The Indian Supreme Court has affirmed lower tribunal rulings that Moisturex® is a medicament used for its curative properties and, as such, is subject to a 15-percent duty rate, rather than the 70-percent rate applied to cosmetic and personal care products used to enhance a person’s appearance or beauty. Comm’r of Cent. Excise v. M/s. Ciens Labs., No. 6988 of 2003 (India, decided August 14, 2013).
Seeking to impose the higher duty rate for cosmetic or toilet preparations, the appellant argued that the product’s pharmaceutical constituents are a minor component of the skin-softening cream, it is sold over the counter without a medical prescription, and consumers use it mainly for skin care.
The Court addressed each issue in turn and established the following guiding principles: (i) “when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive”; (ii) “though a product is sold without a prescription of a medical practitioner, it does not lead to the immediate conclusion that all products that are sold over/across the counter are cosmetics”; and (iii) “prior to adjudicating upon whether a product is a medicament or not, Courts have to see what people who actually use the product understand the product to be. If a product’s primary function is ‘care’ and not ‘cure,’ it is not a medicament. . . . A product that is used mainly in curing or treating ailments or disease and contains curative ingredients even in small quantities, is to be branded as a medicament.”
According to the Court, Moisturex® contains pharmaceutical substances and, in the product literature, is “indicated for any dryness of skin associated with winter, fissure feet, cracked nipples, in the treatment of pathological dry skin conditions and also for dryness associated with leprosy and clofazimine.” It is also “prescribed by the dermatologist for treating dry skin conditions.” Thus, the Court found that the product is a medicament and dismissed the appeals filed in two consolidated cases.