1. The issue involved in this appeal filed by M/s. Sujanil Chemo Industries is whether the product "Licel" is classifiable as a medicament under sub-heading 3003.10 as decided in the impugned order or is classifiable as an insecticide under sub-heading 3808.10 of the schedule to the Central Excise Tariff Act as claimed by the Appellants.
2.1 Briefly stated the facts are that the Appellants manufacture, inter alia, a product by name "Licel" which is used for the purpose of killing head louse on the head of human beings. The Appellants filed the classification list claiming classification under Heading 3808.10 of CETA, as an insecticides. The Assistant Collector under order dated 17-2-1993, classified the impugned product under Heading 3003.10 and confirmed the demand of duty amounting to Rs. 1,70,609.74, holding that infestation of lice on one's head is a disease called pediculosis and as such the product has therapeutic value. On appeal, Collector (Appeals) upheld the order following the Appellate Tribunal's decision in the case of C.C.E. v. Pharmasia Pvt. Ltd. 1990 (47) E.L.T. 658 (Tribunal). The Collector (Appeals) also held that the fact that Malathion, used in the manufacture of impugned product is registered as an insecticide cannot alter the classification under Central Excise Tariff which is governed by different principles and is not to be guided by the fact whether the product is registered under the Drugs Act or under the Insecticides Act.
3. Shri L.P. Asthana, ld. Advocate submitted that the impugned product is a non-alcoholic natural herbal oil base lice killer. The composition of the product is:Extract of Shikakai Aroma 0.5%Squamosa, Mehendi, Amla etc.
0.5%Neem Oil 0.5%Karanji oil 0.25%Malathion 0.25%Oil base Q.S.2.2 He further mentioned that the essential ingredient in the impugned product is Malathion which is an insecticide; that other ingredients like Shikakai, Neem Oil, etc. also have insecticidal properties; that it is not correct to say that lice infestation is a disease; that lice are small wingless parasites; there are three types of lice which infest man, (i) head louse, (ii) body louse and (iii) crab louse; that Licel is used mainly for head lice; that only the body louse transmits diseases such as epidemic typhus and epidemic relapsing fever; that the head lice is not known to transmit disease, it only causes irritation and annyonance and, therefore, a substance which merely kills lice cannot be considered a medicament for curing a disease.
2.3 He emphasised that Licel is an insecticide and is registered under the Insecticides Act, 1968. Section 3 of the said Act defines insecticides as including any preparation containing a notified substance. Licel contains Malathion which is notified under the Insecticides Act; under Section 5, registration is to be granted by a Board which includes the Drug Controller of India. Registration is only granted after scrutinising the formula and verification of other factors. Reliance was placed on the decision in the case of Travancore Chemical and Manufacturing Co. Ltd. v. C.C.E., Kochi 1997 (89) E.L.T.136 (Tribunal) in which the certificate of Registration under the Insecticides Act for Copper Sulphate was duly considered by the Tribunal for classifying the same as insecticide falling under sub-heading 3808.10 of CETA. He also mentioned that according to Hawley's Condensed Chemical Dictionary, the use of Malathion is as insecticide. He also referred to the Book "Useful Plants of India and Pakistan" by Mr. J.F. Dastur, according to which Shikakai, custard Apple and Karanj are insecticides used for killing body/head lice. He also mentioned that Dy. Chief Chemist in his Test Report has clearly opined that Licel can be considered as an insecticide preparation and not as a P & P Medicine; that according to Black's Medical Dictionary, edited by C.W.H. Havard, insecticides are substances which kill insects; that Malathion is one of the more common insecticides now in use; that for head lice, a lotion containing 0.5 per cent Malathion in 10 ml. should be rubbed with fingers into the hair and its roots and left for twenty four hours and the hair is then washed. He further mentioned that Licel does not have any curative or prophylactic properties, nor is it an unmixed product put up in measured dose for use in hospitals; it merely kills head lice; Medical preparations are to be used for treatment, mitigation or prevention of disease; that licel does not do any of these things; that Licel is not a drug as per the Indian Pharmacopoeia or British Pharma Copoeia. The ld. Counsel finally submitted that Pharmasia case is distinguishable since Mediker was manufactured under Drug Licence whereas the impugned product Licel is manufactured under Insecticides Act; that the issue in Pharmasia case was whether Medikar was classifiable under Chapter 30 or 33 of CETA and not under Chapter 38; that Licel does not contain D.Phenothrin at all which was used in the manufacture of Mediker; that the definition of disease as given in Doriand's Pocket Medical Dictionary does not cover pediculosis. The disease is defined as under: "Any deviation from or interruption of the manual structure or function of any body part, organ or system that is manifested by a characteristic set of symptoms and signs and whose etiology, Pathology and prognosis may be known or unknown." 3. Countering the arguments, Shri H.K. Jain, ld. SDR submitted that the basic purpose of Mediker, product considered in Pharmasia case, and Licel, impugned product, is the same that is elimination of lice; that Licel contains many other products besides Malathion; that the Tribunal clearly held in Pharmasia's case that a product which is to treat infestation of lice has to be considered to be a medicament.
4. We have considered the submissions of both the sides. The undisputed fact is that the impugned product Licel is a lice killer, Louse, according to Butter-Worths Medical Dictionary, "the whole life cycle (of louse is) being spent on the host, whilst eggs are attached to the Hair or feathers. Transfer from host to host is normally by direct contact.... Typhus, Trench Fever, Brill's disease, relapsing fever, and perhaps other diseases, may be louse borne." According to same dictionary Pediculosis is "A disease of the skin characterized by infestation with lice, Pediculosis, Capillittii, Pediculosiscapitis." An affection marked by the presence of Pediculous humanus var. capitis in the hair. Thus it is apparent that infestation of lice is a disease which is cured by lice killer and according to Note 2 (i) to Chapter 30 of the schedule to Central Excise Tariff Act, lice killer is a medicament. This issue has been discussed in detail in the case of C.C.E. v. Pharmasia (P) Ltd. 1990 (47) E.L.T. 638. The Tribunal observed that "Much evidence has been placed that infestation of the lice on one's head is a disease and is given the name of Pediculosis." The Tribunal perused the following : - (1) Merck Manual of Diagnosis and Therapy - 14th Edition at page 2045 specifically deals with a disease known as pediculosis.
(2) "Physicians Desk Reference 1987 edition, at page 801 describes the disease pediculosis, warnings, cure and treatment.
(3) A certificate dated 22-6-1987 given by Drug Control Administration, Government of Andhra Pradesh makes it very clear that the product is used for the treatment of disease and thus is a medicament.
(4) Handbook Non-Prescription Drugs, 8th Edition at page 509 describes the problem of pediculosis, infestation of head lice and problems relating thereto.
(5) Andrew's "Disease of the Skin", Clinical Dermatology, Seventh Edition in page 554 describes the condition of pediculosis and the treatment.
(6) A research paper on Lice by D.E. Weidhass and N.C. Gratz published through World Health Organization describes the problem of infestation on human lice, disease that are caused and treatment.
5. After perusal of these books and material, the Tribunal came to the conclusion that "the infestation of lice on the head causes several diseases and a product which is to treat such diseases has to be considered to be a medicament. We also observe that D-Phenothrin which was contained in Mediker is also an insecticides like "Malathion" in the present matter. The Tribunal observed in Pharmasia's cases that "Extra Pharmacopoea (Martin dale) also mentions that Phenothrin as being used in drug as insecticides." This goes to show that insecticides are used in drugs. The Tribunal had also considered the classification of Mediker in Chapter 38 in Pharmasia's case and held that once the product has been held to be classifiable as medicament under 30.03, by virtue of Note 1(c) to Chapter 38, the product cannot be classified under Chapter 38 since according to this note Chapter 38 does not cover medicaments (Heading No. 30.03). Following the decision in Pharmasia case, the appeal against which has been dismissed by the Supreme Court as reported in 1996 (83) E.L.T. (A178), we do not find any reason to interfere with the impugned order and reject the appeal filed by the Respondents.