ORDER
Jyoti Balasundaram, Member (J)
1. The above appeals involve common issues and are hence heard together and disposed of by this common order.
2. The brief facts of the case are that M/s. ICPA Health Products (P) Ltd. are engaged in the manufacture of pharmaceutical products and preparations for oral or dental hygiene falling under Sub-heading 3003.10 and 3306.00 of the Schedule to the CETA, 1985 respectively. They were availing concessional rate of duty under Notification No. 175/86-CE dated 1.3.86 as they had not crossed SSI limit up to 14.6.88. They had classified their products viz. (1) Hexiprep (2) Hexiscrub (surgiscrub) and (3) Hexiaqua under Sub-heading 3003.10 and paid duty under Notification No. 29/88-CE dated 1.3.88 at 10% adv. BED and 5% SED which appeared to the Department to have been paid incorrectly. The Chemical Examiner opined from the contents of the labels of all the 3 products that Chlorhexidine Gluconate Solution BP had therapeutic properties and used as disinfectant which is specifically covered under CET heading 38.08 and hence the above mentioned 3 products containing Chlorhexidine Gluconate Solution BP were disinfectants falling under that Heading and not medicaments falling under CET Sub-heading 3003.10. The Department was also of the view that the product Hexidine manufactured by M/s. ICPA Health Products (P) Ltd. was a product for oral hygiene classifiable under Sub-heading 3306.00 and not a medicament under Chapter 30. Accordingly, a show cause notice dated 23.5.91/29.5.91 proposing reclassification of Hexiprep, Hexiscrub and Hexlaqua under CET sub-heading 3808.00 and Hexidine under CET Sub-heading 3306.00 and proposing recovery of differential duty of Rs. 7.41,813.13 for clearances during the
period from March 1988 to November 89. The extended period was invoked in the notice on the ground of misstatement and suppression of facts, the adjudicating authority upheld the classification proposed in the show cause notice and confirmed the entire demand, by his order dated 28.11.91 against which the assessee has filed E/770/92-C.
3. E/38/95 and E/39/95-Carise out of the order dated 27.9.94 of the Collector of Central Excise (Appeals), Ahmedabad setting aside the order dated 20.5.93 of approval of classification list No. 5/90-91 dated 2.8.91 classifying Hexiprep in, Hexiscrub and Hexiaqua under CET Sub-heading 3808.90 and Hexidine under CET Sub-heading 3306.00 and Order-in-Original dated 28.7.93 confirming consequential duty demand of Rs. 21,13,369.03, both passed by the Assistant Collector of Central Excise.
4. We have heard Shri V. Lakshmikumaran, Learned Counsel and Shri H.K. Jain, Learned SDR.
5. We record our findings as under:
4.1 Classification of Hexiprep, Hexiscrub and Hexiaqua The basic ingredient of these 3 products is Chlorhexdine Gluconate Solution BP. which is a 20% aqueous solution of 1.1 hexamethylenebis [5-4 chlorophenyl]. The Pharmaceutical Codex (incorporating the British Pharmaceutical Codex) mentions that Chlor-hexidine Gluconate Solution BP containing 0.05 to 0.5% is used for disinfection of the hands. The labels of the 3 products above mentioned describe them as “superior surgical microbicidal solution”. Hexiprep is used to paint the skin as required to disinfect the skin before surgery, it is for rapid skin disinfection prior to surgery. Hexiaqua is used as a skin disinfectant to paint the skin before surgery and as a wound disinfectant. It is described as a cleanser, and is used for cleansing of wounds and abrasions and minor cuts. Hexiscrub is for use on hands and forearms of Surgeons for rapid hand disinfection prior to surgery. These three products are described as “faster, longer acting microbicidals”. The killing of microbes is to prevent a patient from contracting any infection. Hence the disputed microbicidal solutions are in the nature of disinfectants and are hence excluded from the coverage of Chapter 30 by virtue of Note 1 (a) (2) to Chapter 38. The contention of the Learned Counsel is that disinfectants of Heading 38.08 would cover only those disinfectants which are used on inanimate objects. We do not agree. The Encyclopaedia of Chemical Technology, Third Edition, Volume 7 by Kirk othmer recognises that there are two general clauses of disinfectants, one for janitorial or household uses directed specially against enteric organisms and another for medical veterinary, hospital and surgical uses, directed against both enteric and pyrogenic bacteria (page 796). The New Encyclopaedia Britannica, Vol. 4 at page 123 defines disinfectant as an substance such as creosote or alcohol, applied to inanimate objects to kill micro organisms. The same definition states that disinfectant and antiseptics are alike in that both are germicidal, but antiseptics are applied primarily to living tissue. The appellants rely upon the HSN Explanatory Notes to Heading 38.08 (page 529) which mentions that disinfectants are agents which destroy or irreversibly inactivate undesirable bacteria, viruses or other microorganisms, generally on inanimate objects and that they are used, for example, in hospitals for cleaning walls, etc. or sterilising instruments. However, as we have already noted surgical disinfectants (which can otherwise be referred to antiseptics) are used only on living tissue. In the absence of any separate Heading in the Central Excise Tariff for antiseptics and having regard to the fact that microbicidal solutions are for skin or hand disinfectants they have been rightly held to be disinfectants falling under CET Sub-heading 38.08. The HSN Explanatory Notes to Heading 38.08 states that the Heading excludes disinfectants which have the essential character of medicaments (page 530); however, in this case the appellants have not established that the products in dispute have the essential character of medicaments. On the other hand, the products are used to prevent the patients from contracting any infection and, therefore, they are clearly in the nature of disinfectants.
4.1.1 The case law cited by the appellants’ Counsel is distinguishable. In the case of Collector of Central Excise v. Pharmasia P. Ltd. , the issue was whether a product “Mediker” is used as a shampoo or even as a medicated soap or whether is used for treatment for lice. In para 16 of its order the Tribunal, after considering the literature placed before it and after viewing the video film held that ‘Mediker’ is considered by all concerned as an antilice treatment and that it is recommended for those people who are infested with lice, the Tribunal also noted that the product was advertised as for anti-lice treatment. On perusal of documents such as Merck Manual of Diagnosis and Therapy, Andrew’s “Diesase of the Skin”, Clinical Dermatology, etc., the Tribunal held that the infestation of lice on one’s head is a disease called Pediculosis and a product used to treat such a disease has to be considered as a medicament and on this basis, the Tribunal upheld the classification as a medicament under CET Sub-heading 30.03 as against classification under Chapter 38.
4.1.2 In the case of Bengal Chemicals and Pharmaceuticals (P) Ltd. , the classification of phenols -whether under CET Sub-heading 3003.20 as a medicament or under CET Sub-heading 3801.90 as a disinfectant, arose for consideration. In paragraph 4 of its order, the Tribunal held that phenol does not fulfil the definition of prevention of disease in human beings or animals and serves only a sanitation in purpose and, noted that the disinfectants are agents such as creosote or alcohol, applied to inanimate objects to kill micro-organisms.
In the present case, however, we have held that the 3 products satisfy the trade parlance test as disinfectants (surgical disinfectants) and since Chapter 38 classifies disinfectants of all kinds, classification under Chapter 30 is ruled out.
4.2 We have held in the preceding paragraph that Hexiprep, Hexiscrub and Hexiaqua fall under CET Sub-heading 38.08. The appellants state that, without prjudice to their contention that the products are classifiable under Heading 30.03, that they would fall under CET Sub-heading 3808.10 and not under Sub-heading 3808.90 and in this connection they rely upon the judgment of the Hon’ble Supreme Court in the case of Bombay Chemicals P. Ltd. and the Tribunal’s decision in the case of Ultima Search Ltd. reported hi . Sub-heading 38.08 covers “insecticides, Rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products.” Sub-heading 3808.10 covers “insecticides, fungicides, herbicides, weedicides and pesticides, while Sub-heading 3808.90 covers “others”. Since disinfectants are not specified under Sub-heading 3808.10, they would be covered by Sub-heading 3808.90. The case law relied upon by the appellants is distinguishable. In the case of Bombay Chemicals P. Ltd, the Apex Court was seized of the issue as to whether SI. No. 18 of the Notification 55/75 which reads as “insecticide, pesticide, weedicide and fungicide” would cover disinfectant also. The Supreme Court held that the term pesticide would also cover disinfectant used for killing germs of infectious and contagious diseases. However, in the present case we are concerned with the classification of the product and since disinfectants are not among the products specified in Sub-heading 3808.10, they will not fall for classification there under but under the other Sub-heading 3808.90. In the case of Ultima Search Ltd. cited supra, the Tribunal held that the term “pesticides” occurring in CET sub-heading 3808.10 would was wide enough to include the disputed product viz. rodenticide and hence rodenticide was covered by that Sub-heading. In the present case, however, the surgical disinfectants fall in the category of disinfectants the product enumerated in CET Sub-heading 3808(sic) and hence the ratio of this decision is not applicable. We, therefore, reject the contention of the assesses that CET Sub-heading 3808 10 covers the above 3 products.
4.3 Classification of Hexidine: The label describes this product as for the treatment of Gingivitis, Aphthous Ulceration and Candidal infection, periodontal surgery and control of dental caries. The appellants rely on certificates from Deirectorate of Medical Education and Research, from the Government Dental College and Hospital and Doctors to support their plea that this product is a medicament falling under CET Chapter Heading 30.03. They state that the use of Chlor-hexidine Gluconate Solution BP which is the main ingredient of Hexidine results in pathological lesion on the tongue, gingivae or oral mucosa or pharyngeal mucosa and skin and it develops brown stains on the teeth and also affects taste buds. Therefore, it cannot be treated as a cosmetic preparation under Chapter 33.00 We find that the Pharmaceutical Codex incorporating the British Pharmaceutical Codex describes Chlorhexidine as a mouth wash. However, the evidence brought on record by the assessees all point to the Hexidine solution being a therapeutic agent prescribed widely for specific diseases of mouth, throat, tongue and gingivae. The Directorate of Medical Education and Research, Government Dental College, Bombay has clearly opined that the question of treating Hexidine solution as a cosmetic or Toilet preparation or a mouth wash does not arise because it is prescribed by Dental Surgeons, ENT Specialists and Oncologists for patients suffering form specific therapeutic properties. The Dean of the Government Dental College, Bombay has certified that Chlorhexidine Gluconate Solution is not merely a routine non-therapeutic or only a hygienic agent but is used as a therapeutic measure, due to its effective medicinal value and absorption peoperty in treatment and control of Plaque related diseases. He has further certified that the medical literature also indicates its use in treatment of root canal infections, etc. The various medical practictioners have clearly stated with one voice that Hexidine solution is definitely not a toilet preparation and is not sold as a mouth wash. The Revenue has not adduced any evidence to dislodge the evidence placed before us by the assessees. In the face of this evidence, it has to be held that hexidine is not a preparation of Chapter 33, having only subsidiary pharmaceutical or antiseptic constituent or having only subsidiary curative or prophylactic value. Further, this product does not satisfy the requirement of Note 2 to Chapter 33 which states that heading Nos. 33.03 to 33.07 inter alia, to products, whether or not mixed (other than aqueous distillates and aqueous slolutions of essential oils), suitable for use as goods of these headings and put up in packing with labels, literature or other indications that they are for use as cosmetics or toilet preparations or put up in a form clearly specialised to such use and includes products whether or not they con tarn subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prophylactic value. Hence, they are not excluded from the Chapter 30 by virtue of note 1(g) to that Chapter. In the light of the above discussion, we hold that hexidine solution is not a preparation for oral or dental hygiene falling under CET Sub-heading 33.06 but is a medicament falling under Sub-heaing 3003.10 as claimed by the assessees.
4.4 Whether the demand is barred by limitation
The demand for the period from March 88 to November 89 was issued under show cause notice dated 29.5.91 which alleges that the Chemical Examiner’s report showed that the three products were having therapeutic properties and were usable as disinfectants which specifically find a place in Chapter Heading 38.08 and the fourth product i.e. Hexidine is a product for hygiene classifiable under Chapter Heading 3306, while the appellants had misstated and suppressed these facts in their classification lists filed from time to time. In the reply to the show cause notice, the appellants submittecd that they had filed lables of their products along with the classification lists. However, in the impugned order, the Collector has held that a perusal of the classification lists does not indicate that they produced the labels of the products to the Proper Officer when he was considering the classification lists to arrive at the correct classification. He has not rebutted the claim of the appellants that they had separately filed product labels along with the classification lists over a period of time. The products in question were claimed by the appellants to be medicines classifiable under CET Sub-heading 3003.10 as Patent or Proprietory Medicaments. The definition of P or P medicaments in Note 2(ii) of Chapter 30 reads as under:
‘Patent or Proprietory medicaments’ means any drug or medical preparation, in whatever form for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph, in a Pharmacopoeia, formulary or other publications, namely:
a) The Indian Pharmacopoeia;
b) The International Pharmacopoeia
c) The National Formulary of India
d) The British Pharmacopoeia
e) The British Pharmaceutical Codex
f) The British Veterinary Codex
g) The United/States Pharmacopoeia
h) The National Formulary of the USA
i) The Dental Formaulary of the USA
j) The State Pharmacopoeia of the USSR or which is a brand name that is, a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that madicine for the purpose of indicating or so as to indicate a connection in the course of trade between the madicine and some person having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person. The Assistant Collector had approved the classification lists claiming that the products were P or P medicaments, which approval could not have been accorded without perusing the labels. In other words, the labels must have been examined by the Assistant Collector in order to satisfy himself as to whether the product bore on itself or on its container or both, a name which was either specified in a monograph, pharmacopoeia, formulary, etc. or not. Further we find that in the case of Ajanta Pharma Ltd. v. CCE. Aurangabad held that the extended period of limitation was not applicable when classification lists filed by the appellants giving the correct name of the medicines claimed to be P or P medicaments were approved from time to time. Para 5 of the order which is relevant is set out below:
Classification lists filed by the appellant from time to time had been approved by the Department. Copies of 7 such classification lists containing, some of which include “Hematinic Capsules” and the rest both the products have been produced. In each of these classification lists the appellants had also included details of medicaments classified by as ‘patient and proprietary’. The Department, therefore, knew that the appellant manufactured such medicines. Before confirming classification of medicaments as other than patent and proprietary it has necessarily to be seen whether such a medicaments would be classified as patent and proprietary medicine. It is only if medicine is determined to be as other than patent and proprietary would it fall for classification under Heading 3003.20. The material before us does not indicate that the department had asked the appellant to furnish information about the goods which it did not furnish. The names of the medicines have been correctly reproduced in the classification lists. It is not possible to say that there has been suppression of information which the appellant was required to disclose. The claim that the appellant described the goods as being “proprietary brand” and, therefore, knew that they were patent or proprietary medicines and as has been guilty of wilful suppression cannot be upheld. The contention of the advocates for the appellant that the certificates were put on invoices in response to requirement of supplier, and that it cannot be said that the certificates are synonymous with saying that the goods are patent or proprietary medicines within the meaning of the tariff has to be accepted. It was for the Department to approve the correct classification, and it cannot be said that in this process the appellant either sup-pressed any information or made a wrong statement. The extended period of 5 years, therefore, would not apply.
5. In the light of the above facts and following the ratio of the decision cited supra, we hold that the appellants are not guilty of any misstatement or suppression of facts with intent to evade payment of duty so as to make available to the Department, the extended period of limitation. Hence, we hold that the demand for the period from March 88 to November 89 (the period covered in Appeal No. E/770/92-C) is barred by limitation.
6. In the result, we hold that Hexiprep, Hexiscrub and Hexiaqua are surgical disinfectants falling under CET Sub-heading 3808.90, product Hexidine falls for classification under CET Sub-heading 3003.10; that the demand for the period from March 88 to November 89 covered in appeal No. E/770/92-C is barred by limitation. The appeals are disposed of in the above terms.
Pronounced in Court.