"Page 1\nJUDGMENT\nREPORTABLE\nIN THE SUPREME COURT OF INDIA\nCIVIL APPELLATE JURISDICTION\nCIVIL APPEAL NO. 4480 OF 2005\nCOMMISSIONER OF CENTRAL EXCISE, \nHYDERABAD\n.....APPELLANT(S)\nVERSUS\nM/S SARVOTHAM CARE LIMITED\n.....RESPONDENT(S)\nW I T H\nCIVIL APPEAL NO.\n \n \n 5752\n \n \n OF 2015\n(arising out of SLP (C) No. 1531 of 2015)\nJ U D G M E N T\nA.K. SIKRI, J.\nCivil Appeal No. 4480 of 2005\nRespondent herein is the manufacture of 'Ketoconazole\nShampoo' and 'Nizral Shampoo' which are sold in the bottles of\n50 ml and 5 ml. Dispute is about the classification of the\naforesaid product for the purposes of payment of central excise\nduty. The respondent had filed the declaration classifying the said\nproduct under CSH 3003.10 of the Central Excise Tariff Act, 1985\non the ground that it is basically a medicine. However, as per the\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 1 of 28\n\nPage 2\nJUDGMENT\nappellant/Revenue, the appropriate classification of this product is\nunder CSH 3305.99 as it perceives the product as 'preparation for\nuse on on hair'.\n2)\nChapter 30 under which CSH 3003.10 falls deals with\nPharmaceuticals products and the aforesaid entry thereof reads\nas under:\n“Patent or proprietary medicaments, other than\nthose medicaments which are exclusively\nAyurvedic, Unani, Siddha, Homoeopathic or\nBio-chemic.”\nOn the other hand, Chapter 33 deals with the products\nwhich fall under the nomenclature 'Essential Oils and Resinoids;\nPerfumery, Cosmetic or Toilet Preparation'. The entry CSH\n3305.99 thereof is as under:\n“Preparations for use on the hair\n-Perfumed hair oils\n-Other :\n--Hair fixer\n--Other”\n3)\nIt becomes clear from the reading of the aforesaid two entries that\nthe respondent claims that the product in question belongs to the\nspecie of Pharmaceutical products i.e. medicinal product and is\ncovered by the expression 'patent or proprietary medicaments'.\nOn the other hand, the case of the Revenue is that it is simply a\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 2 of 28\n\nPage 3\nJUDGMENT\nshampoo which is to be used for cleaning hair and is nothing but\na 'toilet preparation'. If the product is to be treated as\nPharmaceutical product covered by Entry 3003.10, excise duty\nprescribed is 16%. The excise duty of goods covered by Entry\n3305.99 is 24%.\n4)\nThe Revenue issued show cause notice demanding differential\nduty amounting to Rs.8,12,194. After the reply was given by the\nrespondent along with the material placed by it before the\nAdjudicating Authority, the Adjudicating Authority passed the\nOrder-in-Original dated 18.11.1999 for the period December, 1998\nto April, 1999 confirming the differential duty of Rs.8,12,194 under\nSection 4A read with Section 11A of the Central Excise Act, 1944.\nIn appeal preferred by the respondent, the aforesaid demand was\nupheld by the Commissioner (Appeals) vide order in original\ndated 13.02.2002, resulting in the dismissal of the appeal of the\nrespondent. Next level appeal filed by the respondent before the\nCESTAT, Bangalore, however, yielded results favourable to the\nrespondent, as this appeal is allowed by the Tribunal vide final\nOrders dated 18.01.2005 with consequential reliefs, if any. It was\nheld that there is enormous evidence to show that the product in\nquestion was used for treatment of several disorders/diseases\nand it has also been sold by Chemists under the prescription\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 3 of 28\n\nPage 4\nJUDGMENT\nissued by the Registered Medical Practitioners or the Hospitals.\nTherefore, it is a medicinal product and not simply a shampoo for\nuse of hair. Naturally, the Revenue is not satisfied with the\naforesaid view of the Tribunal and, therefore, has preferred the\ninstant appeal in this Court.\n5)\nIn his endeavour to demonstrate that the product 'Nizral\nShampoo' was simply a toilet preparation to be used on the hair\nand could not be classified as a product belonging to the family of\nPharmaceutical products, Mr. Panda, learned senior counsel\nappearing for the Revenue, drew our attention to the orders\npassed by the Commissioner (Appeals) wherein findings in\nrespect of this product are arrived at after discussing the\ningredients/properties of the said product. On that basis, it was\nargued (as reasoned by the Commissioner (Appeals) as well) that\nthere was no dispute raised even by the assessee that the\nproduct 'Nizral' was basically a shampoo preparation. Even if it\nwas coupled with therapeutic or prophylactic properties imparted\nto it with the presence of an anti-fungal agent known as\n'Ketoconazole', this would not change the basic character of the\nproduct viz. shampoo, which is meant for the use of cleaning hair.\nIt was argued that such a classification was in conformity with\nChapter Note (6) to Chapter 33 which specified 'shampoos'\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 4 of 28\n\nPage 5\nJUDGMENT\nwhether or not containing soap or organic surface active agent.\nHe further submitted that as per the packings, labels, leaflet\nliterature, it was apparent that the product in question was held\nout commercially as having subsidiary curative or prophylactic\nvalue with main purpose and the main purpose of the produce\nwas cleaning of scalp and hair. Therefore, Chapter Note (2) of\nChapter 33 also got attracted as per which how the product is\nexplained and marketed by the manufacturer itself becomes the\ndetermining factor. It was also submitted that HSC of Chapter 33\nalso includes not only shampoos containing soap and OSAC, but\n'other shampoos' as well which would imply that those products\nwhich are essentially shampoos would still be treated as\nshampoos even if the subsidiary benefits of using such a\nshampoo would be curative in nature. On that basis, submission\nwas that presence of 'Ketoconazole' which was hardly 2% W/V in\nthe said shampoo making it anti-fungal agent, would not change\nthe pre-dominant character of the product as shampoo and turn it\ninto a patent or proprietary medicament classifiable under\nChapter sub-heading 3003.10. The learned senior counsel, in\nthis behalf, drew our attention to the following justification given\nby the Commissioner (Appeal) in his order reflecting that mere 2%\nof presence of 'Ketoconazole' would not make any difference:\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 5 of 28\n\nPage 6\nJUDGMENT\n“It is rather unassailable that active ingredient\n'Ketoconazole' is considered to prophylactic in\nnature for it to treat the cause of dandruff.\nAdmitting that the active ingredient\n'Ketoconazole' is for prophylactic for dandruff, it\nis clear that the product 'Nizral Shampoo' shall\nstand excluded from the purview of Chapter 30,\nin view of Chapter Note 1(d) to Chapter 30\nwhich lays down that 'Preparation of Chapter 33\neven if they have therapeutic or prophylactic\nproperties' are not covered. On careful reading\nof the above Chapter Notes, which are statutory\nin nature and binding, a clear finding emerges\nthat the impugned goods have a specific entry\nunder Chapter 33 in terms of Chapter (6) to\nChapter 33. The heading which provides the\nmost specific description, shall be preferred to\nheadings providing a more general description\nas per Rule 3(a) of Rules for the interpretations\nof the Schedule. Hence, by all the above\nstatutory accounts the impugned goods would\nnot permit classification under Chapter 30 of\nCentral Excise Tariff Act, 1985 as medicament,\nbut only as a 'preparation for use on hair”.\n \n6)\nIt was further argued by Mr. Panda that merely because the\nrespondent was manufacturing this product on loan/licence basis\nfrom Johnson & Johnson Ltd., with the express permission/\nlicence of Drug Controller of India and Food & Drug\nAdministration, would be of no avail to the respondent. Likewise,\neven if it was sold by the Chemist would be of no significance as\nthe claim of the respondent that it could be sold only on specific\nprescription of the registered medical practitioner was clearly\nwrong as the respondent was widely publishing the product\nthrough advertisements clearly conveying to the users that the\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 6 of 28\n\nPage 7\nJUDGMENT\nsame was available with leading Chemists. Mr. Panda referred to\nthose portions of the order of the Commissioner (Appeals) where\nthe aforesaid arguments of the respondent were discussed and\ndiscarded. He pleaded that what was to be seen was the\npre-dominant use of the product in question; that is to say\nwhether the product 'Nizral Shampoo' was primarily used as a\nshampoo or as a medicinal product and argued that the dominant\npurpose of the product was to use it as a shampoo with\nancillary/added advantage being prevention of scalp related\ninfection i.e. dandruff.\n7)\nTo buttress the aforesaid submissions, Mr. Panda took the aid of\ncertain judgments of this Court. First judgment on which he relied\nis in the case of Collector of Central Excise, Shillong v. Wood\nCrafts Products Ltd.1, wherein this Court emphasized that the\ncriteria/classification laid down by Harmonised System Committee\n(HSC), established under Article 6 of the International Convention\non Harmonised System, is to be acted upon while deciding the\ncases of classification inasmuch as it was an expert body which\nwas assigned the main function of preparing explanatory notes,\nclassification opinions or other advice as guides to the\ninterpretation of the Harmonised System and to secure uniformity\n1\n(1995) 3 SCC 454\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 7 of 28\n\nPage 8\nJUDGMENT\nin the interpretation and application of the Harmonised System. It\nwas so held by this Court in the said judgment in the following\nmanner:\n“11. The Statement of Objects and Reasons of\nthe Central Excise Tariff Bill, 1985 which led to\nthe enactment of the Central Excise Tariff Act,\n1985 is indicative of the pattern of the structure of\nthe Central excise tariff enacted therein. It reads\nas under:\n1. Central Excise duty is now levied at the\nrates specified in the First Schedule to the\nCentral Excises and Salt Act, 1944. The\nCentral Excises and Salt Act, 1944\noriginally provided for only 11 items. The\nnumber of Items has since increased to\n137. The levy, which was selective in\nnature, to start with, acquired a\ncomprehensive coverage in 1975, when the\nresiduary Item 68 was introduced. Thus,\nbarring a few Items like opium, alcohol, etc.,\nall other manufactured goods now come\nunder the scope of this levy.\n2. The Technical Study Group on Central\nExcise Tariff, which was set up by the\nGovernment in 1984 to conduct a\ncomprehensive inquiry into the structure\nof the Central excise tariff has\nsuggested the adoption of a detailed\nCentral excise tariff based broadly on\nthe system of classification derived from\nthe International Convention on the\nHarmonised Commodity Description and\nCoding System (Harmonised system)\nwith such contractions or modifications\nthereto as are necessary to fall within the\nscope of the levy of Central excise duty.\nThe Group has also suggested that the new\ntariff should be provided for by a separate\nAct to be called the Central Excise Tariff\nAct.\n3. The tariff suggested by the Study Group\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 8 of 28\n\nPage 9\nJUDGMENT\nis based on an internationally accepted\nnomenclature, in the formulation of which\nall considerations, technical and legal, have\nbeen taken into account. It should,\ntherefore, reduce disputes on account of\ntariff classification. Besides, since the tariff\nwould be on the lines of the Harmonised\nSystem, it would bring about considerable\nalignment between the customs and Central\nexcise tariffs and thus facilitate charging of\nadditional customs duty on imports\nequivalent to excise duty. Accordingly, it is\nproposed to specify the Central excise tariff\nsuggested by the Study Group by a\nseparate tariff Act instead of the present\nsystem of the tariff being governed by the\nFirst Schedule to the Central Excises and\nSalt Act, 1944.\n4. The main features of the Bill are as\nfollows:\n(i) The tariff included in the Schedule to the\nBill has been made more detailed and\ncomprehensive, thus obviating the need for\nhaving a residuary tariff Item. Goods of the\nsame class have been grouped together to\nenable parity in treatment.\nxx\nxx\nxx\n5. The Bill seeks to achieve the above\nobjects.(emphasis supplied)\n12. It is significant, as expressly stated, in\nthe Statement of Objects and Reasons, that\nthe Central excise tariffs are based on the\nHSN and the internationally accepted\nnomenclature was taken into account to\n\"reduce disputes on account of tariff\nclassification\". Accordingly, for resolving\nany dispute relating to tariff classification, a\nsafe guide is the internationally accepted\nnomenclature emerging from the HSN. This\nbeing the expressly acknowledged basis of\nthe structure of Central excise tariff in the\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 9 of 28\n\nPage 10\nJUDGMENT\nAct and the tariff classification made\ntherein, in case of any doubt the HSN is a\nsafe guide for ascertaining the true\nmeaning of any expression used in the Act.\nThe ISI Glossary of Terms has a different\npurpose and, therefore, the specific\npurpose of tariff classification for which the\ninternationally accepted nomenclature in\nHSN has been adopted, for enacting the\nCentral Excise Tariff Act, 1985, must be\npreferred, in case of any difference between\nthe meaning of the expression given in the\nHSN and the meaning of that term given in\nthe Glossary of Terms of the ISI.”\n8)\nHe also pointed out that the aforesaid principle contained in\nWood Crafts Products was reiterated in CCE, Hyderabad v.\nBakelite Hylam2 as follows:\n“17. Hence for the interpretation of the New\nTariff harmonised system of nomenclature\nand its explanatory notes are relevant. In\nthe case of Collector of Central Excise,\nShillong v. Wood Crafts Products Ltd. 1995\n(3) SCC 454, this Court, while considering\nthe Central Excise Tariff Act of 1985, has\nheld that looking to the Statement of\nObjects and Reasons the Central Excise\nTariff under the 1985 Act is based on the\nHarmonised System of Nomenclature (HSN)\nand\n \nthe\n \ninternationally\n \naccepted\nnomenclature has been adopted to reduce\ndisputes on account of tariff classification.\nAccordingly, for resolving any dispute\nrelating to tariff classification, the\ninternationally accepted nomenclature\nemerging from the HSN is a safe guide, this\nbeing the expressly acknowledged basis of\nthe structure of the Central Excise Tariff in\nthe 1985 Act and the tariff classification\nmade therein. In case of any doubt, the\nHSN is a safe guide for ascertaining the true\nmeaning of any expression used in the Act.”\n2\n1997 (91) ELT 13\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 10 of 28\n\nPage 11\nJUDGMENT\n9)\nMr. Panda also referred to certain decisions of the Tribunals\nwherein such shampoos with 2% anti-fungal agents were still\ntreated as shampoos and not a medicinal product. Notably,\namong these decisions are (i) Amit Ayurvedic & Cosmetic\nProducts v. Commissioner3 and (ii) CCE Vapi v. Beta\nCosmetics4.\n10)\nMr. Bagaria, learned senior counsel, appearing for the\nrespondent/assessee stoutly refuted the aforesaid arguments of\nthe Revenue laying great emphasis on the plea that the product in\nquestion was basically a medicine which was pre-dominant use.\nIn order to demonstrate that the product 'Nizral Shampoo' could\nonly be used as medicine and not like any other general/ordinary\nshampoo, he pointed out the following features which stood\nestablished on record in the form of plethora of\nmaterials/evidence placed before the authorities below:\n(i) The medicinal properties of the product were adequately\nemphasized and the product was sold by the assessee on that\nbasis in the market.\n(ii) There was a warning to the patients about the adverse\nreaction of the use of this shampoo, if used for a long period.\n3\n2004 (168) ELT 354\n4\n2004 (173) ELT 255\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 11 of 28\n\nPage 12\nJUDGMENT\n(iii) The product was essentially described as 'medicine' only and\nnot as a shampoo meant for cleaning the hair.\n(iv) The literature along with the product sold specifically stated\nthe diseases which could be cured by the use of this shampoo.\n(v) Limited period use of the product was suggested, unlike a\nnormal shampoo which could be used regularly for infinite period.\n11)\nMr. Bagaria argued that matter needed to be examined keeping in\nview the aforesaid essential attributes/characteristics of the\nproduct and in this context, the fact that the product was held out\nby the respondent to the public at large as medicine; availability of\nthe said product with the Chemists; sale of the product on the\nprescription of a Doctor; assume much relevancy in treating the\nproduct as medicament having therapeutic value and not as\nordinary shampoo.\n12)\nMr. Bagaria also pointed out that presence of 2% 'Ketoconazole'\nin the said shampoo could not be treated as something\ninsignificant. On the contrary, it was the maximum percentage\nrequired to treate the dandruff inasmuch as presence of more\n'Ketoconazole' could be harmful. He further submitted that if it is\nless than that, then it may lose its therapeutic value and for this\nreason, in those shampoos where the assessee was earlier\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 12 of 28\n\nPage 13\nJUDGMENT\nputting 1% to 1½% of 'Ketoconazole', the assessee was itself\ntreating the said product as shampoo only and not as\nPharmaceutical product. He concluded his arguments by\nsubmitting that the judgment of this Court in\n B.P.L.\nPharmaceuticals Ltd. v. CCE, Vadodra5 squarely covered the\nissue involved in this case.\n13)\nWe have considered the submissions of counsel for the parties\nand find ourselves in agreement with the view taken by the\nTribunal holding that the product in question 'Nizral Shampoo' is\nclassifiable under CSH 3003.10 and not CSH 3305.99.\n14)\nAt the outset, we may mention that the product known as 'Nizral\nShampoo' gives the nomenclature of the product as shampoo.\nHowever, the respondent claim that it is a patent or proprietary\nmedicament as it's essential characteristics is therapeutic in\nnature. It is the common case of the counsel for the parties the\npre-dominant use of the product in question is to be taken into\nconsideration while deciding the classification issue. Therefore, it\nis to be determined as to whether the product in question is\nprimarily used as a shampoo or it is used as a medicament. To\nfind answer to this question, it is necessary to keep in mind the\n5\n1995 Supp. (3) SCC 1\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 13 of 28\n\nPage 14\nJUDGMENT\nessential characteristics of the product. When the matter is\nexamined from the aforesaid perspective we come to the\nconclusion that the respondent is correct in submitting that the\nessential properties of the product are medicinal in nature. It is\nclear from the following description:\n“Pharmacodynamics\nKetoconazole, a synthetic imidazole dioxolane\nderivative ha a potent anti-fungal activity against\ndermatophytes, such as Trichophyton sp.\nEpidermophyton sp. Microsporum sp. and\nyeasts, such as candida sp. and Malassezia\nfurfur (Pityrosporum ovale). Ketoconazole\nshampoo rapidly relieves scaling and pruritus,\nwhich are usually associated with pityriasis\nversicolor seborrhoeic dermatitis and pityriasis\ncapitis (dandruff).\nPharmacokinetics\nPercutaneous absorption of Ketoconazole\nshampoo is negligible since blood levels cannot\nbe detected, even after chronic use. Systematic\neffects, therefore, are not expected. \nIndications\nTreatment and prophylaxis of infections in which\nthe yeast pityrosporum is involved, such as\nPityriasis versicolor (localized), seborrhoeic\ndermatitis and pityriasis capitis (dandruff).\nContra-indications\nKnown hypersensitivity to Ketoconazole or the\nexcipient.” \nThe manufacturer has given clear warning and precautions\nfor the use of this product which are follows:\n“Warnings and Precautions\nTo prevent a rebound effect after stopping a\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 14 of 28\n\nPage 15\nJUDGMENT\nprolonged treatment with topical corticosteroid it\nis recommended to continue applying the topical\ncorticosteroid together with Nizral Shampoo 2%\nand to subsequently and gradually withdraw the\nsteroid therapy over a period of 2-3 weeks.\nSeborrhoeic dermatitis and dandruff are often\nassociated with increased hair shedding, and this\nhas also been reported although rarely, with the\nuse of Nizral Shampoo 2%.”\nIt is further mentioned as to how the treatment should be\ngiven to a person suffering from various kinds of dandruffs:\n“Treatment:\n-Pityriasis versicolor; once daily for maximum 5\ndays.\n-Seborrhoeic dermatitis and pityriasis capitis;\ntwice weekly for 2 to 4 weeks.\nProphylaxis:\n-Pityriasis versicolor: once daily for a maximum 3\ndays during a single treatment course before the\nsummer.\n-Seborrhoeic dermatitis and pityriasis capitis:\nonce every one or two weeks.”\nEven the adverse reaction of the treatment are mentioned\nby the manufacturers with specific advice that overdoses of this\nshampoo is not expected, as is clear from the following:\n“Adverse reactions\nTopical treatment with Nizral Shampoo 2% is\ngenerally well tolerated. \n As with other\nShampoos, a local burning sensation, itching,\nirritation and oily/dry hair may occur, but are rare,\nduring the period of use of Nizral Shampoo 2%.\nIn rare instances, mainly in patients with\nchemically damaged hair or grey hair, a\ndiscolouration of the hair has been observed.\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 15 of 28\n\nPage 16\nJUDGMENT\nOverdosage\nNot expected as Nizral Shampoo 2% is intended\nfor external use only. In the event of accident\ningestion, only supportive measures should be\ncarried out. In order to avoid aspiration, neither\nemesis nor gastric lavage should be performed.”\n15) Thus, not only limited period use is stated, another important\nfeature that appears in the literature supplied by the respondent is\nthe information for the 'patient', describing the user of the product\nas a 'patient'. It is as under:\n“Patient information\nKetoconazole Shampoo 2%\nNizral Shampoo 2%\nYou have been advised by your doctor to use\nthis shampoo to treat dandruff. This leaflet gives\nyou some information that you should keep in\nmine while using Nizral Shampoo. It also gives\nsome background information on dandruff, which\nis important for you to deal with it. Please read\nthis leaflet carefully to get the best results from\nthis treatment. Remember that it cannot answer\nall your questions, and that you should check\nwith your doctor for any further information you\nmay require.”\n16)\nThe use is suggested only on the advice of a Doctor and there is\na suggestion that Doctor should be consulted for any further\ninformation. \n The respondent has also provided the\nliterature/material showing that dandruff is a disorder which\naffects the hairy scalp. It is generally triggered by a single celled\norganism which is kind of fungus, with scientific name\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 16 of 28\n\nPage 17\nJUDGMENT\n'Pityrosporum Ovale'. For treatment of this disease, Nizral\nShampoo 2% (i.e. shampoo containing 2% 'Ketoconazole') is\nshown as 'a new medicine' use whereof cures clears a dandruff.\nIt is suggested that it should be used once a week and on other\ndays, normal shampoos may be used which clearly shows that\n'Nizral Shampoo' is to be used like a medicine, unlike other\nnormal Shampoos.\n17)\nWe also find that in order to show that the product was used only\nas a medicament for curing dandruff and not for using the same\nfor the purpose of cleaning hair, the assessee filed affidavits of\nvarious Doctors.\n18)\nHaving regard to the aforesaid material on record, we find that the\ncase is directly covered by the ratio of this Court's judgment in\nB.P.L. Pharmaceuticals Ltd. (supra). That was a case where\nthe assessee was engaged in manufacture of Selenium Sulfide\nLotion which contained 2.5% selenium sulfide W/V. The\nassessee was manufacturing this product under a loan licence\nfrom Abbott Laboratories in accordance with Abbott's\nspecifications, raw materials, packing materials and quality\ncontrol. It was sold under the private name 'Selsun'. The\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 17 of 28\n\nPage 18\nJUDGMENT\nassessee in that case claimed that this product was used in the\ntherapeutic quantity i.e. 2.5% W/V which was the only active\ningredient and other ingredient merely served the purpose of a\nbare medium. It was also claimed that the product is\nmanufactured under a drug licence issued by the Food and Drug\nAdministration. The assessee, thus, wanted the product to be\nclassified under heading 3003.19 as Pharmaceutical Product\nunder Chapter 30. However, the Revenue took the plea that it\nwould fall under sub-heading 3305.90 i.e. under Chapter 33.\nThus, the respective contentions of the Department as well as the\nassessee were almost on the same lines as in the present case,\nnamely, whether the said product was Pharmaceutical product or\nit was a cosmetic/toiletry preparation. The only difference was of\nsub-headings under those Chapters. This Court went into the\nessential characteristics of the product and found it that dominant\nuse of the product was medicinal, as it was sold only on medical\nprescription as a medicine for treatment of disease known as\nSeborrhoeic Dermatitis, commonly known as Dandruff. It was\nmanufactured under a Drug Licence; the Food and Drug\nAdministration had certified it as a Drug; and the Drug Controller\nhad categorically opined that Selenium Sulfide present in Selsun\nwas in a therapeutic concentration etc. The relevant passages\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 18 of 28\n\nPage 19\nJUDGMENT\nfrom the said judgment throwing light on these aspects are\nreproduced below:\n“19. So far as medicinal properties of the product\nare concerned it can be gathered from the\ntechnical and/or pharmaceutical references that\nSelenium Sulfide has anti-fungal and\nanti-seborrhoeic properties and is used in a\ndetergent medium for the treatment of dandruff\non the scalp which is milder form of Seborrhoeic\nDermatitis and Tinea Versicolour 2.5% of this\ncompound is the therapeutic quantity.\nxx\nxx\nxx\n24. Elaborating the above submissions, the\nlearned counsel for the respondents invited our\nattention to chapter notes of Chapter 30 and\nChapter 33 and also the rules of interpretation.\nAccording to the learned counsel a careful\nreading of chapter notes of Chapter 30 would\nshow that preparations of Chapter 33 even if\nthey have therapeutic or prophylactic properties\nwould not fall under Chapter 30. However, he\nfairly admitted that ‘medicaments’ are those that\nhave therapeutic or prophylactic uses.\nNevertheless those medicaments, if they are\nclassifiable under Chapter 33 or Chapter 34 will\nnot fall under Chapter 30, according to him, if\nthey are more specifically preparations falling\nunder Chapter 33 or Chapter 34. In other words,\nhe wants to equate the product in question to\n‘shampoo’ enumerated under Heading No.\n33.05. He also invited our attention to the fact\nthat the appellants before the coming into force\nof the new Tariff Act described the product as\nshampoo and they have omitted the word\n‘shampoo’ deliberately only to claim that the\nproduct would fall under Chapter 30.\n25. We do not think that we can accept all the\ncontentions of the learned counsel for the\nrespondents except certain obvious admitted\npositions. The submission that the product in\nquestion must be equated to shampoo falling\nunder Chapter 33 is not at all correct.\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 19 of 28\n\nPage 20\nJUDGMENT\n26. It is true that the learned counsel for the\nappellants have placed reliance on the definition\nof the words “cosmetic and drug” as defined in\nthe Drugs and Cosmetics Act, 1940. On a\nperusal of the definitions, we can broadly\ndistinguish cosmetic and drug as follows:\n“A ‘cosmetic’ means any article intended to be\nrubbed, poured, sprinkled or sprayed on, or\nintroduced into, or otherwise applied to, the\nhuman body or any part thereof for cleansing,\nbeautifying, promoting attractiveness, or\naltering the appearance, and includes any\narticle intended for use as a component of\ncosmetic.”\n and\n“A ‘drug’ includes all medicines for internal or\nexternal use of human beings or animals and all\nsubstances intended to be used for or in the\ndiagnosis, treatment, mitigation or prevention of\nany disease or disorder in human beings or\nanimals, including preparations applied on\nhuman body for the purpose of repelling\ninsects.”\n27. We cannot ignore the above broad\nclassification while considering the character of\nthe product in question. Certainly, the product in\nquestion is not intended for cleansing,\nbeautifying, promoting attractiveness or altering\nappearance. On the other hand it is intended to\ncure certain diseases as mentioned supra.\n28. The fact that the appellants have previously\ndescribed the product as “Selsun Shampoo”\nwill not conclude the controversy when the true\nnature of the product falls for determination. In\nfact, notwithstanding the fact that the \nappellants have described the product as\nSelsun Shampoo, the Central Board of Excise\nand Customs, as noticed earlier, has classified\nthe same as patent and proprietary medicine.\nThe respondents have accepted the same.\nTherefore, there is no force in the submission\nof the learned counsel for the respondents that\nthe product must be equated with shampoo.\n29. The contention based on chapter notes is\nalso not correct. One of the reasons given by\nthe authorities below for holding that Selsun\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 20 of 28\n\nPage 21\nJUDGMENT\nwould fall under Chapter 33 was that having\nregard to the composition, the product will\ncome within the purview of Note 2 to Chapter\n33 of the Schedule to Central Excise Tariff Act,\n1985 is without substance. According to the\nauthorities the product contains only subsidiary\npharmaceutical\n \nvalue\n \nand,\n \ntherefore,\nnotwithstanding the product having a medicinal\nvalue will fall under Chapter 33. We have\nalready set out Note 2 to Chapter 33. In order\nto attract Note 2 to Chapter 33 the product\nmust first be a cosmetic, that the product\nshould be suitable for use as goods under\nHeadings Nos. 33.03 to 33.08 and they must\nbe put in packing as labels, literature and other\nindications showing that they are for use as\ncosmetic or toilet preparation. Contrary to the\nabove in the present case none of the\nrequirements are fulfilled. Therefore, Note 2 to\nChapter 33 is not attracted. Again it is without\nsubstance the reason given by the authorities\nthat the product contains 2.5% w/v of Selenium\nSulfide which is only of a subsidiary curative or\nprophylactic value. The position is that\ntherapeutic quantity permitted as per technical\nreferences including US Pharmacopoeia is\n2.5%. Anything in excess is likely to harm or\nresult in adverse effect. Once the therapeutic\nquantity of the ingredient used, is accepted,\nthereafter it is not possible to hold that the\nconstituent is subsidiary. The important factor is\nthat this constituent (Selenium Sulfide) is the\nmain ingredient and is the only active\ningredient.\nxx\nxx\nxx\n33. The labels which give the warning,\nprecaution and directions for use do make a\ndifference from that of ordinary shampoo which\nwill not contain such warning or precautions for\nuse. Further no individual would be prepared to\nsay in a social gathering that he or she is using\nSelsun to get rid of dandruff or other similar\ndiseases whereas nobody would hesitate to\nstate in a similar gathering that he or she is\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 21 of 28\n\nPage 22\nJUDGMENT\nusing a particular brand of shampoo for\nbeautifying his or her hair. Thus there are lot of\nfavourable materials to treat the product in\nquestion as a medicine rather than cosmetic. In\nthis connection the reliance placed by the\nlearned counsel for the appellants on a\ndecision of this Court reported in case Indian\nMetals & Ferro Alloys Ltd. v. CCE can be\nusefully referred to. In that case this Court held:\n“It (the Tribunal) seems to say that, even if the\ngoods manufactured by the appellant had been\nrightly classified under Item 26-AA before\n1-3-1975, the introduction of Item 68 makes a\ndifference to the interpretation of Item 26-AA.\nThis is not correct. Item 68 was only intended\nas a residuary item. It covers goods not\nexpressly mentioned in any of the earlier items.\nIf, as assumed by the Tribunal, the poles\nmanufactured were rightly classified under Item\n26-AA, the question of revising the\nclassification cannot arise merely because Item\n68 is introduced to bring into the tax net items\nnot covered by the various items set out in the\nSchedule. It does not and cannot affect the\ninterpretation of the items enumerated in the\nSchedule. This logic of the Tribunal is,\ntherefore, clearly wrong.”\n34. This judgment supports the case of the\nappellant when it is contended that there is no\ngood reason to change the classification merely\non the ground of coming into force of the new\nCentral Excise Tariff Act, 1985 without showing\nmore that the product has changed its\ncharacter.\n35. The learned counsel also placed reliance\non a number of judgments to support his\nargument that in common and commercial\nparlance the product is known as medicine\nrather than cosmetic. As pointed out already\nand in support of that submission, affidavits\nand letters from chemists, doctors and\ncustomers are filed to show that the product is\nsold under prescription only in chemists’ shops\nunlike shampoos sold in any shop including\nprovision shops. This conclusion, namely, that\nthe product is understood in the common and\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 22 of 28\n\nPage 23\nJUDGMENT\ncommercial parlance as a patent and\nproprietary medicine was also found by the\nCentral Board of Excise and Customs as early\nas in 1981 and accepted by the Excise\nauthorities and in the absence of any new\nmaterial on the side of the respondents there is\nno difficulty in accepting this contention without\nreferring to decision cited by the counsel for the\nappellants.\n36. Yet another reason given by the CEGAT for\nnot accepting the case of the appellants was\nthat the product is sold with a pleasant odour\nand, therefore, it must be treated as a\ncosmetic. Selenium Sulfide has an unpleasant\nodour and to get rid of it insignificant amount of\nperfume is used and make it acceptable to the\nconsumers. A medicine, for example,\nsugar-coated pill will nevertheless be medicine\nnotwithstanding the sugar-coating. Likewise the\naddition of insignificant quantity of perfume to\nsuppress the smell will not take away the\ncharacter of the product as a drug or medicine.\nAgain one other reason given by the Tribunal is\nregarding the packing. The Tribunal has held\nthat the product is cosmetic because it is\npacked in an attractive plastic bottle. This by\nitself will not change the character, as cosmetic\nis put up for sale with some indication on the\nbottle or label that it is to be used as cosmetic\nor it is held out to be used as a cosmetic. As\nalready noted the label here gives warnings.\nThe fact that it is packed in a plastic bottle is a\nwholly irrelevant criteria.”\n19)\nThe aforesaid judgment not only provides a complete answer to\nthe issue at hand, it also suitably answers the various arguments\nof the Revenue and the manner in which those arguments were\nrebutted by the Court in the said case. The Tribunal has summed\nup the entire legal proposition in para 5 of its judgment with which\nwe entirely agree. This para reads as under:\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 23 of 28\n\nPage 24\nJUDGMENT\n“5. We have carefully considered the\nsubmissions made by the learned Counsel and\nthe learned DR. We find from the extracted\nliterature that the item comprises of 20 mg\nKetoconazole in one ml and the pamphlet\nclearly indicates that it is for the use only of a\nRegistered Medical Practitioner or a Hospital or\na Laboratory. The pamphlet claims that the item\nis used for treatment and prophlaxis of\ninfections in which the yeast pityrosporum is\ninvolved such as pityriasis versicolor (localized),\nseborrhoeic\n \ndermatitis\n \nand\n \npityriasis\ncapitis(dandruff). The procedure for treatment\nand the adverse reactions on such treatment\ndue to overdose is also stated in the pamphlet.\nThe Apex court, in the case of Muller & Phipps\n(India) Ltd. v. CCE, 2004 (167) ELT 347 (SC)\nhas clearly held that once the item has been\nmanufactured under a Drug licence and the\nDepartment has treated the item as a Drug, it\nwould not cease to be one notwithstanding the\nfact that new Tariff Act has come into force. The\nApex Court again held in the case of CCE v.\nPandit D.P. Sharma, 2003 (154) ELT 324 (SC)\nthat once in the common parlance the item is\ntreated as a medicament and manufactured\nunder drug licence and the evidence is\nproduced by the party with regard to the item\nbeing a medicament, then it should be treated\nas such and should not treat 'Himtaj Oil' as\n'perfumed hair oil'. The Apex Court's ruling in the\ncase of B.P.L. Pharmaceuticals Ltd. v. CCE,\n1995 (77) ELT 485 has held that 'Selsun' and\nanti-dandruff preparation containing 2.5%\nselenium sulphide which is full therapeutic limit\npermissible as per pharmacopoeia and\nmanufactured under Drug Licence and certified\nby Food and Drugs Administration as a\nmedicine, and the same is put up as a medicine\nto be used under Doctor's advise in\naccompanying literature and sold through\nchemist shops under doctor's prescription\nshould be considered as a medicament under\nSub-Heading 3003.19 of CE Act and not as a\ncosmetics. In the present case also, same\nevidence is relied which are identical to the facts\nof B.P.L. Pharmaceuticals Ltd. The item also\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 24 of 28\n\nPage 25\nJUDGMENT\nacts as an anti-dandruff preparation with 2%\nKetoconazole. The same is sold on doctor's\nprescription and by the chemists and\nunderstood as a medicine in common parlance\nas per the enormous literature and affidavit\nproduced. Therefore, there was no necessity for\nthe Commissioner to have distinguished this\nApex Court judgment which applies on all fours\nto the facts of the present case. We also find\nthat the judgment of the Apex Court rendered in\nthe case of CCE v. Vicco Laboratories, 2005\n(179) ELT 17 (SC) also applies to the facts of\nthe case. In this case, the Apex Court has\nclearly noted that the common parlance test\nshould be applied for determining whether a\nproduct is classificable as a pharmaceutical\nproduct under Chapter 30 of CET Act or as a\ncosmetics under Chapter 33 ibid as laid down\nby the Supreme Court in the case of Shree\nBaidyanath Ayurved Bhavan Ltd., 1996 (83) ELT\n492 (SC). As there is enormous evidence\nproduced by the appellants with regard to the\nuse of Ketoconazole Shampoo for treatment of\nseveral disorders and diseases mentioned in the\npamphlet and the same is sold by a chemist\nunder a prescription issued by a Registered\nmedical Practitioner or a Hospital or a\nLaboratory, therefore, the appeal is required to\nbe allowed with consequential relief, if any.”\n20)\nWe, thus, are of the view that the judgment of the Tribunal does\nnot call for any interference and the appeal is dismissed with cost.\nCIVIL APPEAL NO.\n \n \n \n 5752\n \n \n OF 2015\n(arising out of SLP (C) No. 1531 of 2015)\n21)\nLeave granted.\n22)\nThis appeal is preferred by the assessee and the issue arises is\nthe same as discussed in Civil Appeal No. 4480 of 2005. Here,\nrespondent No.2 has passed an order directing the appellant to pay\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 25 of 28\n\nPage 26\nJUDGMENT\ndifferential duty, treating the product as Shampoo and not\nMedicaments. Challenging that order, appellant had filed the writ\npetition, which has been dismissed by the High Court vide impugned\njudgment primarily on the ground the matter had left to the concerned\nauthority to decide the classification on the basis of technical evaluation\nand it could not be decided by the High Court. For the reasons\nrecorded in Civil Appeal No. 4480 of 2005, this appeal stands allowed\nhereby quashing the order of the High Court as well as respondent\nNo.2 dated 28.12.2001 demanding differential duty. \n.............................................J.\n(A.K. SIKRI)\n.............................................J.\n(ROHINTON FALI NARIMAN)\nNEW DELHI;\nMAY 14, 2015.\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 26 of 28\n\nPage 27\nJUDGMENT\nITEM NO.101 COURT NO.12 SECTION III\n S U P R E M E C O U R T O F I N D I A\n RECORD OF PROCEEDINGS\nCivil Appeal No(s). 4480/2005\nCOMMISSIONER OF CENTRAL EXCISE HYDERABAD Appellant(s)\n VERSUS\nM/S SARVOTHAM CARE LIMITED Respondent(s)\nWITH\nSLP(C) No. 1531/2015\n(With Interim Relief and Office Report)\n \nDate : 14/05/2015 These matters were called on for hearing \ntoday.\nCORAM : \n HON'BLE MR. JUSTICE A.K. SIKRI\n HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN\nFor Appellant(s)\n Mr. A.K.Panda,Sr.Adv.\n Mr. Rajiv Nanda,Adv.\n Mr. T.M.Singh,Adv.\n Mr. B. Krishna Prasad,Adv.\n \n Mr. S.K.Bagaria,Sr.Adv.\n Mr. Alok Yadav,Adv.\n Mr. Anuj B.,Adv.\n Mr. Udit Jain,Adv.\n Mr. Ajit,Adv.\n Mr. Harish Pandey,Adv.\nFor Respondent(s)\n Mr. S.K.Bagaria,Sr.Adv.\n Mr. Alok Yadav,Adv.\n Mr. Anuj B.,Adv.\n Mr. Udit Jain,Adv.\n Mr. Ajit,Adv.\n Mr. Rajan Narain,Adv.\n \n UPON hearing the counsel the Court made the following\n O R D E R\n \nThe Civil Appeal No. 4480 of 2005 is dismissed with cost.\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 27 of 28\n\nPage 28\nJUDGMENT\nLeave granted.\nThe Civil Appeal No. 5752 of 2015 arising\nout of SLP(C)NO. 1531 of 2015 stands allowed hereby\nquashing the order of the High Court as well as\nrespondent\n \nNo.2\n \ndated\n \n28.12.2001\n \ndemanding\ndifferential duty.\n (SUMAN WADHWA) \n AR-cum-PS\n (SUMAN JAIN)\n COURT MASTER\nSigned Reportable judgment is placed on the file.\nCivil Appeal Nos. 4480 of 2005 & Anr.\nPage 28 of 28\n"