CX - AA considers hair growth a cosmetic necessity rather than a disease; takes his analysis to illogical heights -AswiniHomeo Arnica Hair Oil is a medicament: SC

CX - Treating the product as a cosmetic because the label depicts a lady with long black flowing hair is stretching the matter to the brink of absurdity: SC

GST - Petitioner having paid tax @ 12% at the time of filing returns and also paid 10% of disputed tax as pre-deposit at the time of filing appeal, one more opportunity can be granted to petitioner to prove that he is a registered government contractor: HC

Sunil Kalgounda Patil

Service Matter - The applicants are seeking promotion to the post of Assistant Commissioner Group-'A' service from three feeder categories in group 'B' services for Superintendent Central Excise, Superintendent Customs Preventive and Customs Appraisers and were previously appointed as Inspectors through the same selection process - The applicants in the present OA belongs to first two feeder categories are aggrieved as they have been stagnating for decades and Customs Appraisers junior to them are being promoted before them because of the discriminatory and arbitrary promotion policy of the Respondents and the irrational application of Rule 5(4) of the Recruitment Rules 2012 with effect from 13.09.2012 instead of 05.06.2002, or earlier, vide Rule 1(2) - The applicants have been granted ad hoc promotion contrary to equal number of promotion as enshrined in the Constitution - It is further stated that their own circulars provide that the quota for promotion from the feeder cadres is to be apportioned on the basis of comparative cadre strength - As per the Handbook of Recruitment Rules, 1993 Group 'A' service including the clause 3.12.7 which provides that if there is more than one feeder category for promotional cadre, the quota of promotion for each category shall be based upon ratio of their sanctioned strength.

Held - Having considered the rival contentions and material at hand, it is clear that all the three categories may approach the Respondents by way of representation & that the Respondents may formulate the promotion policy based on the strength of the cadre and not from the retrospective date i.e., with effect from 2012: CAT

+ In nut shell, the outcome of the meeting was that whether the ratio which is to be applied for the promotional benefits of the applicants herein, their implementation was on prospective basis or not. Thus the Board directed that clarification from Supreme Court may be sought for. Thereafter, the Respondents have approached the Supreme Court by filing modification application seeking clarification of order dated 03.08.2011 passed by the Court in Civil Appeal No. 1198/2005 to the effect that the respondents are permitted to alter the existing ratio of 6:1:2 in the three feeder cadres, namely (i) Superintendent of Central Excise, (ii) Superintendents of Customs (Preventive) and (iii) Customs Appraisers to 13:2:1 respectively on the basis of the existing regular sanctioned strength of the respective feeder cadres, for promotion with effect from the date the amended Recruitment Rules are notified : together with kind permission to extend the time limit by another three months to complete this exercise. In other words, as to whether the ratio of 13(Superintendent of Central Excise) :2(Superintendent of Customs Preventive) : 1 (Appriaser); and Central Excise are to be implemented retrospectively.

- Application disposed of: DELHI CAT COURT

2023-TIOL-450-HC-KOL-GST

Mohammad Sikandar Ali Vs Asstt. Commissioner State Tax  

GST - Appeal filed by petitioner is directed against impugned order refusing to grant any interim order while entertaining the petition challenging an order passed by appellate authority rejecting the appeal filed by appellant as against demand of tax on the ground of limitation - SCN was issued stating that there is short payment of tax and petitioner was directed to produce certain documents as evidence in support of his claim - Petitioner's bank account was attached against which the appeal was preferred by them - There is a delay of 297 days in filing the appeal - After extending the benefit of order passed by Supreme Court, yet there was a delay of 114 days - The petitioner having paid tax @ 12% at the time of filing returns and also paid 10% of disputed tax as pre-deposit at the time of filing appeal, one more opportunity can be granted to petitioner to produce proof to show that he is a registered government contractor - However, this opportunity shall be subject to condition - Matter remanded back to original authority with a condition that petitioner shall pay a further sum of Rs.1 lakh and upon such payment, said assessing officer shall consider the documents which the petitioner may produce and examine as to whether petitioner assessee was right in computing tax at 12% and after considering all the documents and affording an opportunity of personal hearing, assessing officer is directed to pass fresh orders on merits and in accordance with law: HC

- Appeal disposed of: CALCUTTA HIGH COURT

2023-TIOL-50-SC-CX

CC, CE & ST Vs Ashwani Homeo Pharmacy

CX - Classification - In relation to the period from December 2013 to November 2014, the Adjudicating Authority held that the product known as "AswiniHomeo Arnica Hair Oil" [AHAHO] could not be classified as 'medicament' under Tariff Item 3003 90 14 and that the product in question, being "Hair oil", was required to be classified as 'cosmetic' under Tariff Item 3305 90 19 - Adjudicating Authority confirmed the differential duty demand of Rs.2,72,14,266/-; ordered payment of interest and imposed penalty in the sum of Rs.54,00,000/- u/r 25 of the CER, 2002 - Appeal preferred by the respondent was allowed by the Tribunal by setting aside the order of the adjudicating authority - Revenue is, therefore, in appeal before the Supreme Court.

Held:

+ 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 assertion that AHAHO is a medicament, also placed reliance on the decision of the Tribunal in the case of BaksonHomeo Pharmacy ( 2001) 136 ELT 485 ) wherein a similar product marketed in the name of "Sunny Arnica Hair Oil" was held to be medicament, covered under Chapter 30.   [para 11]

+ In the said decision, the Tribunal examined the questions relating to two products namely, "Sunny Arnica Hair Oil" and "Sunny Arnica Shampoo". As regards … hair oil, the Tribunal 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. [para 17]

+ 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, 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. 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 or prevention of disease (medicament) or for care (cosmetic); and the preparation having only subsidiary curative or prophylactic value would fall under Chapter 33. [para 18.1].

+ 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.  [para 18.3]

+ 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 Homeopathic Pharmacopoeia of India   as also in the Dictionary of Practical Materia Medica . [para 22]

+ In the over-anxiety to somehow hold the product in question as cosmetic, the Adjudicating Authority even attempted to suggest his reservations as regards the utility of Pilocarpine as a Homeopathic drug contrary to the authoritative texts. [para 22.1]

+ 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 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 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.   [para 22.2]

+ 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 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. [para 23.3]

+ 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.   Viewed from any angle, merely for being available across the counter, the product in question, AHAHO, does not cease to be a medicament. [para 25]

+ 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 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. 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. A treatment or prevention of 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. [para 27]

+ 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 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. [para 29]

+ 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 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. [para 30]

+ 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, 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. [para 32.1]

+ 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 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]

- Revenue Appeal dismissed: SUPREME COURT OF INDIA