ORDER
Gowri Shankar, Member (Technical)
1. The question for consideration in these appeals is the classification of two products, that the appellant manufactures, Povidone Iodine Cleansing Solution USP and Wokadine Surgical scrub. Both of these products have identical composition, the only difference being that Wokadine is a branded product, whereas the other is generic. The composition of these products per 1000 litres is as follows:
(i) Povidone Iodine IP – 80.21 kg
(ii) neutromix S-60 and anomic detergent (active content 58%) – 250 kilogram)
(iii) superamide L-9 (foaming agent) – 12 kilogram
(iv) sodium hydroxide (preservative) -1.46 kilogram
(v) demineralised water – balance
2. The label indicates that the product contains povidone iodine 7.5% w/v. the appellant claimed classification of these products as medicaments in chapter 30.03 of the Central Excise tariff, the branded product being in sub heading 10 and the other in sub heading 20. The department has sought to classify these goods in heading 3402.90 as a cleansing agent or a washing preparation. This is the classification that has been determined by the Commissioner (Appeals) or the adjudicating authority in the orders impugned before us. Hence these appeals.
3. The contention of the appellant are as follows: The essential characteristic of the product is provided by povidone iodine. Povidone iodine is recognised to be a broad-spectrum topical microbicidal product and is used as an antiseptic. The addition of the surface active agent and stabiliser is only to provide quarter and were efficient dispersal of the solution containing the povidone iodine, and they do not by themselves give the product the essential characteristic. The Tribunal has already upheld classification of similar product as medicament in heading 30.03. Reliance is placed upon the provisions of the Explanatory Notes to the Harmonised System of Nomenclature to show that disinfectants and antiseptics etc having the essential characteristic of medicament are classified as a medicament. Reference to pharmacopoeial texts is made in order to establish the efficacy of povidone iodine. Case law is cited in support. The applicability of the extended period of limitation invoked in some of the notices is also questioned.
4. The departmental representative emphasises that the products contained for greater quantities of detergent, three times as much as the povidone iodine, leading to the view that it is used more as a cleansing agent to remove dirt, fungus etc than for its microbicidal properties. The fact that the appellant manufactures and sells povidone iodine solution which does not contain detergent or stabiliser underlines the importance of the presence of the detergent. The directions for the use of the product provided that surgical scrub, which is applied to the patient’s skin has to be rinsed off and thereafter the skin painted with solution of povidone iodine not containing surface active agent. The fact that they are being washed off and the requirement of the use of the povidone iodine solution clearly indicate that it is not used principally for its prophylactic qualities. Note 1(e) to Chapter 30 excludes from the chapter, soaps and other products of chapter 34 containing added medicament. The fact that the product is manufactured under a drug licence or complies with the pharmacopoeial requirements does not automatically lead to its classification as a medicament and decisions are cited in support. He also sought to rebut the arguments made on limitation raised by the appellant.
5. As we have noted, each of the products contains povidone iodine 7.5% bt w/v. This is stated to provide available iodine 0.75% w/v. Considerable evidence was cited to show that povidone iodine is used in disinfectant. Povidone iodine is described in Goodman and Gilman’s The Pharmacological Basis of Therapeutics 6th edition as an “iodophor”; the book says that the most widely used iodophor is povidone iodine. “An iodophor is a loose complex of element iodine wit a carrier that serves not only to increase the solubility of iodine but also to provide a sustained release reservoir of the element. A 10% solution contains 1% of available iodine but the free iodine concentration is less than 1 ppm. A standard surgical scrub with a 10% solution (1% available iodine) will decrease the usual cutaneous bacterial population by about 85%; it returns to normal in about 6 to 8 hours but effective control is lost in about 1 hour, which is a much shorter time than with hexachlorophene or chlorhexidine. However, when the hands are contaminated by gram-negative bacteria, povidone iodine is a more effective scrubing disinfectant than in aqueous chlorhexidine.” It refers to branded preparations (Prepodyne, Septodyne) available as a cleansing solution (scrub) containing 0.75% of available iodine, a solution containing 1% available iodine and other forms. The Japan Medical Products International Trade Association, is cited to say that surgical scrub solution containing 100 mg povidone iodine (10 mg as available iodine) foaming agent and surfactant is used for disinfection of the skin go the operating site. The United States Pharmacopoeia and the Indian pharmacopoeia are cited to say that povidone iodine is used as an antiseptic. The Extra Pharmacopoeia by Martindale indicates “solution of povidone iodine gradually release iodine to exert an effect against bacteria, fungi, viruses, protozoa, cysts, and spores. A wide variety of tropical formulation is available, the majority containing 4 to 10% povidone iodine, and 1% mouth wash has been used for oral infection and tropical powder containing 0.5% with 5% povidone iodine has been tried in the treatment of preventing wound infection.”
6. This literature is sufficient to establish that povidone iodine finds use as an antiseptic and disinfectant. In any event, the departmental representative does not seriously dispute that it is so used. His objection is that the addition of surface active agent and other substances to it results in a product in which the prophylactic qualities of the povidone iodine becomes subsidiary to the use of the substance as a washing solution. One of the contentions that is strongly raised in this regard revolve around the use of the product. He emphasises that after it is applied the skin of the patient to be operated upon it rinsed off and the skin painted with povidone iodine solution. Now, this povidone iodine solution is in fact of a lesser concentration than the substance that we are concerned with. It has 5% povidone iodine w/v with available iodine being 0.5% w/v. It is obviously lesser than 7.5% iodine contained in the substance that we are concerned with, releasing 0.75% iodine contained in the substance that we are concerned with, releasing 0.75% of free iodine. The departmental representative does not dispute that the povidone solution (as distinct from the scrub) is clearly prophylactic. This is fact in the main point of his argument. It would therefore follow that, without the presence of the surface active agent and stabiliser, the scrub that we are concerned with would also be classifiable as a pharmaceutical product in heading 30.03. It is confirmed by the counsel for the appellant that the 5% solution of povidone iodine is in fact so classified. In that event, accepting the departmental representation’s contention would result in a situation in which povidone iodine, which is otherwise a pharmaceutical product will cease to be so only because some surface active product has been added to it.
7. Given these facts, it would be reasonable to accept the appellant’s contention that the presence of the surface active stabiliser etc is only to ensure appropriate dispersible to the surface active agent and that it is nor primarily a washing or cleaning preparation. This contention finds support also from the pattern of sale of the goods. If the substances were essentially cleaning preparations, they would be used similar to various medicated soaps, which are put to use by ordinary persons, primarily with a view to washing parts of their body and also in order to obtain a subsidiary benefit of antiseptic provided by pharmaceutical element present in that. But this is not how the product is bought and used. The affidavit affirmed on 9.8.2002 by Sandip Sahni, Senior Vice President (Marketing) of the appellant indicates that during the year 2000, out of 100000 bottles of cleansing solution and surgical scrub, 89% were sold to hospitals, nursing home, clinics etc. In other words, it is only 10% or so which did not find its way to such a place of hospital, nursing home or clinic etc. This shows that the product is in fact not used as a general cleansing solution and is only used in places where practice of surgery and medicine is being carried out. The presentation of the substances also does not suggest that they are intended to be used by ordinary household consumer. They are packed in opaque brown thick plastic bottles wit plain labels, not packed in bring attractive colours of the type as soaps and such products would be. The labels on them clearly show their use for preoperative use by the surgeon and his team or on the patient, and do not suggest any use other than these.
8. Note 1(e) to Chapter 30 of the tariff excludes from its scope soap or other products of chapter 34 containing added medicament. We do not see how the presence of the note helps the department’s case. It only explains that the goods which are clearly identifiable as soap or products of Chapter 34 do not cease to be so classified because they contain added medicament. In other words, if the primary use of the product is as soap or other product of Chapter 34 the presence of medicament in it will not bring it into the scope of Chapter 30. For it to be classified in Chapter 30, its primary function must be therapeutic or prophylactic. Whether a particular product is classifiable in chapter 30 or elsewhere is to be decided on the facts of each case. We must mention in this regard that the Tribunal’s decision in Hagel Capsule v. CCE in which classification of a virtually identical product was considered does not offer any help to either side. The Tribunal in that decision did not uphold on merits the classification in heading 30.03 of that product. It only ruled out that the classification proposed by the department in heading 33.04 with the result that by default classification claimed by the manufacturer in heading 30.03 became final. The Explanatory Notes under heading 30.04 of the Harmonised System of Nomenclature relating to the medicament consisting of mixed or unmixed product of therapeutic or prophylactic use, put up in measured doses or in forms or packing for retail sale indicates that organic surface active product and preparations with active cation (e.g., quaternary ammonium salts) having antiseptic, disinfectant, bactericidal or germicidal properties) are classifiable in this heading, if they are in packings intended for retail sale for therapeutic or prophylactic use or put up in measured doses in forms such as tablets and tubes etc. Therefore, such products are not disqualified from classification in heading 30.03 solely because they contain organic surface active products or preparations. The test is to be applied is whether it is primarily for therapeutic and prophylactic qualities of the products that it purchased or its qualities as such organic surface active product or preparations. It is also to be noted that at the same page of the Explanatory Notes, polyvinyl pyrrolidone-iodine, which is the full name of the product that we are concerned with here, povidone iodine, is also stated to be covered, provided it satisfies the condition of being put up to measured doses or packing for retail sale.
9. The judgments that the Departmental Representative cites are not of any assistance. In Shree Baidyanath Ayurvedic Bhavan ltd. v. CCE 1996 (83) ELT 492, the Supreme Court held tat Dant Manjan Lal could not be classified as a medicament because it had not been shown by acceptable authority to have medicinal properties, and was not sold on prescription. The Tribunal did not agree to classification of lip salve in heading 30-.03 in Alpine Industries v. CCE 1997 (92) ELT 53 and of a product claimed to be an ayurvedic medicament in Vasu Pharmaceuticals Pvt. Ltd. v. CCE 1999 (111) ELT 623. In Shri Baidyanath Ayurvedic Bhavan and Vasu Pharmaceutical Products Pvt. Ltd. and the Supreme Court and the Tribunal were concerned with ayurvedic medicament. The product before us is before us is povidone iodine for the prophylactic qualities of which sufficient literature has been cited. In Alpine Industries v. CCE 1997 (92) ELT 53, the majority took the view that lip salve under consideration by it was not a medicament but more in the nature of a barrier cream. It is relevant to emphasise here that judgments relating to classification of such products only afford limited assistance in classification. All of them emphasise what we have already said and, indeed, what is found in the Explanatory Notes and in the tariff, it is the presence in the required quantity of the therapeutic and prophylactic substance or its absence that determines the classification of the goods either in chapter 30 as a medicament. As we have noted on consideration of the facts before us, the product in question is primarily intended for and actually used for, its antiseptic properties. The classification claimed by the appellant therefore will have to be accepted.
10. We are therefore satisfied that the products are more properly classified in Chapter 30. We have therefore not considered it necessary to examine whether some of the demands were barred by limitation.
11. Appeals allowed. Impugned orders set aside.