Judgment:
1. The question for consideration in this appeal is the classification and the consequential rate of duty applicable to three products manufactured by the appellant. In the order impugned in the appeal, the Commissioner (Appeals) has confirmed the classification of these products determined by the Assistant Commissioner as products for skin care under Heading 33.04 of the tariff, declined to accept the claim of the assessee that the goods were medicament classifiable under Heading 30.03.
2. The three products under consideration are Microshield*T, Microshield*2 and Microshield*PVP. Each of these products is a mixture of disinfectant or antiseptic product with surface active agent, and containing emollient moisturiser. The active ingredient in Microshield-2 is chlorhexidine solution 10% v/v equivalent to 2% w/v of chlorhexidine gluconate, and in Microshield*PVP, providone-iodine LP 7.5% w/v equivalent to 0.75% w/v. MicroshieldT contains triclosan 1.0% w/v. Each of these products, which is described as topical antiseptic solution, contains direction of them for use. These directions require undiluted use of the products for antimicrobial handwashing and body washing or showering. In Microshield*PVP, povi-done-iodine is also stated to be suitable for surgical handwash, unlikely other products.
3. It was the contention of the manufacturer that these products were primarily intended for use by medical practitioners in hospital either to disinfect the hands of medical practitioner or other medical care provider, who by dealing with patients may be infected or otherwise deal with substances that may contain infective or contagious substances or to disinfect the patient before subjecting him or her to a process of surgery or other medical treatment. The notice issued "to the appellant proposed to classify the goods as skin care products on the ground that they contained emollient and moisturiser and were put to be used for body washing and their antiseptic property was subsidiary to this use. Adjudicating on the notice, the Assistant Commissioner accepted this proposal claimed in the notice. He finds that Microshield*2 did not contain sufficient chlorhexidine in order to justify its reconsideration as an antiseptic. It contained 2% w/v of chlorhexidine gluconate solution. The British Pharmacopoea prescribes that an antiseptic solution of this substance contains not less than 19% chlorhexidine w/v. He therefore doubled that it had any antiseptic property at all. He found that the label of the products did not indicate it to be a medicament. He said that the literature produced by the appellant itself indicates that chlorhexidine gluconate is safe even when used on the skin of new born infants. There was therefore no need for the presence of moisturiser.
4. He found that the active ingredient in Microshield*T triclosan skin cleanser "is commonly used in commercial soaps to reduce body odour by inhibiting the growth of skin bacteria over time." The technical literature produced by the appellant showed that the product is non-allergenic and non-mutagenic. It was therefore more comparable to antiacne preparation products for skin care. He found that the percentage of povidoneiodine in Microshield*PVP is 0.75% w/v less than 9% w/v shown in the Indian Pharmacopoeia. Povidone-iodine the active ingredient requires approx two minutes of contact time to allow the release of free iodine, which provides antimicrobial functions. The directions on the label require the user to wash hands for 30 seconds.
Therefore it was not used as an antiseptic but for the presence in it of the emollient and moisturiser. He thus found that the products qualify for classification under Heading 33.04. The Commissioner (Appeals) confirmed the finding of the Assistant Commissioner and relied upon Notes 2 and 5 to Chapter 33.
5. The Extra Pharmacopoeia of Martindale, thirty-first edition, in the entry for chlorhexidine, says that the British, Europe, French, German, Italy, Japanese, Netherlands, Portuguese and Swiss pharmacopoeias "include chlorhexidine gluconate solution which contains 19 to 21% of chlorhexidine gluconate. Later, however, it says as follows :- "For pre-operative skin disinfection and hand-washing, chlorhexidine is used as a 0.5% solution of the acetate or gluconate in alcohol (70%) or as a 4% detergent solution of the gluconate. For disinfection of wounds, burns, or other skin damage or disorders chlorhexidine is used as a 0.5% aqueous solution of the gluconate, as a tulle dressing impregnated with chlorhexidine acetate 03%, or as a cream containing chlorhexidine gluconate 1%. For the emergency disinfection of clean instruments a 2-minute immersion in chlorhexidine acetate or gluconate 0.5% in alcohol (70%) is used; for the storage and disinfection of clean instruments a 30-minute immersion in a 0.05% aqueous solution is used. In obstetrics, chlorhexidine gluconate is used as a 0.05% aqueous solution or a 1% cream. The cream is also used as a barrier against bacterial hand infection." 6. The use for which the product is recommended is anti-micro hand washing and body washing or showering. It is therefore not correct to conclude as the Commissioner has done, that because its concentration is less than 20%, it has no antimicrobial activity at all. In fact he has in the same order held Microshield*5 another product manufactured by the appellant, which contained 5% chlorhexidine, which did not contain emollient or moisturiser to be an antiseptic. His real reason for denying the benefit is thus not that the product has no antimicrobial activity but the presence of emollients and moisturiser.
Triclosan, the active ingredient in Microshield*T, is stated in Martindale to be "used in soaps, creams and solutions in concentrations of up to 2% for disinfections of hands and wounds and for disinfection of skin prior to surgery, injections, or venepuncture." The Assistant Commissioner does not indicate any basis for his finding that triclosan is commonly used in commercial soap to reduce body odour and the growth of skin bacterial over time is an antiseptic. Even if this is correct he acknowledges it to be an antiseptic property since it inhibits growth of skin bacteria. The fact that it can be absorbed through intact skin and it is non-allergenic and non-mutagenic for short term use on which the Commissioner (Appeals)'s reliance does not appear to us to have relevance to its use.
7. As for the third product, Microshield*PVP, Martindale explains that "povidone-iodine is an iodophore which is used as a disinfectant and antiseptic mainly for the treatment of contaminated wounds and pre-operative preparation of the skin and mucous membranes as well as for the disinfection of equipment.... A wide variety of topical formulations is available, the majority containing about 4 to 10% of povidone-iodine; a 1% mouth wash has been used for oral infections and topical powders containing 0.5% to 5% povidone-iodine have been tried in the treatment and prevention of wound infection." The Indian Pharmacopoeia says that povidone-iodine solution has, as its usual strengths 5, 7.5 and 10% w/v.8. In addition, the appellant has relied upon a monograph by Dr.
Larsen, a Professor of Nursing in the Johns Hopkins University, published in the American Journal of Infection Control, December, 1988, Vol. 16, No. 66, entitled "APIC Guidelines for Infection Control Practice". In that monograph, Dr. Larsen has set out the uses of chlorhexidine, iodine/iodophors (which are provided by povidone-iodine) and triclosan. She indicates that their topical antimicrobial agents function against gram positive and gram negative bacteria and describes other characteristics of these products referring to the use of chlorhexidine gluconate as antimicrobial agents in patients for handwashing, body washing and showering.
9. From this publication, it is clear that the presence of these substances having an ingredient with antimicrobial property is established. What is now to be seen is whether the properties provided by these substances are subsidiary in nature to their function as skin cream or other preparation. Notes 2 and 5 to Chapter 33 provide as follows :- "2. Heading Nos. 33.03 to 33.07 apply, infer alia, to products, whether or not mixed (other than aqueous distillates and aqueous solutions of essential oils), suitable for use as goods of these headings and put up in packagings with labels, literature or other indications that they are for use as cosmetics or toilet preparations put up in a form clearly specialised to such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents, or are held out as having subsidiary curative or prphylactic value." "5. Heading No. 33.04 applies, inter alia, to the following products; beauty creams, vanishing creams, cold creams, make-up creams, cleansing creams, skinfoods, skin tonics, face powders, baby powders, toilet powders, talcum powders and grease paints, lipsticks, eye shadow and eyebrow pencils, nail polishes and varnishes, cuticle removers and other preparations for use in manicure or chiropody and barrier creams to give protection against skin irritants." 10. These are the notes relied upon in the order impugned before us. We have already indicated the suggested use that the labels of each of these products indicate. It is also to be noted that samples of these products that were produced before us were contained in plain plastic jars or bottles. Samples are printed in plain and simple letters. We have already indicated the direction for use. There is nothing on these products to suggest that they are used for any purposes other than disinfection. No doubt, each of these products is also stated to be used for body washing or showering. This direction has to be read with the other indications on these products for the use antimicrobial hand washing, and in the case of Microshield*PVP for surgical hand washing.
From these directions, and the manner of their packing which is marked different from the manner in which avowedly the cosmetics products are packed, we do not find it possible to conclude that the requirement in Note 2 to Chapter 33 that the goods must be put up in packings, labels, literature or other indications that they are for use for cosmetics purposes is satisfied. We do not see the relevance of Note 5 of these products. It is a note explaining the category of products which should be classified in Heading 33.04.
11. We do not find the presence of such characteristics either in the packing or the product, of colours, appearance etc. which impel us to consider the products more to be in the nature of skin care preparation. We also note the contention raised by the appellant that the product should be sold by any chemist and is not available for sale in such places or general stores or other cosmetics shops. This contention has not been rebutted.
12. The explanation that was furnished for the presence of emollient and moisturiser in these products is that the substance that the active ingredient that these products contain and the surface active solution which is present in them can cause irritation and roughing of the skin and that particularly when it is frequently used and that this emollient moisturiser prevent from counteracting this. If the products are used as antimicrobial hand washing, they would be used very frequently by medical practitioners and others and we do not find the presence of these emollients and moisturisers such as to be retracted from the presence of active disinfectant antiseptic.
13. We therefore conclude that sufficient basis had not been made out for classification of these products as skin care under Heading 33.04 of the tariff. The duty consequently payable under this heading is not applicable.
14. Accordingly we allow the appeal and set aside the impugned order.
Consequential relief according to law.