Page 53 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] QUESTION-ANSWER BOX J111
medicine and tonic and classification becomes doubtful, matter has to be re-
ferred to Drug Controller - In present case, Drug Controller have granted
licence to assessee for manufacture of impugned products as Ayurve-
dic/Siddha medicines and Licence number is indicated on products - Sub-
stitutes used in impugned products due to non-availability of original
products mentioned in Ayurvedic texts, duly declared by assessee before
Drug Controller - Assessee holding valid licence duly extended upto 31-12-
2001 - Assessee has not claimed classification as exempted category
under sub-heading 3003.31 ibid but claimed the same as patent or
proprietary medicament under sub-heading 3003.39 ibid on pay-
ment of appropriate duty - Similar product by other manufacturers
have been classified as Ayurvedic medicaments and same product
of assessee in other Units at Baddi, Sahibabad and Rudrapur has
been classified as Ayurvedic medicine - Impugned products rightly
claimed by assessee as Ayurvedic medicaments, falling under Head-
ing 30.03 ibid primarily having therapeutic use and its use as health
tonic only a secondary benefit - Demand, penalty and confiscation of
goods set aside - Sections 11A and 11AC of Central Excise Act, 1944
- Rule 25 of Central Excise Rules, 2002. [paras 4.2, 4.3, 4.4, 4.5, 4.6]
 2012 (277) E.L.T. 299 (S.C.) : Commissioner of Central Excise v. Wock-
hardt Life Sciences Ltd. :-
Medicament - Povidone Iodine Cleansing Solution - Constituting
medicament Povidone Iodine along with preservatives viz. Neutro-
nix, Superamide and Sodium Hydroxide - Used by surgeons for clean-
ing or degerming their hands and scrubbing surface of skin of patient before
operation - HELD : Purpose of use was primarily prophylactic and to pre-
vent infection or disease - In that view, it was classifiable as medicament
under Heading 3003 of Central Excise Tariff, a specific entry and not un-
der sub-heading 3402.90 thereof, a residuary entry - Note 2(i) of Chapter
30 ibid made it clear that products, comprising two or more constit-
uents which have been compounded together either for therapeutic
or prophylactic uses, would fall within meaning of expression ‘Me-
dicament’ - Revenue plea that since impugned product was primarily used
as detergents/cleansing preparation, they cannot be brought under defini-
tion of medicaments, rejected. [paras 15, 29, 34]
Classification of goods - Determination of - Factors to be considered
are product composition, its literature, label, character and user -
Process of manufacture and end use, is not necessarily determina-
tive - What is more important is whether broad description of article
fits in with expression used in Tariff - Functional utility and pre-
dominant usage of commodity must be taken into account, apart
from understanding in common parlance - However, there cannot
be static parameter for correct classification. [paras 31, 32, 34]
Classification of goods - Determination of - There is no fixed test -
‘Common parlance test’ or ‘commercial usage test’ are most com-
mon - Whether particular article will fall within particular Tariff
heading or not has to be decided on basis of tangible material or ev-
idence to determine how it is understood in ‘common parlance’ or in
‘commercial world’ or in its popular meaning or in ‘trade circle’;
they are concerned with product and their understanding consti-
tutes definitive index of legislative intention, when statute was en-
acted. [para 30]

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