Himani Navratna Oil, Boroplus Cream, 3 Other Ayurvedic Products Are Drugs Not Cosmetics, Rules Telangana HC – News18

The Telangana High Court recently clarified whether six products, namely Himani Navratna Oil, Boroplus Antiseptic Cream, Boroplus Prickly Heat Powder, Himani Nirog Dant Manjan Lal, and Sona Chandi Chyawanprash would fall under the category of cosmetics or drugs.

A division bench consisting of Justice P Sam Koshy and Justice N Tukaramji ruled that while Himani Nirog Dant Manjan could be classified as a cosmetic, Himani Sona Chandi Chyawanprash, Navratna Hair Oil, Himani Gold Turmeric Ayurvedic Cream, Boroplus Antiseptic Cream and Boroplus Prickly Heat Powder fell in the category of drugs.

The court delivered the verdict while hearing a case involving the classification of products as cosmetics or drugs under the Andhra Pradesh General Sales Tax (APGST) Act, 1957. The case revolved around six products manufactured by two sister concerns, with the Sales Tax Appellate Tribunal (STAT) and the assessee (Himani Ltd) filing Tax Revision Cases against each other.

The STAT had held that the three products, Navratna Oil, Gold Turmeric Ayurvedic Cream, Nirog Dant Manjan Lal, were cosmetics, while the other three, Boroplus Antiseptic Cream, Boroplus Prickly Heat Powder, and Sona Chandi Chyawanprash, were drugs. The STAT had challenged the classification of the latter three products as drugs, arguing that they fell under Entry 36 of the CGST Act and TGST Act, which would have made them liable for GST at the rate of 20%. On the other hand, the assessee had challenged the exclusion of the first three products as drugs, which would have made them liable for duty at the rate of 10%.

The court heard arguments from both sides and examined the characteristics of each product. In respect of Himani Sona Chandi Chyawanprash, the court had noted that it was made of 52 rare herbs and minerals, including gold, silver, and saffron, and had been specifically mentioned to have various health benefits. The HC also referred to ayurvedic literature and texts such as Charaka Samhita and Bhava Prakasha.

The court emphasised that the petitioner obtained a license under the Drugs and Cosmetics Act, 1940, claiming the product falls under Entry 37 of the 1st Schedule. The STAT reviewed the product’s ingredients and definitions of “cosmetics” and “drugs” under the Act, concluding it is a drug, not a cosmetic. The court further clarified that Section 3(aaa) of the Act defines cosmetics as products for external application, while Section 3(b) defines drugs as substances for internal or external use in diagnosing, treating, mitigating, or preventing diseases or disorders. Drugs can be consumed internally or applied externally, whereas cosmetics are for external use only.

The court further addressed the characteristics of Himani Boroplus Antiseptic Cream. The product’s name itself indicates it is not an ordinary or cosmetic cream but an antiseptic cream with medicinal properties, categorising it as a drug under Entry 35 of the 1st Schedule of the Act. Unlike typical body creams or lotions, it is a fully medicated product and not subject to Entry 36. “As has been reflected in the wrapper of the product/label of the product, it is preventive in nature and has curative and healing ayurvedic ointment and it is prescribed for dry skin diseases, cuts, burns, minor skin burns, wounds, chapped skins, furuncle impetigo and intertrigo,” the court noted, upholding the STAT’s well-reasoned finding.

The court addressed the next product in question, Himani Boroplus Prickly Heat Powder, stating that this product is not merely a cosmetic or toilet preparation and does not fall under either clause (a) or (c) of Entry 37. It satisfies the definition under Section 3 of the Drugs and Cosmetics Act, thus falling under Entry 37 of the I Schedule to the APGST Act, and should be taxed accordingly. The court further said that it should not be classified under Entry 36 as ‘Cosmetics or Toilet Preparations’, as this would misrepresent its medicinal attributes.

The court further considered the two products that needed consideration and adjudication, Himani Navratna Oil and Himani Gold Turmeric Ayurvedic Cream. The STAT in the impugned order had categorised both as cosmetic products falling under Entry 36 of the 1st Schedule of the Act. However, the counsel for the petitioner/assessee contended that these products were, in fact, drugs, as classified under Entry 37 of the 1st Schedule of the Act.

Despite the respondent/department’s counsel arguing that Himani Navratna Oil and Himani Gold Turmeric Ayurvedic Cream should be classified as cosmetics, the lack of substantial evidence to support this claim led to the court’s conclusion that the STAT’s categorisation under Entry 36 was incorrect. The products were determined to fall under Entry 37 of the 1st Schedule of the Act.

Lastly, with regards to the Nirog Dant Manjan Lal, the Sales Tax Appellate Tribunal (STAT) ruled that it is a cosmetic product, a finding that was accepted and not challenged.