurological disorders. Non-mention of Alopecia
G or Insomnia on the labels indicates that the product is not meant
for any substantial curative purpose. Further, the kind of prevention
or control claimed by AHAHO indicates a clear non-connection
between the diseases and the product in question. Moreover, by
mentioning that there are no contra indications, it implies that
irrespective of the quantum or duration of usage, there is no
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 305
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

adverse effect on the scalp or skin, which is against the basic A
concept of a medicament, which is prescribed or used for a limited
period and overdose of a medicament is known to result in contra
indications like diahorrea, acidity, ulceration, rashes etc. Even a
medically prescribed skin cream or ointment has a limited use for
the particular indication or symptom. We normally find a warning
B
on such creams that prolonged usage will result or cause irritational
symptoms, which if persist, should be remedied by a consultation
with the Doctor. Nothing of that sort is found herein. In any case,
the point that becomes clear is that AHAHO is a neither a
prescribed medicament of a medical practitioner nor it is claimed
to have any substantial therapeutic or prophylactic properties. I C
also find that as regards labels, Hon’ble Supreme court observed
in the case of Ishaan Laboratories (supra) that “Further it was
obvious from the labels of the products which we have ourselves
inspected in the court that there is a claim made in each of the
label of the medicinal properties of the product. It is also found
D
that there was a specific claim that this is not a cosmetic product.”
Though in that case, the products were held to be medicaments,
the label description on the basis of which such a conclusion was
drawn (apart from other factors) indicates that the product should
be projected and marketed in I such a manner so as to express
the intention of the manufacturer that the product is a medicament E
and not a cosmetic. Such a situation does not exist in the present
case inasmuch as the labels neither contain a positive indication
that it is a medicament nor a negative indication that it is not a
cosmetic. However, it is certainly labeled as a Hair Oil,
prominently. If the intention is to identify the product as
F
medicament, there was no need to label it is Hair Oil. Hence
following the finding in the said case, I am inclined to hold that
AHAHO cannot be categorized as a medicament but has to be
classified as a Hair Oil. Accordingly, AHAHO does not fit into
the first criteria prescribed under the said Circular.”
6.8. As regards the common parlance criteria i.e., the way the G
product was marketed, it was observed that AHAHO was accessible in
both Medical and General Stores and could be bought across the counter.
Moreover, depiction of a lady with long, black flowing hair on its label
indicated its categorisation as cosmetic and not as a medicament. The
Adjudicating Authority even proceeded to observe that ‘Hair growth is H
306 SUPREME COURT REPORTS [2023] 6 S.C.R.

A at best a cosmetic necessity rather than a disease requiring immediate
attention or treatment’; and held that the product in question failed on
the second criteria of common parlance too.
6.9. The Adjudicating Authority also observed that the drug licenses
issued by respective authorities, per se did not make AHAHO a
B preparation of homeopathic medicine, thereby failing the third criteria
also. While referring to Materia Medica, the Adjudicating Authority
expressed his reservations about one ingredient (Pilocarpine) and
observed that there was no nexus of the said ingredient with Homeopathy.
6.10. While referring to the significance of general rules of
C interpretation as regards the Notes attached to the respective Chapters/
Tariff Items in the First Schedule to the Act of 1985, the Adjudicating
Authority observed that as per Note 1(e) to Chapter 30, the said Chapter
did not cover preparation of the headings of Chapter 3303 to 3307, even
if they have therapeutic or prophylactic properties.

D 6.11. The Adjudicating Authority also referred to the Board
Circular No. 890/10/2009-CX dated 03.06.2009, clarifying its stance that
coconut oil packaged in containers up to 200ml had to be classified as
“Hair oil” due to the general view of public; and observed that AHAHO
packed in bottles of 50ml, 100ml and 200ml, was to be treated as “Hair
oil” and the 400ml pack cannot surpass this classification, merely because
E it was not fast-moving.
6.12. Hence, the Adjudicating Authority was of the view that the
product in question could not be classified under Tariff Item 3003 90 14
or under any item stated in Chapter 30. The Adjudicating Authority further
observed that when the intention of the framers of the legislation was to
F tax “Hair oil” at a particular rate, any attempt to evade the same would
result in disregarding the law. Accordingly, the Adjudicating Authority,
by its order dated 16.10.2015, confirmed the demand and levied interest
and penalty on the respondent, as noticed hereinbefore.
6.13. It may be observed, in all fairness to the learned Adjudicating
G Authority, that in his elaborate order dated 16.10.2015 (pp. 96-253 of
paper-book), several passages from a large number of decisions have
also been reproduced, which we have not indicated hereinabove. The
relevant of those decisions, as cited on behalf of the parties, shall be
referred to and examined at the relevant stage hereafter.
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 307
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Before the Customs, Excise and Service Tax Appellate A
Tribunal
7. The assessee’s appeal11 against the aforesaid order dated
16.10.2015 was taken up for consideration by the Tribunal along with a
bunch of its other appeals involving the same issues but pertaining to
different periods of consideration. B
7.1. The respondent-assessee (appellant before the Tribunal) made
various submissions, including that the product was made of four
homeopathic medicines in coconut oil base with therapeutic use for curing
alopecia (loss of hair) and insomnia (lack of sleep) amongst other
diseases; that the product was being manufactured under the drug license C
issued by the Director, Indian Medicine and Homeopathy, subsequently
renewed as a medicament by the Additional Director & Drug Controller
(Homeo), Department of Ayush, Government of Telangana; that AHAHO
was mentioned at Serial No. 35 of Schedule K to the Rules of 1945,
which contains only drugs; that the label clearly listed the ingredients
and composition, indications and contra-indications as also mode of use; D
that the product was commonly understood as homeopathic medicament
by its users as well as dealers; that the issue had squarely been decided
in Bakson Homeo Pharmacy (supra); and that there were no such
changes, be it in the Act of 1985 or in the ingredients of the product or
the manufacturing process, which would warrant a revision of its E
classification. On the other hand, the Department reiterated the findings
of the Adjudicating Authority in opposition to the appeal.
7.2. The Tribunal summarised the substance of the order passed
by the Adjudicating Authority as follows: -
“6. We find that the adjudicating authority has mainly confirmed F
demand on the ground that since the AHAHO is not prescribed
by a medical practitioner for the purpose of curing any disease
and it is available in the medical shops as well as general stores
and any persons desirous using it can purchase across the counter,
hence the same is not Homeopathic medicine. He also held that G
the label does not indicate the condition of sale by the authorized
medical distributor or retailer under prescription from medical
practitioner even though it is mandatory requirement under section
97 (1) of the Drugs & Cosmetic Act, 1940. It also does not contain
11
Being Appeal No. E/30050/2016. H
308 SUPREME COURT REPORTS [2023] 6 S.C.R.

A the dosage to be used or that the dosage as directed by the
physician. That it does not contain any that it can cure any particular
disease like alopecia (loss of hair) or insomnia (sleep loss). Further
he also held that previous orders passed by the Appellate Authority
were on the basis of tariff entry before 2012 and after the said
period the entries has changed hence needs relook.”
B
7.3. Having taken note of the background aspects of the case, the
findings of the Adjudicating Authority, and various decisions cited by the
parties in support of their respective contentions, the Tribunal found no
reason for which the classification of the product in question was sought
to be changed by the Adjudicating Authority.
C
7.4. In the course of its analysis, the Tribunal, inter alia, observed
and held that only for the reason of being sold over the counter and not
on a medical prescription would not take the product out of the category
of medicine; that when different branches of medicine and licensing
authority recognized baldness or hair fall as disease, the Adjudicating
D Authority was not entitled to take a different view; that the product
clearly mentioned its use for other ailments like sleep loss; that the
contents of its label clearly mentioned the product as homeopathic
medicine and the same was understood as such by its users and traders;
and that the product in question indeed passed the common parlance
E test. The Tribunal further referred to the four homeopathic medicines as
being the ingredients of products and the same being covered by Serial
No. 35 of Schedule K to the Rules of 1945, which only related to drugs
and not cosmetics. The Tribunal yet further observed that the Adjudicating
Authority had not been adopting a uniform approach and referred to the
fact that the respondent had been issued show-cause notices in the past
F too and the Adjudicating Authority, upon examining the common parlance
test as also the contents and usage of product, had accepted AHAHO
as a homeopathic medicine. The Tribunal observed that the product
remained the same and its classification as previously accepted was not
required to be altered. The Tribunal also observed that on one hand, the
G Adjudicating Authority noted that the classification made before the
amendment had to be re-looked but on the other hand, relied upon the
decisions before 2012 along with the circular issued by the Board in
1997.
7.5. Thus, in sum and substance, the Tribunal found no reason for
H the classification now sought to be adopted by the Department; and
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 309
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

proceeded to disapprove the order so passed by the Adjudicating Authority. A
For ready reference, we may reproduce the relevant parts of the findings
of the Tribunal as follows: -
“9. The above judgments of the Hon’ble Apex Court and the
Tribunal clearly spells out that even though the goods are sold
over the counter and not on a medical prescription, it would not B
lead to the goods being out of the category of medicine. The
adjudicating authority has held that since the hair growth is
cosmetic necessity and the product label shows the lady with long
hair the goods are cosmetic product. We are not in agreement
with the above views of the adjudicating authority. Firstly when
the different branches of medicine and the Licensing authorities C
recognize the baldness or hairfall as disease in that case the
adjudicating authority cannot take a different view which is not
recognized by the branches of medicine. Secondly the product
clearly mentions that the product in question is used for other
ailments also such as sleep loss, increase of blood circulation and D
it nowhere depicts itself as for hair care or enhancing beauty of
hair. The label indicates the product as Homeoptahic medicine
under schedule K, ingredients and their composition, indications,
contra indications and mode of application. The content of label
thus itself shows that even in common parlance it is understood
by the users and the traders as Homeopathic medicine. There is E
no advice on the label nor does it suggests that it can be used as
hair oil. It is not disputed about the fact that the product is made
of four Homeopathic medicines as ingredients namely Arnica
Mount, Cantharis, Pilocarpin and Cinchona and is used to treat
the hair loss, insomnia, dandruff, headache and other ailments. It F
is manufactured under Drug Licence issued under Rule 25 C of
Drugs & Cosmetic Rules 1945 and in terms of Rules 85D by the
Director, Indian Medicine & Homeopathy. The licence has been
renewed from time to time by the Additional Director & Drug
Controller (Homeo), Department of Ayush, Government of
Telangana State. Even as per analysis report & Drug Controller, G
Department of Ayush the product is medicine. The product is
covered by serial no. 35 of Schedule K of Drugs and Cosmetic
Rules (Homeopathic Hair oils having active ingredients upto 3X
potency) and the said schedule covers only drugs and not
Cosmetics. The product has already been held to be Drug by the H
310 SUPREME COURT REPORTS [2023] 6 S.C.R.

A Hon’ble Andhra Pradesh High Court in reference to APGST as
well as Commercial taxes. The Advance Ruling authority of
Commercial Taxes, Government of Tamilnadu for the purpose of
TNVAT Act 2006 held that product to be a homeopathic medicine.
We find that even before the subject cases, on many occasions in
the past, Appellant were issued show cause notices for
B
classification of goods as cosmetic and the Appellate Authority
after going into all the aspects of common parlance as well as
contents of the product and its usage held that the product is
Homeopathic medicine. The adjudicating authority has relied upon
the judgment of Hon’ble Supreme Court in case of CCE, Nagpur
C Vs. M/s Shree Baidyanath Ayurved Bhavan Ltd. 2009 (237) E.L.T.
225 (S.C.) to state that the product in question does not satisfy
the common parlance test. We find that the ratio of said judgment
is not applicable as in the said case, the product Lal Dant Manjan
was known as toilet preparation in common parlance and not as
Ayurvedic medicine. Whereas in the present case the facts are
D
entirely different as the Appellant has sold the goods as
Homeopathic medicine and it is known as Homeopathic medicine
in the common parlance. Even as apparent from facts the label of
the product clearly shows the product as Homeopathic medicine,
its content and usage. It also says that it should be left overnight.
E We are of the view that when the product is being sold as
Homeopathic medicine and known as homeopathic medicine in
the market the goods pass test of common parlance test as
Homeopathic medicine. In the light of our observations made in
preceding paras, we hold that the reliance placed upon the judgment
of Shree Baidyanth case supra is misplaced as the facts are entirely
F
different. Further the adjudicating authority reliance upon the order
of the Tribunal in case of Naturence Research Labs (P) LTD.
Vs. CCE, DELHI-II. 2003 (154) E.L.T. 672 (Tri. -Del.) is not
correct as in said case the product Forest Flower was sold as
nourishment to the scalp and hair roots as per the matter mentioned
G on the packing and it also helped control hair loss and prevents
scalp infection, encourages luxurious growth of hairwhereas in
the present case the Drug/ licensing Authorities and even the
Honble High Court, the Vat authorities and the medical practitioners
all have certified the product to be falling under the category of
schedule K as Drug and even the product is sold as medicine as
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 311
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

known as medicine in common parlance, The judgment of Alpine A
Industries 2003 (152) E.L.T. 16 (S.C.) as relied upon by the revenue
is also not applicable as in the said case the drug licence obtained
by the assessee under the Drugs and Cosmetics Act, 1940, itself
mentioned that it is a licence for ointment and cream for external
application as a non-pharmacopoeia item whereas in the present
B
case the product is registered as Homeoptahic Medicine by the
Additional Director, Indian Medicine and Homeopathy
Department, Government of Andhra Pradesh. Even the Hon’ble
High Court of Andhra Pradesh held the product to be falling under
the category of Drug and Medicine and is sold as medicine. The
ratio of judgment in case of CCE Vs. ZANDU C
PHARMACEUTICAL WORKS LTD. 2006 (204) E.L.T. 18
(S.C.) is also not applicable as the product label clearly shows the
product as Homeopathic medicine The Judgment of Hon’ble Apex
Court in case of Sujanil Chemco Industries Vs. CCE, Pune 2005
(181) ELT 206 (SC) and Tribunal order in case of Bakson Homeo
D
Pharmacy (P) Ltd. Vs. CCE, New Delhi 2001 (136) ELT 485
(TR- DEL) are absolutely applicable to the present case in view
of our above findings and we do not find any reason to differ with
those decisions.
10. We also find that the adjudicating authority at the one hand
has held that the classification done before amendment in Central E
Excise Tariff in the year 2012 would require relook into the
classification of the product in question and thus refused to accept
the settled classification of goods under chapter 30 in terms of
Appellate Orders passed in favour of Appellant. However on the
other hand the adjudicating authority has relied upon the judgments F
rendered in the context of Central Excise Tariff before year 2012
and the Board Circular issued in year 1997 which clearly shows
that there is no uniformity adopted by him to decide the issue. The
adjudicating authority has relied upon the Circular No. 333/49/97
CX dt. 10.09.1997 to hold that the medicine is prescribed by a
medical practitioner, used for limited time and not every day unless G
it is prescribed to deal with specific disease. He also relied upon
the judgments in case of Alpine Industries Vs. CCE, Delhi 1997
(92) ELT 53 (TRI), CCE, Mumbai Vs. M/s Muller & Phipps,
Richardson Hindustan Ltd. 1998 (35) ELT 424 (TRI) to hold that
the word must be construed in popular sense i.e the meaning as H
312 SUPREME COURT REPORTS [2023] 6 S.C.R.

A understood by the people conversant therewith. The adjudicating
authority has held that though the there is no rationale behind
applying the 1997 circular in the year 2012 but since the said
circular has not been withdrawn or held to be inapplicable in these
matter by any court or law, the same would be applicable as it
was relied upon by the Courts of law in numerous cases and in
B
the light of said circular the product is not prescribed by a medical
practitioner for any disease. We find that the adjudicating authority
has chosen to apply pick and choose approach wherever it suited
him for confirming demand against Appellant. We are not in
agreement with the above approach and views of the adjudicating
C authority. We find that the Appellant were earlier issued demand
notice on four different occasions and on each occasion the issue
stands decided in favour of Appellant by the Appellate Authorities
holding the goods to be Homeopathic medicine and liable to duty
accordingly. The revenue has placed its reliance upon the judgment
of Hon’ble Apex Court in case of M/s Shree Baidynath case
D
supra to confirm the demands. However it is to be observed that
the Honble Apex Court in said case has relied upon its judgment
in case of B.P.L. PHARMACEUTICALS LTD. Vs.
COLLECTOR OF C. EXCISE, VADODARA 1995 (77) E.L.T.
485 (S.C.). wherein it was held that Merely because there is some
E difference in the tariff entries, the product will not change its
character. Something more is required for changing the
classification especially when the product remains the same. In
the present appeals the product has remained same and the
classification issue stands decided in favour of the Appellant in all
four previous proceedings against the Appellant. In case of CCE
F
Nagpur Vs. Vicco Laboratories 2005 (179) ELT 17, the Honble
Apex Court has held that classification cannot be changed without
a change in the nature of a product or a fresh interpretation of the
tariff heading by such decision. In the present case the goods in
question has remained same and there is no change of tariff
G heading. Thus the contention of the Ld. Adjudicating authority
that the change in tariff entry would require relook into
classification is absolutely erroneous as the product has remained
same and it would remain classified as Homeopathic medicine.
11. After careful appreciation of the facts as narrated above we
H find no reason to classify the product as Cosmetic under Chapter
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 313
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

33 of the CETA, 1985. We thus hold that the goods are classifiable A
under chapter 30 of the Central Excise Tariff as Homeopathic
medicine and liable to duty accordingly. There is no reason to
demand the duties and penalties adjudged against the Appellant.”
Rival Submissions
8. In the present appeal, the learned Additional Solicitor General B
Mr. Vikramjit Banerjee has assailed the impugned judgment and order
dated 31.01.2018 on a variety of grounds while asserting that the Tribunal
has erred in holding that the product in question would fall under Chapter
30 and not under Chapter 33 of the First Schedule to the Central Excise
Tariff Act, 1985 as amended in the year 2012. C
8.1. Learned ASG has stressed upon the necessity for re-look
into the classification of the product in question with the submissions
that due to the change in tariff structure, the orders prior to 2012 had lost
their precedential value. The learned ASG would submit that Chapter 30
has been reworded to remove the distinction between patent/proprietary D
and generic medicaments and to classify them in terms of whether they
are put in unit containers for retail sale or not; and the mention about the
Act of 1940 as also various pharmacopeia has also been deleted. The
learned ASG would further submit that “Hair oil” under Chapter 33
garnered focus because of the subsidiary headings of “perfumed hair
oil” and “others” having been specified. The learned ASG has supported E
his submissions with reference to the decision in Collector of Central
Excise, Guntur v. Andhra Sugar Ltd. Venkataraypuram: 1989 Supp
(1) SCC 144 that the change in entries from 2012 of the Act of 1985
showed the legislative intent to bring the product within taxation bracket
as “Hair oil”, which was added under Chapter 33 as a distinct category. F
8.2. Learned ASG has strenuously argued that the product in
question does not meet the criteria laid down under Chapter 30. It has
been submitted that on a reading of the relevant Notes, even if the product
is stated to possess certain curative or prophylactic value, it would still
be cosmetic, as it excludes those with subsidiary curative and prophylactic G
value. The learned ASG would submit that the respondent has classified
the product under Tariff Item 3003 90 14 but, the said entry provides for
medicaments not put in measured doses or packaging whereas, AHAHO
is admittedly sold in packaging of 50ml, 100ml, 200ml and 400ml bottles.
According to learned ASG, Tariff Item 3305 90 19, specifically meant
for “Hair oils”, directly covers the product in question, AHAHO. H
314 SUPREME COURT REPORTS [2023] 6 S.C.R.

A 8.3. Learned ASG has also argued that a specific entry would
take precedence over a general entry, as held by this Court in
Commissioner of Central Excise, Nagpur v. Shree Baidyanath
Ayurved Bhavan Ltd.: (2009) 12 SCC 419; and when “Hair oil” is
specifically mentioned in Chapter 33 and when AHAHO’s common
parlance is that of a general cosmetic requisite, classifying it as a
B
‘medicament’ is a far-fetched proposition.
8.4. In the other limb of submissions, learned ASG has contended
that the common parlance test of the product is not in favour of the
respondent, as the product is not prescribed by any medical practitioner,
is available freely without any prescription in Medical and General Stores,
C and could be purchased across the counter, as admitted by the respondent.
Additionally, the label does not indicate the condition of sale by authorised
medical distributor or retailer under prescription as mandated under the
Act of 1940; it does not cure any particular disease; and the claims on
the label are for marketing purposes only. Learned ASG has relied upon
D the decision in Alpine Industries v. Collector of Central Excise, New
Delhi: (2003) 3 SCC 111 to submit that any subsidiary therapeutic or
prophylactic use of the product would not change its nature as “Hair
oil”, if in the common parlance, it is treated as a cosmetic. Another
decision of this Court in Sunny Industries (P) Ltd. v. Collector of Central
Excise, Calcutta: (2003) 4 SCC 280 has also been relied upon.
E
8.4.1. Learned ASG has again referred to common parlance test
to submit that the product is advertised as hair oil and not a medicament;
and is perceived by the public who purchase and sell the product as a
hair oil (cosmetic) and not as medicament. For the purpose of construing
the words in a statute, the learned ASG has referred to the decision in
F Commissioner of Customs, Calcutta v. G.C. Jain and Anr.: (2011)
12 SCC 713 to submit that unless the statute defined the words and
expressions, they ‘have to be construed in the sense in which persons
dealing with them understand i.e., as per trade and understanding
and usage.’ Further the decision in Commissioner of Central Excise
G v. Wockhardt Life Sciences Limited: (2012) 5 SCC 585 has been
relied upon to submit that for classifying a taxable commodity, there is
no fixed test and the decision on the classification of a particular article
would depend on the tangible material or as to how it is comprehended
in “common parlance” or “commercial world” or “trade circle”, or in its
popular sense.
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 315
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9. On the other hand, learned senior counsel for the respondent A
Mr. V.V.S. Rao has emphasised on the submissions that AHAHO’s
classification has attained finality, having been examined four times; its
composition is of four homeopathic medicines in a base oil medium; it
has been licensed for manufacture and sale as a homeopathic medicine
by the Director, Indian Medicines and Homeopathy, Government of
B
Andhra Pradesh; it cures/prevents alopecia, dandruff, hair fall, etc., due
to its therapeutic and prophylactic properties; and its label indicates the
nature of the product as a homeopathic medicine under Schedule K to
the Rules of 1945 with ingredients, composition, indications, contra-
indications and mode of application.
9.1. Learned senior counsel would submit that although there were C
changes in the tariff structure in the year 2012 but then, notwithstanding
the amendments, AHAHO has remained classifiable under Chapter 30,
as its ingredients or manufacturing process did not undergo any change
warranting its classification as a cosmetic under Chapter 33. Elaborating
on these aspects, learned senior counsel has submitted that until 2004- D
05 the tariff entry was only 3003 39 for Homeopathic medicines and
from 2005-06, 3003.39 was divided into 3003 for wholesale and 3004 for
retail sale. Consequent to amendment of the First Schedule to the Central
Excise Tariff Act, 1985 during the year 2005-06 introducing eight-digit
classification system, the product became classifiable under Chapter
heading 3004 90 14 (Medicaments consisting of two or more constituents E
which have been mixed together for Therapeutic or Prophylactic uses
put up in doses or in forms or packings suitable for retail sale). It has
been argued with reference to the decisions in BPL Pharmaceuticals
v. Collector of Central Excise, Vadodara: 1995 Supp (3) SCC 1 and
Commissioner of Central Excise, Nagpur v. Vicco Laboratories: F
(2005) 4 SCC 17 that some differences in the tariff entries would not
change its character when the product remains the same. According to
the learned counsel, insertion of Sub-Headings in Chapter 33 makes no
difference as the product in question does not fit into any of the revised
descriptions of “Hair oil” in Chapter 33, for AHAHO is clearly covered
by the definition of ‘medicament’. G

9.1.1. In regard to the question of re-look at the classification, it
has also been submitted that the contention on the part of appellant that
the respondent classified the product under 3003 90 14, which provides
for medicaments not put up in measured doses or packaging, whereas
H
316 SUPREME COURT REPORTS [2023] 6 S.C.R.

A admittedly AHAHO is sold in packaging of 50ml, 100ml etc., is a new
ground which was not a part of the show-cause notice; rather the
respondent was never called upon to show-cause as to why the
classification should not be changed. Therefore, all the proceedings are
vitiated. It has, however, been submitted that even in relation to the
assertions of the appellant, AHAHO would still remain under Chapter
B
30 (Traffic Item 3004 90 14) which is meant for Homeopathic
Medicament packed in packages for retail sale and, in any case, it would
not fall under Chapter 33 (Tariff Item 3305 90 15); and, notwithstanding
the change in sub-classification, the rate of duty would not change and
the situation would remain revenue neutral.
C 9.2. It has further been argued that the observations in Shree
Baidyanath Ayurved Bhawan (supra) rather support the respondent’s
case, because the ingredients, process of manufacture and uses of
AHAHO having undergone no change from the beginning despite change
in group of individual tariff entries. According to the learned counsel, no
D case is made for treating AHAHO as ‘cosmetic’ by ignoring its
recognition as drug/medicament by the Government authorities as well
as by this Court on 27.02.2019 in Commissioner of Commercial Taxes
v. M/S Aswini Homeo Pharmacy: Civil Appeal No.9494-9495 of
2011.
E 9.3. Learned senior counsel has submitted that there is no need
for invoking the common parlance test as the nature of the product is
certified by competent authority as a medicament and that the appellant
had not made any market enquiries to establish that the product is a
cosmetic besides not disproving the factual evidence in favour of the
respondent.
F
9.4. Learned senior counsel has relied upon the decision in
Commissioner of Central Excise, Calcutta v. Sharma Chemical
Works: (2003) 5 SCC 60 to submit that merely because a product is
sold across counters and without a prescription, it would not per se lead
to the conclusion of it being not a medicament. The method of usage of
G AHAHO is clearly stated on its label; and Materia Medica clearly states
the therapeutic properties of ingredients used. It has also been submitted
that several drugs like Anacin, Dolo 650, Cough syrups, etc. are available
across the counter; and none of the Homeo drugs require any prescription
for purchasing. Another decision of this Court in the case of Meghdoot
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 317
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Gramodyog Sewa Sansthan, U.P. v. Commissioner of Central Excise, A
Lucknow: (2005) 4 SCC 15 has also been relied upon.
9.5. Learned senior counsel has distinguished the facts of the
present case from the case of Alpine Industries (supra), as AHAHO is
a therapeutic/prophylactic medicament in the medium of oil for the
diseases relating to the scalp. The product is not advertised as “Hair B
Oil” but is marketed only as “Aswini Homeo Arnica Hair Oil”.
9.6. With reference to the majority decision of the Tribunal in the
case of Bakson Homeo Pharmacy (supra) in respect of a similar
product, “Sunny Arnica Hair Oil”, learned senior counsel has submitted
that the said decision having attained finality, and in the case of respondent C
itself, the Department having four times accepted the classification of
the product as medicament, the attempt to revisit the classification had
been wholly unjustified and has rightly been disapproved by the Tribunal
9.7. It has, thus, been contended on behalf of the respondent that
in the impugned order dated 31.01.2018, the Tribunal has rightly set aside D
the demands raised by the Department after appreciating the facts and
the law applicable to the case inasmuch as, during the relevant period,
there was no change in the said Chapter 30; and there was no change in
the manufacturing process or ingredients of AHAHO. As such, the product
remained a medicament under Chapter 30 of the First Schedule to the
Central Excise Tariff Act, 1985 prior to 2012 and even thereafter. Hence, E
this appeal deserves to be dismissed.
Points for determination
10. For what has been noticed hereinabove, the point essentially
arising for determination in this case is as to whether the product in F
question, AHAHO, merits classification as ‘medicament’ under Chapter
30 or as ‘cosmetic or toilet preparations’ under Chapter 33 of the First
Schedule to the Central Excise Tariff Act, 1985; and the interlaced point
is as to whether the change in tariff structure by way of amendment
brought about in the year 2012 justified a re-look into the classification
of the product in question. G
11. As noticed, it remains undeniable that the product in question,
AHAHO, was classified as ‘medicament’ under Chapter 30 on at least
four different occasions by the Department, including two orders passed
by the successive Commissioner (Appeals) during 1994-2004; and the
said orders had attained finality. The respondent, in order to support its H
318 SUPREME COURT REPORTS [2023] 6 S.C.R.

A assertion that AHAHO is a medicament, also placed reliance on the
decision of the Tribunal in the case of Bakson Homeo Pharmacy (supra)
wherein a similar product marketed in the name of “Sunny Arnica Hair
Oil” was held to be medicament, covered under Chapter 30. However,
the Department attempted to rely on the amendment of the tariff entries
in the year 2012 as its justification for re-examination of the classification
B
of the product in question.
12. We have closely examined the divergent findings recorded by
the Adjudicating Authority and the Tribunal and have also taken note of
the competing stands taken by the parties. In order to examine the root
question as to whether the product in question is classifiable as
C ‘medicament’ under Chapter 30 or would fall in the classification of
‘cosmetic or toilet preparations’ under Chapter 33 as also the other
question as regards justification for re-examination of the previous
classification of the product in question, we may, in the first place, take
note of the principles discernible from the cited decisions.
D The principles in the cited decisions
13. As regards justification for re-examination of the classification
of the product in question, the Adjudicating Authority observed that there
were substantial changes in the tariff entries, particularly when Chapter
30 came to be reworded so as to remove the distinction between patent/
E proprietary and generic medicaments and classify them according to
whether they are put up in unit containers for retail sale or not; the
mention about the Act of 1940 and the various Pharmacopeia came to
be deleted; and under Chapter 33, the phrase “Hair oil” became prominent
under which, subsidiary headings of “perfumed hair oil” and “others”
F came to be specified. Learned ASG has also relied upon the reasons
adopted by the Adjudicating Authority in support of his contentions and
has cited the decision in Andhra Sugar Ltd. (supra) as regards
construction of statute with reference to the legislative intent.
13.1. In the case of Andhra Sugar Ltd. (supra), essentially, the
G issue involved had been as to whether acetic anhydride manufactured
by the respondent and sold to drug manufacturers was eligible to benefit
of exemption as drug intermediate. This Court held, having regard to the
language and purpose of exemption Notification, that the said product
acetic anhydride was covered by the expression ‘drug intermediate’ in
the Notification. In that context, this Court, observed in the referred
H paragraph as follows: -
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 319
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

“5. …It is well settled that the meaning ascribed by the authority A
issuing the notification, is a good guide of a contemporaneous
exposition of the position of law. Reference may be made to the
observations of this Court in K. P. Varghese v. ITO [(1981) 4
SCC 173]. It is a well settled principle of interpretation that courts
in construing a statute will give much weight to the interpretation
B
put upon it at the time of its enactment and since, by those whose
duty has been to construe, execute and apply the same enactment.”
13.2. In the case of BPL Pharmaceuticals (supra), cited on
behalf of the respondent, the issue before this Court was regarding the
classification of “selenium sulfide lotion USP” manufactured and sold
by the assessee under the brand name “Selsun Shampoo”. This Court, C
inter alia, held that for a product to fall under Chapter 33, in terms of
Note 2 therein, it must first be cosmetic and suitable to be used as such.
This Court also examined the active ingredient of the product (albeit
very small in quantity) and held that having regard to the preparation,
label, literature, character, common and commercial parlance, the product D
was liable to be classified as a medicament. Further, this Court accepted
the submission on behalf of the assessee that merely because of some
difference in the tariff entries, the product will not change its character;
and something more is required for changing the classification, especially
when the product remains the same. The relevant observations and
expositions of this Court read as under: - E

“29. The contention based on chapter notes is also not correct.
One of the reasons given by the authorities below for holding that
Selsun would fall under Chapter 33 was that having regard to the
composition, the product will come within the purview of Note 2
to Chapter 33 of the Schedule to Central Excise Tariff Act, 1985 F
is without substance. According to the authorities the product
contains only subsidiary pharmaceutical value and. Therefore,
notwithstanding the product having medicinal value will fall under
Chapter 33. We have already set out Note 2 to Chapter 33. In
order to attract Note 2 to Chapter 33 the product must G
first be cosmetic, that the product should be suitable for
use as goods under Headings Nos. 33.03 to 33.08 and they
must be put in packing as labels, literature and other
indications showing that they are for uses cosmetic or toilet
preparation. Contrary to the above in the present case none of
H
320 SUPREME COURT REPORTS [2023] 6 S.C.R.

A the requirements are fulfilled. Therefore, Note 2 to Chapter 33 is
not attracted. Again it is without substance the reason given by
the authorities that the product contains 2.5% w/v of Selenium
Sulfide which is only of a subsidiary curative or prophylactic value.
The position is that therapeutic quantity permitted as per technical
differences including US Pharmacopoeia is 2.5%. Anything in
B
excess is likely to harm or result in adverse effect. Once the
therapeutic quantity of the ingredient used, is accepted,
thereafter it is not possible to hold that the constituent is
subsidiary. The important factor is that this constituent
(Selenium Sulfide) is the main ingredient and is the only
C active ingredient.
30. As rightly contended by the learned Senior Counsel for
the appellants that merely because there is some difference
in the tariff entries, the product will not change its character.
Something more is required for changing the classification
D especially when the product remains the same……
*** *** ***
33. The labels which give the warning, precaution and directions
for use do make a difference from that of ordinary shampoo which
will not contain such warning or precautions for use. Further no
E individual would be prepared to say in a social gathering
that he or she is using Selsun to get rid of dandruff or other
similar diseases whereas nobody would hesitate to state in
a similar gathering that he or she is using a particular brand
of shampoo for beautifying his or her hair. Thus there are lot
F of favourable materials to treat the product in question as a
medicine rather than cosmetic. In this connection the reliance
placed by the learned counsel for the appellants on a decision of
this Court report in case Indian Metals & Ferro Alloys Ltd. v.
CCE [(1991) 51 ELT 165 (SC)] can be usefully referred to. In
that case this Court held:
G
“It (the Tribunal) seems to say that, even if the goods
manufactured by the appellant had been rightly classified under
manufactured by the appellant had been rightly classified under
Item 26-AA before 1-3-1975, the introduction of Item 68 makes
a difference to the interpretation of Item 26-AA. This is not
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correct. Item 68 was only intended as a residuary item. It covers A
goods not expressly mentioned in any of the earlier items. If,
as assumed by the Tribunal, the poles manufactured were
rightly classified under Item 26-AA, the question of revising
the classification cannot arise merely because Item 68 is
introduced to bring into the tax net items not covered by the
B
various items set out in the Schedule. It does not and cannot
affect the interpretation of the items enumerated in the
Schedule. This logic of the Tribunal is, therefore, clearly wrong.”
34. This judgment supports the case of the appellant when
it is contended that there is no good reason to change the
classification merely on the ground of coming into force of C
the new Central Excise Tariff Act, 1985 without showing
more that the product has changed its character.
35. The learned counsel also placed reliance on a number of
judgments to support his argument that in common and commercial
parlance the product is known as medicine rather than cosmetic. D
As pointed out already and in support of that submission, affidavits
and letters from chemists, doctors and customers are filed to show
that the product is sold under prescription only in chemists’ shops
unlike shampoos sold in any shop including provision shops. This
conclusion, namely, that the product is understood in the common E
and commercial parlance as a patent and proprietary medicine
was also found by the Central Board of Excise and Customs as
early as in 1981 and accepted by the Excise authorities and in the
absence of any new material on the side of the respondents there
is no difficulty in accepting this contention without referring to
decision cited by the counsel for the appellants. F

36. Yet another reason given by the CEGAT for not accepting the
case of the appellants was that the product is sold with a pleasant
odour and, therefore, it must be treated as a cosmetic. Selenium
Sulfide has an unpleasant odour and to get rid of it insignificant
amount of perfume is used and make it acceptable to the G
consumers. A medicine, for example, sugar-coated pill will
nevertheless be medicine notwithstanding the sugar-coating.
Likewise the addition of insignificant quantity of perfume to
suppress the smell will not take away the character of the product
as a drug or medicine. Again one other reason given by the Tribunal H
322 SUPREME COURT REPORTS [2023] 6 S.C.R.

A is regarding the packing. The Tribunal has held that the product is
cosmetic because it is packed in an attractive plastic bottle. This
by itself will not change the character, as cosmetic is put up for
sale with some indication on the bottle or label that it is to be used
as cosmetic or it is held out to be used as a cosmetic. As already
noted the label here gives warnings. The fact that it is packed in a
B
plastic bottles is a wholly irrelevant criteria.
37. On a perusal of the entire material we are satisfied that the
product in question, having regard to the preparation label,
literature, character, common and commercial parlance
understanding and the earlier decisions of the Central Board of
C Excise and Customs, would fall under Sub-heading No. 3003.19
and there is no justifiable reason for changing the classification.
As we have reached the above conclusion with reference to the
materials placed before us on facts, we do not think it necessary
to go into other decisions cited at the Bar. In the result the appeals
D are allowed holding that the product ‘Selsun’ will fall under Tariff
Item 3003.19.”
(emphasis supplied)
13.3. In Vicco Laboratories (supra), this Court was dealing with
the question of classifying turmeric skin cream, vajradanti toothpaste
E and tooth powder as under Chapter 30 with pharmaceutical products or
as under Chapter 33 with essential oils and resinoids, perfumery, cosmetics
or toilet preparations. After applying the common parlance test of
classification, and while relying on BPL Pharmaceuticals (supra) and
other decisions, this Court held against the attempt at re-classification in
F the following words: -
“4. The mere decision of a court of law without more cannot be
justification enough for changing the classification without a change
in the nature of a product or a change in the use of the product, or
a fresh interpretation of the tariff heading by such decision.”
G 14. At this juncture, it shall be apposite to refer to the two decisions
pertaining to the assessee Shree Baidyanath Ayurved Bhavan Ltd.
14.1. In the decision rendered on 13.04.2009, which has been
referred to by the learned counsel for the parties [reported in (2009) 12
SCC 419], extensive reference has been made to the previous decision
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rendered on 30.03.1995 in relation to the same assessee and concerning A
the classification of the same product namely Dant Manjan Lal 12. In the
said previous decision, being the case of Shree Baidyanath Ayurved
Bhavan Ltd. v. Collector of Central Excise, Nagpur: (1996) 9 SCC
402, the issue was as to whether DML manufactured by the assessee
was falling within the meaning of an Ayurvedic Medicine to qualify for
B
exemption from payment of excise duty under Notification No. 62/78-
CE dated 01.03.1978 issued in exercise of power conferred by Rule
8(1) of the Central Excise Rules, 1944. The relevant entry introduced by
amendment was reading as ‘all drugs, medicines, pharmaceuticals and
drug intermediates not elsewhere specified’. The appellant contended
that the product in question was a scientific medicine which would attract C
the aforesaid entry and would, therefore, be exempt from the payment
of excise duty. The Tribunal disagreed with these submissions and held
that the product in question could rightly be described as a toilet
preparation. In that regard, after noticing that the ingredient for the product
was stated to be Geru (red earth) to the extent of 70% having a cooling
D
quality, the Tribunal observed that the same was largely used as a filler
or coloring agent and was not described as a medicine in common
parlance. After going through various texts, definition of ‘drug’ under
the Act of 1940 and ayurvedic books as well as opinion of experts in this
behalf, the Tribunal concluded that the product in question could not be
described as a medicinal preparation and, accordingly, rejected the claim E
of the appellant. This Court approved the reasoning and findings of the
Tribunal while observing, inter alia, as under:-
“3. …. The Tribunal rightly points out that in interpreting statutes
like the Excise Act the primary object of which is to raise revenue
and for which purpose various products are differently classified, F
resort should not be had to the scientific and technical meaning of
the terms and expressions used but to their popular meaning, that
is to say the meaning attached to them by those using the product.
It is for this reason that the Tribunal came to the conclusion that
scientific and technical meanings would not advance the case of
the appellants if the same runs counter to how the product is G
understood in popular parlance. That is why the Tribunal observed
in para 86 of the judgment as under:

12
‘DML’, for short. H
324 SUPREME COURT REPORTS [2023] 6 S.C.R.

A “So certificates and affidavits given by the Vaidyas do not
advance the case of Shri Baidyanath Ayurved Bhawan Limited
in the absence of any evidence on record to show and prove
that the common man who uses this Dant Manjan daily to clean
his teeth considers this Dant Manjan as a medicine and not a
toilet requisite.”
B
It is this line of reasoning with which we are in agreement. The
Tribunal rejected the claim of the appellant holding that ordinarily
a medicine is prescribed by a medical practitioner and it is used
for a limited time and not every day unless it is so prescribed to
deal with a specific disease like diabetes. We are, therefore, of
C the opinion that the Tribunal applied the correct principles in
concluding that the product in question was not a medicinal
preparation (‘Ayurvedic’) and, therefore, the appellant was not
entitled to the benefit of the exemption notification. Having heard
the learned counsel at length and having perused the line of
D reasoning adopted by the Tribunal with which we are in general
agreement, we see no reason to interfere with the conclusion
reached by the Tribunal and, therefore, we dismiss these appeals,
but make no order as to costs.”
14.2. The aforesaid case related to the Rules framed under the
E Act of 1944 and the Notification issued thereunder. During the pendency
of appeal before this Court, the Act of 1985 was enacted which replaced
the Schedule to the Act of 1944; and Chapter 30 of the Act of 1985 dealt
with pharmaceutical products. With reference to the new enactment
and its amendments in the year 1996-1997, the assessee approached the
Board with a plea that now, there was specific definition of Ayurvedic
F medicines and hence, its product DML should be classified on the basis
of that definition. This led to the Board sending communication to the
Commissioner of Central Excise, Nagpur concerning the classification
of DML. These propositions led to different decisions where the assessee
contended that the product DML was a medicament under Chapter Sub-
G Heading 3003.31 of the Act of 1985 whereas, stand of the Department
had been that the said product was a cosmetic/toiletry preparation/tooth
powder classifiable under Chapter Heading 3306. West Regional Bench
of the Tribunal decided the classification in favour of the assessee and
held that DML was classifiable under Chapter Sub-Heading 3003.31. A
similar view was taken by East Regional Bench of the Tribunal. However,
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the Larger Bench of the Tribunal, to which the issue of classification of A
DML was referred, held that DML was classifiable under Chapter Sub-
Heading 3306.10.
14.3. In the above backdrop, the second decision concerning the
assessee Shree Baidyanath Ayurved Bhavan Ltd. was rendered by
this Court, which has been referred to by the learned counsel for the B
parties. Therein, this Court took note of the said previous decision rendered
on 30.03.1995 [mentioned as the decision of Baidyanath I] and held
that since the product in its composition, character and uses continued to
be the same, even after insertion of new Sub-Heading 3301.30, change
in classification was not justified. This Court elaborated on the twin test
for determination of classification of products (common parlance test C
being one of them) and also held that specific heading shall prevail over
the general one. The relevant observations and expositions of this Court
could be usefully reproduced as under: -
“46. As a matter of fact, this Court has consistently applied
common parlance test as one of the well-recognised tests D
to find out whether the product falls under Chapter 30 or
Chapter 33. In a recent decision in Puma Ayurvedic Herbal
(P) Ltd. v. CCE [(2006) 3 SCC 266] this Court observed that in
order to determine whether a product is a cosmetic or medicament,
a twin test (common parlance test being one of them) has found E
favour with the courts. This is what this Court observed: (SCC
pp. 269-70, para 2)
“2. … 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 approval of this Court also F
vide CCE v. Richardson Hindustan Ltd. [(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 G
medicament which is called the common parlance test.
For this test it will have to be seen whether in common parlance
the item is accepted as a medicament. If a product falls in the
category of medicament it will not be an item of common use.
A user will use it only for treating a particular ailment and will
H
326 SUPREME COURT REPORTS [2023] 6 S.C.R.

A stop its use after the ailment is cured. The approach of the
consumer towards the product is very material. One may buy
any of the ordinary soaps available in the market. But if one
has a skin problem, he may have to buy a medicated soap.
Such a soap will not be an ordinary cosmetic. It will be
medicament falling in Chapter 30 of the Tariff Act.
B
II. Are the ingredients used in the product mentioned in
the authoritative textbooks on ayurveda?”
*** ***
***
C 48. Applying the twin tests for determination of classification of
products (including common parlance test), this Court in Puma
Ayurvedic Herbal (P) Ltd. [(2006) 3 SCC 266] held that Items 1,
2, 3, 4, 7, 9, 10 and 11 were medicaments while Items 5, 6 and 8
were liable to be classified as cosmetics under Chapter Sub-
D Heading 33.04. We endorse the view that in order to
determine whether a product is covered by “cosmetics” or
“medicaments” or in other words whether a product falls
under Chapter 30 or Chapter 33 the twin tests noticed in
Puma Ayurvedic Herbal (P) Ltd. [(2006) 3 SCC 266]
continue to be relevant.
E
49. The primary object of the Excise Act is to raise revenue for
which various products are differently classified in the new Tariff
Act. Resort should, in the circumstances, be had to popular
meaning and understanding attached to such products by those
using the product and not to be had to the scientific and technical
F meaning of the terms and expressions used. 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
G strong factor in determination of classification of the
products.
*** *** ***
52. The approach of the West Regional Bench is fallacious in
what we have indicated above as it overlooks and ignores common
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parlance test which is one of the well-recognised tests to determine A
whether the product is classifiable as medicament or cosmetic
and that has been consistently followed by this Court including
with regard to this very product. It also overlooks the well-
settled legal position that without a change in the nature or
a change in the use of the product and in the absence of a
B
statutory definition, the product will not change its character.
The product DML remains the same in its composition,
character and uses. We have already held above that Sub-
Heading 3003.31 does not define ayurvedic medicine and,
therefore, there cannot be any justification enough for
changing the classification of the product DML which has C
not been held to be ayurvedic medicine by this Court.
*** *** ***
56. There is no doubt that a specific entry must prevail over a
general entry. This is reflected from Rule 3(a) of the general Rules
of interpretation that states that Heading which provides the D
most specific description shall be preferred to Headings
providing a more general description. DML is a tooth powder
which has not been held to be ayurvedic medicine in common
parlance in Baidyanath I [(1996) 9 SCC 402].
57. We have already observed that common parlance test continues E
to be one of the determinative tests for classification of a product
whether medicament or cosmetic. There being no change in the
nature, character and uses of DML, it has to be held to be a tooth
powder – as held in Baidyanath 1. DML is used routinely for
dental hygiene. Since tooth powder is specifically covered by F
Chapter Sub-Heading 3306, it has to be classified thereunder. By
virtue of Chapter Note 1(d) of Chapter 30 even if the product
DMLhas some therapeutic or medicinal properties, the product
stands excluded from Chapter 30.
58. The learned Senior Counsel for Baidyanath relied upon the G
judgment of this Court in Vicco Laboratories [(2005) 4 SCC 17
: (2005) 179 ELT 17] to show that in Baidyanath I [(1996) 9
SCC 402], no tests for classification were laid down. First,
in Baidyanath I [(1996) 9 SCC 402] common parlance test applied
by the Tribunal has been approved. Second, and more importantly,
H
328 SUPREME COURT REPORTS [2023] 6 S.C.R.

A with regard to the very same product (DML), this Court held that
it could not be classified as ayurvedic medicine and rather the
product is a toilet requisite. Baidyanath I [(1996) 9 SCC 402] ,
no doubt relates to the old Tariff period i.e. prior to
enactment of the new Tariff Act but since the product in its
composition, character and uses continues to be the same,
B
even after insertion of new Sub-Heading 3301.30, we have
already held that change in classification is not justified as
common parlance test continues to be relevant for
classification. Vicco Laboratories [(2005) 4 SCC 17: (2005) 179
ELT 17] is of no help to the assessee.”
C (emphasis supplied)
15. As regards the test to be applied for determination of the
proper classification of a product and construction of the tariff entries
with reference to a product, we may refer to the other cited decisions as
infra.
D
15.1. The case of Alpine Industries (supra) essentially related to
the question of classification of the product ‘Lip Salve’, manufactured in
accordance with the defence services specifications and supplied entirely
to military personnel, as a ‘medicament’ under Chapter 30 or as ‘a
preparation for care of skin’ under Chapter 33. This Court, while dealing
E with common parlance theory, held that the entries are not to be understood
in their scientific or technical sense, but by their popular meaning for the
purpose of interpretation. This Court said: -
“5. It is well established that in interpreting tariff entries in
taxation statute like the Excise Act, where the primary
F object is to raise revenue and for that purpose various
products are differently classified, the entries are not to be
understood in their scientific and technical meaning. The
terms and expressions used in tariff have to be understood
by their popular meaning that is the meaning that is attached
G to them by those using the product. See the decision of the
Supreme Court on the dispute regarding classification for excise
duty, the product — Lal Dant Manjan manufactured by Shree
Baidyanath Ayurved Bhavan Ltd. reported in the case of Shree
Baidyanath Ayurved Bhavan Ltd. v. CCE [(1996) 9 SCC 402].
The manufacturer claimed the product to be an Ayurvedic
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medicinal preparation product for dental care. The view of the A
Tribunal was upheld by this Court by holding (at SCC pp. 404-05,
para 3) that “ordinarily a medicine is prescribed by a medical
practitioner and it is used for a limited time and not every day
unless it is so prescribed to deal with a specific disease like
diabetes”.
B
*** *** ***
7. ….. It is firmly established that on the question of
classification of a product under the 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 C
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 D
the nature of the product and the use to which it is put, we do 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 E
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 everyone as protection from
dry, cold weather or sunrays. The product, therefore, essentially
is protective of skin of lips. It is a lip-care product and not a F
“medicament”. It is neither prescribed by any doctor nor obtainable
from the chemist or pharmaceutical shops in the market.
8. The appellant seeks classification of the product as
a pharmaceutical product under Chapter 30 and as a
“medicament” under Heading 30.03. Under the Rules for G
Interpretation of the Schedule under the Central Excise Tariff
Act, 1985, for the purpose of classification chapter notes can be
taken as an aid for understanding their various entries under various
headings of the tariff. What is to be noted from Chapter 30 of the
Tariff Act is that under Note 1(d) preparations covered by Chapter H
330 SUPREME COURT REPORTS [2023] 6 S.C.R.

A 33 even if they have “therapeutic or prophylactic properties” are
excluded from Chapter 30. “Medicament” has been defined in
Note 2(i) to mean “goods which are either products comprising
two or more constituents which have been mixed or compounded
together for therapeutic or prophylactic use”. On a reading of
Note 1(d) with Note 2(i) of Chapter 30 under the heading
B
“Pharmaceutical Products”, it is clear that preparations which
fall under Chapter 33 even if they have therapeutic or
prophylactic properties are not covered under Heading 30.03
as “medicaments”
*** *** ***
C
13. ……..Note 2 and Note 5 with Entry 33.04, we find ourselves
in agreement with the majority opinion of the Tribunal that the
product “Lip Salve” is a kind of “barrier cream” or a protective
cream against skin irritants. It, therefore, clearly falls under Entry
33.04 and conforms to the description “preparations for the care
D of the skin (other than medicaments)”. The learned counsel of
the appellant has not been able to persuade us to take a different
view from the one taken in the majority opinion of the Tribunal.
We confirm that the product “Lip Salve” is essentially a
preparation for protection of lips and skin and is not a
E “medicament”. Such preparations which have a subsidiary
curative or prophylactic value clearly fall under Entries 33.03
to 33.07 as per Note 2 under Chapter 33. The product
clearly is covered by Entry 33.04 read with Note 5 of Chapter
33, it essentially being a preparation for protection of lips
or skin. We have also gone through the minority opinion expressed
F by one of the members of the Tribunal and the reasoning therein
supported before us on behalf of the appellant. For the reasons
aforesaid, we are unable to agree with the minority view. In the
result, we find no merit in these appeals and the same are hereby
dismissed.”
G (emphasis supplied)
15.2. In G.C. Jain (supra), this Court held that the words and
expressions have to be construed as per trade and understanding usage,
unless defined in the statute. This Court said: -

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“18. Admittedly, the expression “adhesive” is not defined in the A
Act. It is now well settled that the words and expressions, unless
defined in the statute have to be construed in the sense in which
persons dealing with them understand i.e. as per trade and
understanding and usage.”
15.3. In Wockhardt Life Sciences (supra), this Court further B
elaborated on the common parlance test as under: -
“33. There is no fixed test for classification of a taxable
commodity. This is probably the reason why the “common parlance
test” or the “commercial usage test” are the most common (see A.
Nagaraju Bros. v. State of A.P. [1994 Supp (3) SCC 122] ). C
Whether a particular article will fall within a particular tariff
heading or not has to be decided on the basis of the tangible
material or evidence to determine how such an article is
understood in “common parlance” or in “commercial world”
or in “trade circle” or in its popular sense meaning. It is
they who are concerned with it and it is the sense in which they D
understand it that constitutes the definitive index of the legislative
intention, when the statute was enacted (see Delhi Cloth and
General Mills Co. Ltd. v. State of Rajasthan [(1980) 4 SCC
71].
34. One of the essential factors for determining whether a E
product falls within Chapter 30 or not is whether the product
is understood as a pharmaceutical product in common
parlance [see CCE v. Shree Baidyanath Ayurved Bhavan
Ltd. [(2009) 12 SCC 419] and CCE v. Ishaan Research Lab (P)
Ltd. [(2008) 13 SCC 349]]. Further, the quantity of medicament F
used in a particular product will also not be a relevant factor for,
normally, the extent of use of medicinal ingredients is very low
because a larger use may be harmful for the human body. [Puma
Ayurvedic Herbal (P) Ltd. v. CCE [(2006) 3 SCC 266], State of
Goa v. Colfax Laboratories Ltd. [(2004) 9 SCC 83] and B.P.L.
Pharmaceuticals Ltd. v. CCE [1995 Supp (3) SCC 1].] G
35. However, there cannot be a static parameter for the
correct classification of a commodity. This Court in Indian
Aluminium Cables Ltd. v. Union of India: (1985) 3 SCC 284
has culled out this principle in the following words: (SCC p. 291,
para 13) H
332 SUPREME COURT REPORTS [2023] 6 S.C.R.

A “13. To sum up the true position, the process of manufacture
of a product and the end use to which it is put, cannot necessarily
be determinative of the classification of that product under a
fiscal schedule like the Central Excise Tariff. What is more
important is whether the broad description of the article fits in
with the expression used in the Tariff.”
B
36. Moreover, the functional utility and predominant or
primary usage of the commodity which is being classified
must be taken into account, apart from the understanding
in common parlance. [See O.K. Play (India)
Ltd. v. CCE [(2005) 2 SCC 460] , Alpine
C Industries v. CCE [(2003) 3 SCC 111] , Sujanil Chemo
Industries v. CCE & Customs [(2005) 4 SCC 189] , ICPA Health
Products (P) Ltd. v. CCE [(2004) 4 SCC 481] , Puma Ayurvedic
Herbal [(2006) 3 SCC 266] , Ishaan Research Lab (P)
Ltd. [(2008) 13 SCC 349] and CCE v. Uni Products India
D Ltd. [(2009) 9 SCC 295] ]
*** *** ***
39. In our view, as we have already stated, the combined factors
that require to be taken note of for the purpose of the classification
of the goods are the composition, the product literature, the label,
E the character of the product and the user to which the product is
put. However, the miniscule quantity of the prophylactic
ingredient is not a relevant factor. In the instant case, it is
not in dispute that this is used by the surgeons for the
purpose of cleaning or degerming their hands and scrubbing
F the surface of the skin of the patient before that portion is
operated upon. The purpose is to prevent the infection or
disease. Therefore, the product in question can be safely
classified as a “medicament” which would fall under Chapter
Sub-Heading 3003 which is a specific entry and not under Chapter
Sub-Heading 3402.90 which is a residuary entry.”
G
(emphasis supplied)
15.4. In Sunny Industries (supra), this Court was dealing with
the question whether ‘Ad-Vitamin Massage Oil Forte’ was still classifiable
as patent and proprietary medicine even after the change of tariff
description after 1985 Budget. This Court dismissed the appeal of the
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assessee as the product in question was oil, used for massage to take A
care of the skin, and not to cure the skin and hence, was classifiable
under ‘cosmetics’ and not under ‘medicaments’. This Court observed
and held as under: -
“11. From the aforesaid chapter notes, it is clear that Heading
33.03 would include products whether or not they contain subsidiary B
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 against skin irritants. Therefore, the product,
mainly oil containing some A and D vitamins which is used C
for massage, even if it prevents ailment of rickets and treats
the same cannot be held to be a medicament.
12. Hence, in our view, after verification of the entire evidence
and the certificates produced on record as well as the report of
the Chemical Analyser, the Tribunal rightly arrived at the conclusion D
that the product in question is oil used for massage and
would be covered by Heading 33.04. Similar contention was
raised in Alpine Industries v. CCE [(2003) 3 SCC 111: JT (2003)
1 SC 130] . The Court observed (at SCC p. 116, para 8) that
“medicament” has been defined in Note 2(i) to mean “goods which E
are either products comprising two or more constituents which
have been mixed or compounded together for therapeutic or
prophylactic use”. On a reading of Note 1(d) with Note 2(i) of
Chapter 30 under the heading “Pharmaceutical Products”, it is
clear that preparations which fall under Chapter 33 even if they
have therapeutic or prophylactic properties are not covered under F
Heading 30.03 as “medicaments”. The Court thereafter held thus:
(SCC p. 115, para 7)
“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. G
It is firmly established that on the question of classification of
a product under the 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 H
334 SUPREME COURT REPORTS [2023] 6 S.C.R.

A 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
B
not find that the claim of the appellant is acceptable that it is
primarily for therapeutic use.”
13. The same would be the position in the present case.
The oil is not used for cure of skin but is oil for massage
and it takes care of the skin.
C
14. In this view of the matter, we find no substance in these appeals
and they are accordingly dismissed. There shall be no order as to
costs.”
(emphasis supplied)
D 15.5. In Sharma Chemicals (supra), this Court was concerned
with the issue as to whether the product Banphool Oil could be classified
under as Ayurvedic medicament or as perfumed hair oil. This Court held
that mere fact that a product is sold across the counter and not under a
doctor’s prescription, does not ipso facto lead to the conclusion that it is
E not a medicament. This Court, inter alia, observed and held as under: -
“12. ….It is settled law that the onus or burden to show
that a product falls within a particular tariff item is always
on the Revenue. Mere fact that a product is sold across
the counters and not under a doctor’s prescription, does
F not by itself lead to the conclusion that it is not a medicament.
We are also in agreement with the submission of Mr
Lakshmikumaran that merely because the percentage of
medicament in a product is less, does not ipso facto13 mean
that the product is not a medicament. Generally the
percentage or dosage of the medicament will be such as
G 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
13
As per Corrigendum issued by Supreme Court of India No. F.3/Ed. B.J./92/2003
dated 9-9-2003.
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 335
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

textbooks. Of course the formula may not be as per the textbooks A
but a medicament can also be under a patented or proprietary
formula. The main criterion for determining classification is
normally the use it is put to by the customers who use it. The
burden of proving that Banphool Oil is understood by the customers
as a hair oil was on the Revenue. This burden is not discharged as
B
no such proof is adduced. On the contrary, we find that the oil
can be used for treatment of headache, eye problem, night
blindness, reeling head, weak memory, hysteria, amnesia,
blood pressure, insomnia etc. The dosages required are
also set out on the label. The product is registered with
the Drug Controller and is being manufactured under a drug C
licence.”
(emphasis supplied)
15.6. In the case Meghdoot (supra), while dealing with the
question of classification of six items namely Bhringraj Tail, Trifla Brahmi
Tail, Neem Herbal Sat, Sat Reetha, Meghdoot Herbal Sat, Meghdoot D
Herbal Powder and following the decision in BPL Pharmaceuticals
(supra), this Court classified the items under the heading of ‘medicaments’
and held that items which may be sold under names bearing a cosmetic
connotation but would remain medicines based on the composition of
the items, in the following terms: - E
“5….. A product may be medicinal without having been
prescribed by a medical practitioner. It was also not
necessary for a person manufacturing medical products to
claim classification under Tariff Sub-Heading 3003.30
without establishing that the product had in fact been tested F
on patients in controlled situations or that the outcome had
not been tested for effectiveness. This would be particularly
true in the cases where the products are claimed to be based
on traditional Ayurvedic formulae.
*** *** *** G
7. This Court has in similar matters come to the conclusion
that items which may be sold under names bearing a
“cosmetic” connotation would nevertheless remain
medicines based on the composition of the items in B.P.L.
H
336 SUPREME COURT REPORTS [2023] 6 S.C.R.

A Pharmaceuticals Ltd. v. CCE [1995 Supp (3) SCC 1 : (1995) 77
ELT 485].
8. As far as the first three items listed earlier are concerned, this
Court has in CCE v. Pandit D.P. Sharma [(2003) 5 SCC 288 :
(2003) 154 ELT 324] and CCE v. Himtaj Ayurvedic Udyog
B Kendra [(2003) 5 SCC 290 : (2003) 154 ELT 323] in connection
with Banphool Oil and Himtaj Oil held that the Ayurvedic hair oils,
were medicines and should be properly classified under Tariff
Sub-Heading 3003.30, rather than under Tariff Sub-Heading
3305.10 or 3305.50….
C 9. As far as Items (4), (5) and (6) are concerned, for the reasons
stated earlier, we are of the view that they are also properly
classifiable under medicaments under Tariff Sub-Heading
3003.30.”
(emphasis supplied)
D 16. Apart from the above, on behalf of the respondent, reference
has also been made to a decision of this Court dated 27.02.2019 concerning
its product in relation to the entry in the Andhra Pradesh General Sales
Tax Act, 1957 and it has been asserted that therein, this Court accepted
that the product in question was a medicine and not a cosmetic product.
E This Court observed and held as under: -
“6. Notably, the Commissioner had failed to address the specific
plea of the respondent that the hair oil manufactured by the
respondent contains ‘Arnica Mount Q, Cantharis Q, Cinchona Q
and Pilocarpine Q’ and would, therefore, qualify to be a drug within
F the meaning of Section 3 of The Drugs and Cosmetics Act, 1940,
and if so, would be covered under Entry 37 of Schedule-I of the
APGST Act; and not Entry 36 which is for general hair tonics,
hair oils or hair lotions, as such. The High Court, therefore,
reversed the conclusion reached by the Commissioner after noting
the aforementioned contention of the respondent and, instead, held
G that the respondent had produced sufficient material to show that
the product manufactured by the respondent was a medicine and
not a cosmetic product.
7. The fact that the respondent is using the Homeopathic
Pharmacopoeia referred to earlier in manufacturing of the hair oil
H has not been traversed by the appellant. Neither has the
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 337
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Commissioner dealt with that contention of the respondent nor A
was such a plea taken before the High Court by the appellant.
Considering this, we see no reason to deviate from the conclusion
reached by the High Court that the product manufactured by the
respondent was rightly assessed at the relevant point of time in
the assessment years 1994-1995 and 1995-1996, as covered by
B
Entry 37 of Schedule-I of the APGST Act.
8. We once again make it amply clear that the view taken in these
appeals is in the fact situation of this case and confined to the
assessment years 1994- 1995 and 1995-1996 only and would not
apply or be of any avail to the respondent for the subsequent
assessment years, in view of the amendment effected in the C
APGST Act.”
17. Before concluding this segment pertaining to the decided cases,
we may also take note of the decision of the Tribunal in the case of
Bakson Homeo Pharmacy (supra) which had all through been relied
upon by the respondent for the reason that therein, a substantially similar D
product was held to be a medicament. In fact, in the said decision, the
Tribunal examined the questions relating to two products namely, “Sunny
Arnica Hair Oil” and “Sunny Arnica Shampoo”. As regards the issue
concerning the product shampoo, the Tribunal remanded the matter to
the lower authority for decision afresh but, as regards hair oil, the Tribunal E
upheld the contention of the assessee in terms of the opinion of the
majority and held that the said product was answering to the description
of Homeopathic medicine while predominantly applying the tests
pertaining to the ingredients. In the leading opinion, the learned Member
of the Tribunal extensively referred to the individual properties of
Homeopathic medicines as also the other natural ingredients of the F
product. The learned Member further underscored the connotations of
Homeopathy system of medical treatment as also the therapeutic and
prophylactic properties of the ingredients and observed as under: -
“On a careful consideration and examination of the materials
produced and referred to above, we notice that the ingredients G
utilised in the manufacture of Arnica Hair Oil are exclusively
natural substances and their reference has been found in
Homoeopathic Pharmacopia of India. The manufacturers have
obtained drug licence and the use of the Hair oil, as a medicament,
has been recommended by the Homeopaths. The appellants have H
338 SUPREME COURT REPORTS [2023] 6 S.C.R.

A shown that the ingredients are homoeopathic in nature and having
therapeutic and prophylactic. Therefore, their contention cannot
be rejected in the light of the evidence produced……In the present
case, we are concerned with Arnica Hair Oil, which is claimed to
be medicament in terms of the ingredients having necessary
antiseptic, antiphlogistic action for dermatological diseases.
B
It is also used for treatment of baldness and acts as an anti-
dandruff agent and as cooling agent. In view of each of the
ingredients having one or the other therapeutic or
prophylectic functions in terms of homoeopathic science,
therefore, it has to be held that the Arnica Hair Oil is not a
C cosmetic preparation or for use on hair under sub-heading
3505.90 of the Central Excise Tariff, as they are not
intended for cleansing, beautifying, promoting
attractiveness or altering appearance in terms of the Hon’ble
Supreme Court judgment in the case of B.P.L. Pharmaceuticals
Ltd. but they are meant for specific treatment for dandruff of
D
other skin and hair problem. Therefore, the appellant’s
contention for treatment as a medicament having
homoeopathic ingredients and considered as homoeopathic
medicine is required to be accepted for classification under
TI 14E of erstwhile tariff and under sub-heading 3003.30
E of the new tariff.”
(emphasis supplied)
18. We may usefully summarise the discernible principles from
the cited decisions as also the other referred orders, so far relevant for
the purpose of determination of points arising in this appeal as follows:
F
18.1. As regards the question as to whether the product in question,
AHAHO, merits classification as ‘medicament’ under Chapter 30 or as
‘cosmetic or toilet preparations’ under Chapter 33, the inquiry shall be
directed towards a couple of tests taken together, being the common/
commercial parlance test i.e., how the product is understood commonly,
G including by the persons dealing in the same and by the end-users; and
the ingredients test i.e., whether the ingredients used in the product are
found mentioned in authoritative textbooks [vide Shree Baidyanath
Ayurved Bhavan Ltd. (supra)]. The connotations of common parlance
test could further be understood from the case of Alpine Industries
H (supra), that the primary object of such taxing statute being to raise
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 339
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

revenue and various products being differently classified for that purpose, A
the entries are not to be understood in their scientific and technical
meaning; rather the terms and expressions used in tariff have to be
understood by their popular meaning, that is the meaning attached to
them by those dealing with or using the product. Further, as observed in
G.C. Jain (supra), the words and expressions, unless defined in the
B
statute have to be construed in the sense in which persons dealing with
them understand i.e., as per trade understanding and usage. Yet further,
there is no fixed test or static parameter for correct classification of a
product and it essentially depends on the meaning assigned to it by the
persons concerned with it. One of the essential factors for determining
whether a product falls under Chapter 30 or not is as to whether the C
product is understood as a pharmaceutical product in common parlance.
However, the quantity of medicament used in a particular product is not
a relevant factor because, ordinarily, the extent of use of medical
ingredients is very low as a larger use may be harmful for the human
body [vide Wockhardt Life Sciences (supra)]. Moreover, as held in
D
Sharma Chemicals (supra), the mere fact that a product is sold across
the counters and not under a doctor’s prescription, does not by itself
lead to a conclusion that it is not a medicament; and in Meghdoot (supra),
that a product may be medicinal without having been prescribed by a
medical practitioner. It is held by this Court in BPL Pharmaceuticals
(supra) and reiterated in Meghdoot (supra) that the items which may be E
sold under names bearing a cosmetic connotation would nevertheless
remain medicines based on the composition. As regards the question as
to whether a particular product is classifiable under Chapter 30 as
‘medicament’ or under Chapter 33 as ‘cosmetic’, one of the essential
features would be as to whether the preparation is essentially for cure
F
or prevention of disease (medicament) or for care (cosmetic); and the
preparation having only subsidiary curative or prophylactic value would
fall under Chapter 33 [vide Alpine Industries and Sunny Industries
(supra)].
18.2. Ordinarily, we would not have delved into another decision
of the Tribunal but have found it appropriate to refer to the said decision G
in the case of Bakson Homeo Pharmacy (supra), which had all through
been relied upon by the respondent, for the reason that it related to a
similar product marketed in the name of “Sunny Arnica Hair Oil”,
which was held to be a ‘medicament’. The said decision has also been
relied upon by the Tribunal in the order impugned. The significant feature H
340 SUPREME COURT REPORTS [2023] 6 S.C.R.

A of the said decision is that therein, in the leading opinion of majority,
ingredient test has extensively been dealt with and the medicinal qualities;
and therapeutic/prophylactic use of several of the ingredients have been
analysed, which include all the ingredients of the product involved in the
present case14.
B 18.3. As regards the question of justification for re-classification
or re-examination of the classification, this Court has clearly held that
there is no good reason to change the classification merely on the ground
of change of tax structure or tariff entries without showing a change in
the nature and character of a product or a change in the use of the
product [vide the decisions in BPL Pharmaceuticals and Vicco
C Laboratories (supra)]. As noticed in Shree Baidyanath Ayurved
Bhavan Ltd. (supra), this Court rejected the contentions seeking
reclassification of the product in question therein, DML, after enactment
of new Tariff Act because the product in its composition, character and
uses continued to remain the same even after insertion of new Sub-
D Heading 3301.30.
19. Having thus summarised the discernible principles, so far as
relevant for the present purpose, we may take up the points arising for
determination. As noticed, the principal point arising for determination in
this case is as to whether the product in question, AHAHO, merits
E classification as a ‘medicament’ under Chapter 30 or as ‘cosmetic or
toilet preparations’ under Chapter 33 of the First Schedule to the Central
Excise Tariff Act, 1985. For determination of this point, the inquiry would
be directed towards the twin tests as noticed above.
Application of the principles and twin test
F 20. Before applying twin tests for the purpose of the product in
question, we may usefully recapitulate the divergent propositions
presented in this case, where the findings of the Adjudicating Authority

14
It appears from the facts of the present case and the observations occurring in the
said case of Bakson Homeo Pharmacy (supra) that all the ingredients of the product
G involved in the present case (AHAHO) were equally the ingredients of the product
under consideration therein, namely, Arnica Montana, Cantharis, Pilocarpine, Cinchona.
As noticed from the relevant pages of Materia Medica placed before us, in the
Homeopathic terminology, Cinchona Officinalis is also termed as China Officinalis;
and Pilocarpine is essentially isolated from Jaborandi. The similar product involved in
Bakson Homeo Pharmacy (supra) was said to be containing the ingredients Arnica
H Mont, Jaborandi, Cantharis and China, apart from other ingredients.
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 341
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

and the submissions made on behalf of the appellant stand on one side A
whereas, the findings of the Tribunal with the submissions made on behalf
of the respondent stand on the other.
20.1. As noticed, the Adjudicating Authority examined the contents
of the product as also its label and observed that it did not contain any
condition like “to be sold by authorized medical distributor or retailer B
under prescription from medical practitioner” even though such a mention
was a mandatory requirement under the Act of 1940; and it did not
contain any specification regarding the dosage to be used and the duration
for which it is to be used, which is the norm for a medicament. The
Adjudicating Authority yet further observed that there was no claim that
the product could cure any particular disease like Alopecia (loss of hair); C
that the medical conditions like Alopecia actually tend to happen all of a
sudden with patches of baldness not only on the head but anywhere on
the body; and that Insomnia was a medical condition resulting in
sleeplessness due to stress and other neurological disorders. According
to these observations, non-mention of Alopecia or Insomnia on the labels D
indicated that the product was not meant for any substantial curative
purpose. The Adjudicating Authority also observed that by mentioning
no contra-indications, it implied that irrespective of the quantum or duration
of usage, there was no adverse effect on the scalp or skin, which was
against the basic concept of a medicament, which is prescribed or used
for a limited period and overdose is known to result in contra-indications E
like diarrhoea, acidity, ulceration, rashes etc. The Adjudicating Authority
further observed that the label neither contained a positive indication
that it was a medicament nor a negative indication that it was not a
cosmetic but it was certainly labelled as a “Hair Oil”; and if the intention
was to identify the product as medicament, there was no need to label it F
as “Hair Oil”. Hence, the Adjudicating Authority held that AHAHO
could not be categorized as a medicament but had to be classified as
“Hair oil”. As regards common parlance test, the Adjudicating Authority
observed that AHAHO was accessible in both Medical and General
Stores and could be bought across the counter. Moreover, the depiction
of a lady with long, black flowing hair on its label indicated its G
categorisation as cosmetic and not as a medicament. The Adjudicating
Authority even proceeded to observe that ‘Hair growth is at best a
cosmetic necessity rather than a disease requiring immediate
attention or treatment’. The Adjudicating Authority also observed that
the drug licenses issued by respective authorities, per se did not make H
342 SUPREME COURT REPORTS [2023] 6 S.C.R.

A AHAHO a preparation of homeopathic medicine. While referring to
Materia Medica, the Adjudicating Authority noted his reservations about
one ingredient (Pilocarpine) and observed that there was no nexus of
the said ingredient with Homeopathy. While referring to the significance
of general rules of interpretation as regards the Notes attached to the
respective Chapters/Tariff Items in the First Schedule to the Act of 1985,
B
the Adjudicating Authority observed that as per Note 1(e) to Chapter 30,
the said Chapter did not cover preparation of the headings of Chapter
3303 to 3307, even if they have therapeutic or prophylactic properties.
20.1.1. Learned ASG, while supporting the aforesaid findings of
the Adjudicating Authority and while assailing the findings of the Tribunal,
C has argued that the product in question does not meet the criteria laid
down under Chapter 30; that even if the product is stated to possess
certain curative or prophylactic value, it would still be cosmetic as it
excludes those with subsidiary curative and prophylactic value; and Tariff
Item 3305 90 19, specifically meant for “Hair oil”, directly covers the
D product in question for, a specific entry would take precedence over a
general entry. The ASG has contended that the common parlance test
of the product is not in favour of the respondent, as the product is not
prescribed by any medical practitioner, is available freely without any
prescription in Medical and General Stores, and could be purchased across
the counter, as admitted by the respondent. Moreover, the label does not
E indicate the condition of sale by authorised medical distributor or retailer
under prescription; it does not cure any particular disease; and the claims
on the label are for marketing purposes only. The learned ASG has relied
upon the decision in Alpine Industries (supra) to submit that any
subsidiary therapeutic or prophylactic use of the product would not change
F its nature as “Hair oil” if in the common parlance, it is treated as a
cosmetic. Learned ASG has also submitted that the product is advertised
as hair oil and not a medicament; and is perceived by the public who
purchase and sell the product as hair oil (cosmetic) and not as
medicament.
G 20.2. In contrast to what has been observed by the Adjudicating
Authority and what has been argued by learned ASG, it is noticed that in
the very first response to the show-cause notice, the respondent asserted
that the twin tests for classification of the product as ‘medicament’ were
duly satisfied in relation to its product AHAHO in view of the facts and
factors: (i) that the manufacturing process, undertaken in terms of the
H
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 343
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

manufacturing license issued by the Drug Controller and by the A
Directorate of Ayush, would indicate the presence of four homeopathic
drugs in the product namely, Arnica Montana, Cantharis, Pilocarpine
and Cinchona; (ii) that the drugs so used are mentioned in the authoritative
text books like Materia Medica of Homeopathic Drugs; (iii) that its label
indicated the words “Homeopathic Medicine” under Schedule K to the
B
Rules of 1945; (iv) that the product is to be applied to the scalp and not
consumed orally; it would cure/prevent the lack of blood circulation to
the hair roots, hair fall (alopecia), dandruff, headache and lack of sleep
(insomnia), and healing from the said diseases would lead to good health
in terms of growth and maintenance of natural colour in the hair; and (v)
that the product was a medicament in terms of market parlance, C
evidenced by its use over a period of nearly 19 years. The respondent
also submitted that the product was not ‘cosmetic’, as the ingredients
used had prophylactic properties and it was not applied for cleansing or
beautifying or promoting attractiveness or altering the appearance; and
depiction of a lady with long flowing hair on its label was only subjective
D
and could be interpreted as indicative of good health evidenced by the
long flowing hair upon being treated for hair fall and dandruff.
20.2.1. The Tribunal took note of the observation and findings in
the order impugned as also the evidence placed before it and the cited
decisions and held, inter alia, that even though the goods were sold
over the counter and not on a medical prescription, it would not lead to E
the goods being out of the category of medicine; that when different
branches of medicine and the Licensing Authorities recognized baldness
or hair fall as disease, the Adjudicating Authority could not take a different
view which was not recognized by the branches of medicine; that the
product clearly mentioned that it could be used for other ailments also F
such as sleep loss, increase of blood circulation and it nowhere depicted
itself as for hair care or enhancing beauty of hair; that the label indicated
the product as Homeopathic medicine under Schedule K to the Rules of
1945, ingredients and their composition, indications, contra-indications
and mode of application and such contents of label itself showed that
even in common parlance, it was understood by the users and the traders G
as Homeopathic medicine; that there was no advice on the label nor did
it suggest that it could be used as hair oil; and indisputably, the product
was made of four Homeopathic medicines as ingredients namely Arnica
Mont, Cantharis, Pilocarpine and Cinchona and was used to treat hair
loss, insomnia, dandruff, headache and other ailments; and the product H
344 SUPREME COURT REPORTS [2023] 6 S.C.R.

A was manufactured under Drug Licence issued under the relevant rules
which had been renewed from time to time by the Additional Director &
Drug Controller (Homeo), Department of Ayush, Government of
Telangana; that even as per analysis report of Drug Controller, Department
of Ayush, the product was medicine; the product was covered by Serial
No. 35 of Schedule K to the Rules of 1945 (Homeopathic Hair oils
B
having active ingredients upto 3X potency) and the said Schedule covered
only drugs and not cosmetics. The Tribunal also observed that the product
had already been held to be drug by the Andhra Pradesh High Court in
reference to Commercial Taxes; and the Advance Ruling Authority of
Commercial Taxes, Government of Tamil Nadu for the purpose of
C TNVAT Act 2006, held the product to be a Homeopathic medicine. The
Tribunal also took note of the fact that even in the past, the respondent
was issued show-cause notices for classification of the product as
cosmetic and the Appellate Authority, after going into all the aspects of
common parlance as well as contents of the product and its usage, held
that the product was a Homeopathic medicine. The Tribunal distinguished
D
the case of Shree Baidyanath Ayurved Bhavan (supra) while observing
that the product in question therein did not satisfy the common parlance
test and the said product DML was known as toilet preparation in common
parlance and not as Ayurvedic medicine. The Tribunal further pointed
out that the decision of this Court in the case of Alpine Industries (supra)
E was not applicable as in the said case, the drug license obtained by the
assessee under the Drugs and Cosmetics Act, 1940, itself mentioned
that it was a license for ointment and cream for external application as a
non-pharmacopoeia item whereas in the present case, the product was
registered as Homeopathic Medicine.
F 20.2.2. While supporting the findings of the Tribunal, learned senior
counsel for the respondent has contended that AHAHO is a therapeutic
or prophylactic medicament in the medium of oil for curing diseases
relating to the scalp. The product is not advertised as “Hair Oil” but is
marketed only as “Aswini Homeo Arnica Hair Oil”.
G 21. In an overall comprehension of the matter, and with application
of the relevant principles to the facts of the present case, we are clearly
of the view that the product in question sails through the twin tests without
any doubt and has rightly been held as medicament by the Tribunal.
22. Taking up the test relating to the ingredients, there appears
H absolutely no reason to suggest that the product in question, AHAHO,
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 345
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

does not pass this test. It remains indisputable that the product has been A
manufactured as a drug after being duly licensed by the competent
authorities and carries the combination of as many as four Homeopathic
medicines, Arnica Montana, Cantharis, Pilocarpine, and Cinchona in its
preparation. These Homeopathic medicines are duly found mentioned in
Homeopathic Pharmacopoeia of India15 as also in the Dictionary of
B
Practical Materia Medica16 placed before us by the learned counsel for
the respondent.
22.1. Having gone through the elaborate order passed by the
Adjudicating Authority, we are constrained to observe that in the over-
anxiety to somehow hold the product in question as cosmetic, the
Adjudicating Authority even attempted to suggest his reservations as C
regards the utility of Pilocarpine as a Homeopathic drug contrary to the
authoritative texts17. Be that as it may, the Adjudicating Authority in its
elaborate order could not otherwise doubt the recognition of other
ingredients of AHAHO as being Homeopathic drugs. The approach of
the Adjudicating Authority in his micro analysis of the contents of label D
had also been in the nature of a fishing inquiry as if only to find some gap
or some loophole therein, without looking at the substance of the matter
that the product in question was clearly indicated to be a Homeopathic
medicine under Schedule K to the Rules of 1945. Looking to the nature
of the product and its properties, the relevant indications have also been
specified in reasonable terms and looking to its nature and purpose, E
directions for use have also been given in the manner that it was to be
massaged directly on the scalp and should be left overnight for best
results. Hence, the Adjudicating Authority’s observations about want of
specification regarding the dosage to be used and the duration for which
it is to be used carry their own shortcomings. As noticed, the product in F
question is essentially meant for dealing with the conditions arising in
and on the scalp with hair being the integral part thereof. The product
consists of Homeopathic medicines. Its manner of use is to put the same
on the scalp and to leave it overnight. Looking to the nature of the product
15
Volume I 1971 ed. and Vol. V 1986 ed.
16
G
A Dictionary of Practical Materia Medica by John Henry Clarke; B. Jain publishers
(P) Ltd., New Delhi.
17
As explained at p. 821 of the extract of Materia Medica placed before us, “Pilocarpine
is one of the most characteristic of several alkaloids which have been isolated from
Jaborandi (Pilocarpus pinnalus)”. In the decision by the Tribunal in the case of Bakson
Homeo Pharmacy (supra), the properties of this ingredient have been distinctly indicated,
including that “for treatment of baldness” with reference to the relevant medical texts. H
346 SUPREME COURT REPORTS [2023] 6 S.C.R.

A and its uses, the observations about want of specification regarding the
dosage do not take the product out of its pharmaceutical value. Further,
the Adjudicating Authority’s observations of dissatisfaction because of
there being no contra-indications have gone miles away from the
reasonableness of approach. If the respondent has stated in clear terms
on the label that the product carried nil contra-indications, looking to its
B
nature, purpose and the manner of use, it does not cease to be a
medicament.
22.2. The perversity and unreasonableness of approach of the
Adjudicating Authority is also noticed from the observations that, if the
intention was to identify the product as medicament, there was no need
C to label it as “Hair Oil”. While the expression “Hair Oil” does appear on
the label, the other integral expressions “Homeo” and “Arnica” preceding
the expression “Hair Oil” could not have been ignored and could not
have been left aside. The Adjudicating Authority had gone to the extent
of observing that hair growth was at best a cosmetic necessity rather
D than a disease requiring immediate attention or treatment! The Tribunal
has rightly observed that when hair fall or baldness is recognised as a
medical condition, the Adjudicating Authority could not have taken a
different view, which was not recognized by any branch of medicine.
The Tribunal has also rightly pointed out that the product clearly mentioned
that it could be used for other ailments like headache and that it induces
E good sleep.
22.3. Moreover, the Adjudicating Authority seems not to have
given adequate attention to the contents of Chapter 30 and the fact that
for being accepted as medicament, the product is not invariably required
to carry only therapeutic use. A product having prophylactic use is also
F envisaged under the Headings 3003 and 3004. If the product claims to
improve blood circulation to the hair roots and thereby controlling hair
fall, its prophylactic use cannot be gainsaid.
22.4. The product in question, being undoubtedly covered by Serial
No. 35 of Schedule K to the Rules of 1945 and being manufactured in
G terms of the license issued under the Act of 1940, in our view, clearly
satisfies the ingredients test. In other words, on its ingredients, the product
is indeed a medicament carrying the combination of Homeopathic
medicines.
23. In regard to the overt reliance of the appellant on the expression
H “Hair Oil” used for the product by the respondent, it may also be observed
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 347
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

that small doses of the medicines in question would invariably require A
some medium of administration. Learned counsel for the respondents
has rightly submitted that in relation to the product in question, hair oil is
only a medium through which the medicine is to be applied on the scalp,
particularly when it is meant for nourishing the hair roots.
23.1. It is also apparent in the present case that the stand of the B
Department to classify the product in question as ‘cosmetic’ under
Chapter 33 is essentially based on the distinct entry “Hair Oil” occurring
therein; and it appears that the expression “Hair Oil” occurring on the
label of the product has been taken as decisive by them. For what has
been discussed hereinabove, it would also follow as a natural corollary
that the expression “Hair Oil” occurring on the label of the product is C
only indicating the medium through which Homeopathic medicines
comprising the product are to be applied. We are unable to accept the
submissions and the efforts on the part of the appellant to take the product
in question to Chapter 33 merely because of its label carrying the
expression “Hair Oil” while ignoring the preceding significant expressions D
“Homeo” and “Arnica”. As observed by this Court in BPL
Pharmaceuticals (supra), for a product to be taken to Chapter 33, it
has first to be a ‘cosmetic’. Similarly, reference to Note 1(e) of Chapter
30 also turns out to be of no relevance because the product in question
cannot be said to be a preparation of Heading 3305 and then having
insignificant or subsidiary therapeutic or prophylactic properties. As E
regards the product in question, which is essentially made of Homeopathic
medicines which have therapeutic and prophylactic uses, it cannot be
said to be carrying only subsidiary pharmaceutical value. Putting it
differently, we are satisfied that the product in question, AHAHO, is
predominantly of pharmaceutical value and the item of cosmetic therein, F
i.e., hair oil, is nothing but a medium for appropriate use of that
pharmaceutical value.
23.2. In regard to the above, we find the consideration of this
Court in the case of BPL Pharmaceuticals (supra) to be apposite to
the questions before us. Therein, this Court was considering a product G
sold by the assessee under the brand name “Selsun shampoo”. This
Court found it to be medicament with reference to a variety of tests
applied from different angles and after finding that its active ingredient
was selenium sulfide. In that context, this Court also indicated that an
individual using such product may not be prepared to say that he or she
H
348 SUPREME COURT REPORTS [2023] 6 S.C.R.

A was using a particular compound to get rid of dandruff or other similar
diseases but would not hesitate to state that he or she was using a
particular brand of shampoo. The observations in BPL Pharmaceuticals
in this regard correlates with ingredient test as also the common parlance
test; and in our view, fortify the case of the respondent.
B 23.3. The submissions about specific entry to be preferred to the
general entry do not take the case of appellant any further. In the present
case, in fact, the referred entry of Chapter 33 relating to the Tariff Item
‘Hair oil’ under the Heading 3305 is itself to be taken as a general entry
and in any case, when hair oil is being used only as a medium for use/
administration/application of the medicine, the case would fall in the
C specific entry pertaining to medicament under Headings 3003 or 3004;
and it being of the medicines of Homeopathic system, it would fall either
in Tariff Item 3003 90 14 or in Tariff Item 3004 90 14. In any case, the
product in question cannot fall under Chapter 33.
24. As observed, we have considered it appropriate to refer to the
D said decision of the Tribunal in the case of Bakson Homeo Pharmacy
(supra), which had all through been relied upon by the respondent for
the reason that it related to a similar product marketed in the name of
“Sunny Arnica Hair Oil”. The said decision clearly makes out the
ingredient test in favour of the respondent and we are satisfied with the
E detailed analysis of the same ingredients by the Tribunal while holding
the product to be a medicament. The ingredient test, as extensively dealt
with in the leading opinion of majority of the Tribunal in the case of
Bakson Homeo Pharmacy (supra), with reference to the fundamental
principles of Homeopathy and the medicinal properties and therapeutic/
prophylactic use of several of the ingredients, inspires confidence and
F when AHAHO is found carrying all such Homeopathic medicines which
were the ingredients of the product under consideration of the Tribunal,
we find it just and proper to endorse the views of the majority of the
Tribunal in Bakson Homeo Pharmacy (supra) and there appears no
requirement to re-analyse the medicinal properties of the ingredients.
G Suffice it would be to observe that the product in question, AHAHO,
passes the ingredients test beyond any doubt.
25. On the other features of common parlance test, i.e., the manner
in which the product in question is commonly understood, it is noticed
that one of the grounds placed at the forefront by the appellants and the
H Adjudicating Authority had been that AHAHO was accessible in both
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 349
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

Medical and General Stores and could be bought across the counter. A
This feature of availability of the product in question has absolutely no
relevance. In Sharma Chemical (supra), this Court clearly held that
merely for a product being sold across the counter and not on doctor’s
prescription, does not by itself lead to a conclusion that it is not a
‘medicament’. Similarly, in Meghdoot (supra), this Court made it clear
B
that a product may be medicinal without having been prescribed by a
medical practitioner. In Meghdoot, this Court has also made it clear
with reference to other decided cases that the items which may be sold
under names bearing a cosmetic connotation would nevertheless remain
medicines based on the composition. Viewed from any angle, merely for
being available across the counter, the product in question, AHAHO, C
does not cease to be a medicament.
26. Another essential feature while examining the question as to
whether a particular product is classifiable as medicament under Chapter
30 or as cosmetic under Chapter 33 would be as to whether the
preparation is essentially for cure or prevention of disease i.e., with D
therapeutic or prophylactic properties or only for care. Tersely put, when
the preparation is for cure or prevention, it would be medicament but, if
only for care, it would be cosmetic. Of course, a cosmetic would not
become medicament even if having subsidiary curative or prophylactic
value, as held by this Court in Alpine Industries (supra). However, the
product in question, AHAHO, does not fail on this count for the reason E
that it is a preparation of Homeopathic medicine and when it is marketed
as carrying those medicines, in commercial as also common parlance,
with its name carrying the significant expressions “Homeo” and “Arnica”,
the product could only be understood as the one carrying predominantly
pharmaceutical value and not mere cosmetic value. F
27. The other suggestion on behalf of the Adjudicating Authority
and the appellant, relating to the common parlance test with reference
to the depiction of a lady with long black flowing hair on its label and
thereby treating it as cosmetic, is also stretching the matter to the brink
of absurdity. When the product in question is intended to control hair fall G
as also to prevent dandruff and to induce good sleep, which all carry
their own therapeutic and prophylactic connotations, the picture of a
lady with long black flowing hair cannot be said to be unrelated to the
indications related with the product. In any case, such a picture, by itself,
cannot make the product in question a cosmetic. Interestingly, right at
the top of the said picture and below the name of the product, it proclaims H
350 SUPREME COURT REPORTS [2023] 6 S.C.R.

A “Controls hair fall. Prevents dandruff”. The Adjudicating Authority has
taken his process of analysis to further illogical heights by proclaiming
that hair growth was at the best a cosmetic necessity rather than a
disease requiring immediate attention or treatment. We have reproduced
these expressions of the Adjudicating Authority verbatim to show the
irrationality of reasoning and want of logic. A treatment or prevention of
B
hair fall by way of medication was sought to be rejected by the
Adjudicating Authority by his impression that hair growth was only a
cosmetic necessity. We could only disapprove such an approach.
27.1. The substance of the matter remains that in common
parlance, the product in question would be approached essentially for its
C claimed medicinal qualities and not as another hair oil. This aspect, in
our view, is itself sufficient to reject the contentions of the appellant and
the observations of the Adjudicating Authority. The Tribunal has rightly
dealt with the matter in accordance with the law applicable to the facts
of the present case.
D 28. The Adjudicating Authority has also observed that drug licenses
issued by respective authorities per se did not make AHAHO a
preparation of Homeopathic medicine. However, the Adjudicating
Authority has failed to consider that such drug license issued under
Schedule K to the Rules of 1945 had not been a factor to be ignored
altogether. Both in relation to common parlance test as also the ingredients
E test, this factor carries its own relevance even if not finally decisive of
the matter. The submission about want of condition of sale by authorised
medical distributor or retailer under prescription has its own shortcomings
for it has not been shown if such a preparation falling under Schedule K
to the Rules of 1945 was also requiring such a mention in terms of Rule
F 97. In any case, any such requirements for adherence to the Act of 1940
and the Rules of 1945 could only be a matter for consideration of the
authorities dealing with licensing and regulating the manufacture and
sale of drugs. The only relevant aspect for the present purpose is that
the product in question being manufactured as a Homeopathy medicine,
and being marketed and used as a Homeopathic medicine for its
G pharmaceutical value, would fall in Chapter 30 and cannot be branded
as cosmetic, so as to fall under Chapter 33 of the First Schedule to the
Act of 1985.
29. In the passing, we may also observe that the very product in
question, in relation to the entry in the Andhra Pradesh General Sales
H Tax Act, 1957, has been accepted by this Court to be answering the
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 351
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

description of a medicine and not being a cosmetic product, after it was A
found that the respondent-assessee’s assertion about its ingredients and
thereby the product qualifying to be a drug within the meaning of Section
3 of the Act of 1940 could not be refuted by the Revenue. The said
decision of this Court may not have a direct bearing on the question of
classification of the product in question for the purpose of the Act of
B
1985 but, it cannot be denied that the product in question has been found
answering to the description of a ‘drug’ for the purpose of the Act of
1940 as also for the purpose of the said Andhra Pradesh General Sales
Tax Act, 1957. Viewed from any angle, it remains a medicament.
Whether re-look at classification of the product in question
justified C

30. For what has discussed hereinabove, it is apparent that the
product in question had rightly been classified as ‘medicament’ in the
past and nothing material had changed so as to re-classify the same.
However, the Revenue has attempted to rely on the amendment of the
tariff structure in the year 2012 as justification for re-look at its D
classification. The Adjudicating Authority stated this justification in the
manner that there were substantial changes in the tariff headings,
particularly when Chapter 30 came to be reworded so as to remove the
distinction between patent/proprietary and generic medicaments and to
classify them according to whether they are put up in unit containers for E
retail sale or not; the mention about the Act of 1940 and the various
Pharmacopeia came to be deleted; and under Chapter 33, the phrase
‘Hair oil’ became prominent under which, subsidiary headings of
‘perfumed hair oil’ and ‘others’ came to be specified. According to the
Adjudicating Authority, all these changes merited interpretation of the
new entries vis-à-vis the product in question than what was decided or F
settled earlier. Learned ASG has also relied upon these very reasons in
support of his contentions. In our view, there had been no justification in
the Department seeking to re-open the settled position in relation to the
product in question merely with reference to certain changes made in
Chapter 30 and Chapter 33, which had essentially broadened their ambit G
and scope and provided modified marginal notes and tariff entries with
detailed specifications. These changes had otherwise no impact, so far
as the product of the respondent, AHAHO, is concerned.
31. In support of the proposition for re-classification, the decision
in Andhra Sugar Ltd. (supra) has been cited on behalf of the appellant.
H
352 SUPREME COURT REPORTS [2023] 6 S.C.R.

A We have extracted the relied upon paragraph of the said decision
hereinbefore and it is difficult to accept that the proposition therein, to
the effect that the meaning ascribed by the authorities issuing Notification
is a good guide of a contemporaneous composition of exposition of law,
has any application to the present case. The applicable principles, as
noticed from the decisions in BPL Pharmaceuticals and Vicco
B
Laboratories (supra) remain that change of classification cannot be
countenanced merely on the ground of coming into force of different tax
structure without showing that the product has changed its character.
The decision in Shree Baidyanath Ayurved Bhawan (supra) is pertinent
to the point wherein, after an unsuccessful attempt to have the product
C DML accepted as a medicinal preparation (in Baidyanath I), the
assessee-company made another attempt for change of classification
after coming into force of the Act of 1985. While rejecting such an
attempt on the part of the assessee-company, this Court held that since
the product in its composition, character and uses continued to be the
same, even after insertion of new Sub-Heading 3301.30, change in
D
classification was not justified (vide paragraph 58 of the decision in
Shree Baidyanath Ayurved Bhawan, reproduced hereinbefore). Thus,
mere broad-basing of the entries in Chapter 30 and Chapter 33 of the
First Schedule to the Act 1985, by itself, could not have been the
justification for an attempt at re-classification of the product in question.
E 32. Even as regards the amendment of the entries, as noticed, the
stand of the appellant-Revenue has been that Chapter 30 was reworded
so as to remove the distinction between patent/proprietary and generic
medicaments and to classify them according to whether they are put up
in unit containers for retail sales or not. Further, it has been stated that
F reference to the Act of 1940 and various pharmacopoeia had been deleted.
Thirdly, it has been contended that in Chapter 33, the phrase hair oil had
become prominent with subsidiary entries of perfumed hair oils and other.
We could only reject such an attempt on the part of the Revenue as a
hair-splitting exercise, away and detached from the substance. This is
apart from the fact that the specification of medicament under Heading
G 3004 would, in any case, cover the product in question in the form it is
marketed for retail sale.
32.1. By way of the amendment of 2012, even if the relevant
entries pertaining to preparation for use on the hair have been provided
with micro classifications in comparison to the entries standing earlier
H (as could be seen from the entries extracted hereinbefore), it could never
COMMISSSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, 353
HYDERABAD v. ASHWANI HOMEO PHARMACY [DINESH MAHESHWARI, J.]

be taken to mean that anything which is prepared for being used on the A
hair and carries the name “Hair Oil”, would lose its character as
medicament if otherwise it has been prepared for therapeutic or
prophylactic uses. Moreover, rewording and regrouping of different entries
in medicaments are hardly of any impact on the character of the product
in question.
B
32.2. As noticed, in Chapter 30, apart from Heading 3003 relating
to medicaments consisting of two or more constituents which have been
mixed together for therapeutic or prophylactic uses not put up in measured
doses or in forms or packing for retail sale, Heading 3004 pertains to the
medicaments consisting of mixed or un-mixed product for therapeutic or
prophylactic uses put up in measured doses or in form of packing for C
retail sale. Viewed thus, we are inclined to accept the submissions on
behalf of the respondent that even with reference to its packaging, the
product AHAHO would remain a homeopathic medicament and would
be covered under Chapter 30, where it could be placed in Sub-Heading
3004 90 14. Similarly, deletions of the reference to the Act of 1940 or to D
various pharmacopoeia cannot be interpreted to mean that a product
like the one in question, which is otherwise a medicament, has to be
classified on the basis of the base through which the application of medicine
is being provided.
33. We have already discussed hereinabove that with application
of the relevant principles, the product in question, AHAHO, comes clean E
through the twin test. Therefore, in the ultimate analysis, we are clearly
of the view that there had been no justification for making any attempt
to re-classify the product in question with reference to the amendments
brought about in Chapters 30 and 33 in the year 2012.
Conclusion F
34. For what has been discussed hereinabove, answers to the
points arising for determination are that the product in question, AHAHO,
merits classification as ‘medicament’ under Chapter 30 and not as
‘cosmetic or toilet preparations’ under Chapter 33 of the First Schedule
to the Central Excise Tariff Act, 1985; and the change in tariff structure G
by way of amendment brought about in the year 2012 did not justify any
re-look at the classification of the product in question.
35. In view of the above, this appeal fails and is, therefore,
dismissed. No costs.
H
Nidhi Jain Appeal dismissed.