1. ' MUHAMMAD ZAHOORUL HAQ, J.-The petitioners are the manufacturers and distributors of pharamaceutical products and have been carrying their business since: 1957. They were granted Drug Manufacturing Licence No. 49 of 1957, which authorised them to manufacture MYCIL Powder.
2. The said licence was renewed from 5th November, 1969 to 4th November, 1971. The ingredients of MYCIL Powder are the following :- "Chlorophenesin B. P.1.0% Haxachlorophene B. P.0.5% Zinc Oxide B. P.5.0% Calcium Stearate5.0%.
3. Magnesium Corbonate, Levis B. .P.5.0% Starch5.0% Talc B. P. ...To make 100 %."
4. Chlorophenesin B. P. And Haxacblorophene B. P. Are alleged to be main ingredients and Zinc Oxide B. P. Is alleged to be secondary ingredient. Rest of the items above-mentioned are stated to be vehicles for the active ingredients.
5. The petitioners claimed that their MYCIL Powder is a medicinal pre--paration for external use commonly prescribed by doctors and dermatologists for prevention and cure of various fungal infections and skin diseases such as ringworm, dhobi's itch, athlete's foot, prickly heat, etc. The main active ingredients and secondary ingredients of the said powder have been included as drugs permitted for manufacture and use in Pakistan under the Drugs (Generic Names) Ord., 1972.
6. The drugs manufacturing licence granted to the petitioners in 1957 and renewed in 1969 mentioned above includes the name of MYCIL Powder.
7. The petitioners also manufacture MYCIL Ointment, which has similar active ingredients as MYCIL Powder. MYCIL Powder and MYCIL Ointment were originally the product of the British Drug Houses Limited; U. K., arid they used to export that into Pakistan as a medicine till 1970. Thereafter, the petitioners started manufacturing the same under licence from British Drug Houses Limited, U. K.
8. The petitioners have printed on the tins of the said MYCIL Powder "for personal freshness" and "for prickly heat control", but they claimed that these words "for personal freshness" do not turn a medicinal product into a cosmetic or toilet preparation and they claimed that the words "for personal freshness" were merely a promotional expression. They have filed a certificate from Doctor Nusrat A.I Sheikh to the effect that MYCIL Powder bad been used by him as an effective anti- --fungal and anti-bacterial agent. The certificate further states that it bad been considered by him as a medicinal preparation for local use and not as a cosmetic preparation.
9. The petitioners started manufacturing of MYCIL Powder in February, 1970. They did not obtain any excise licence for the same nor paid any excise duty on its manufacture. On 11-8-1970 an Intelligence Officer of Central Excise and Land Customs visited their factory and found 44,412 tins of 100 grams each of MYCIL Powder having been already manufactured and cleared without payment of excise duty. He also found 2700 Kg. Of the said powder in the said premises.
10. Consequently, show-cause notice was issued to the petitioners on 5-10-1970 as to why action should not be taken against them under the Excises and Salt Act, 1944, and rules and why duty should not be determined and assessed. The petitioners replied on 6-9-1970 and claimed that the MYCIL Powder was a medicinal preparation and not a cosmetic product. On 13th October, 1970, the petitioners made further representation on the lines as noted by. Us in the earlier paras. And maintained that their product was a medicinal and not a cosmetic product. Further grounds taken by them were, the powder did not contain any perfume and it was sold through licensed chemists shop and not by the general merchants.
11. On 4-12-1970, the Collector of Central Excise and Land Customs held that MYCIL Powder was a cosmetic preparation as it was packed in con--tainers like other talcum powder and displayed the words "for personal freshness" and "for prickly beat control" and thus emphasises its use as a freshner. He relied on Item 28 of First Schedule to the Central Excises- and Salt Act, 1944, which at the relevant time read "perfumery, cosme--tics and toilets preparations, all sorts whether medicated or other--wise". He ordered for the confiscation of the seized goods, but allowed the option to pay a fine of Rs. 25,000 in lieu of confiscation in addition to the duty. He also imposed a penalty of Rs. 50,000 under Rule 241 of Central Excise Rules, 1944 and further ordered that Rs.
12. 3,13,248 be paid as duty on.44,412 tins cleared without payment of duty and ordered the recovery from the petitioners.
13. On appeal by the petitioners, the Central Board of Revenue held on 14-2-1972, that the said powder was an item which serves the purpose of cosmetic and a cosmetic even though it may be medicated is assessable under item 28 of First Schedule to the Central Excises and Salt Act, 1944.
14. The C. B. R. Also held that the word "medicated" and "freshness" can be both promotional. The redemption fine was remitted and the penalty imposed under Rule 241 was reduced to total penalty of Rs. 10,000. In respect of the price it was held that lower rate of duty be charged if the price is pinted on the tin.
15. The petitioners then approached the Pakistan Central Government in revision which was decided on 16th March, 1973. The relevant order is reproduced below :-- "The applicants have been marketing their product "MYCIL Powder" for prickly heat control and personal freshness. Therefore, the con--tention that "MYCIL Powder" is a medicine and not medicated cosmetic is not tenable as medicine are not marketed or intended for use for "personal freshness". It is basically a Powder for skin, and therefore, a cosmetic which although medicated attracts the Central Excise Duty under item 28 of the First Schedule to the Central Excises and Salt Act, 1944.
16. The words "whether medicated or otherwise" added on 28th June, 1969 have considerably widened the scope of the item. The clear intention of the Legislature was to remove the discrimination between one manufacture of a particular type of skin powder and another manufac--ture of a somewhat similar but different type of powder. Conse--quently, it was held that the duty had been correctly imposed, but there was no justification in imposing the penality, which was totally remitted."
17. Mr. E. A. Nomani, learned counsel for the petitioners has reiterated the submissions contained in the petition and noted by us in the earlier paras. And asserted that MYCIL Powder was a medicine and not a cosmetic or toilet preparation. His submissions are noted as under :-
(a) That the ingredients of the powder are medicinal.
18. However, we find that only 1.5 % of the main active ingredients are medicinal and further only 5.0 % of the secondary active ingredients are medicinal whereas the rest amounting to almost 93.5 % are not medi--cinal as they are not found mentioned in the National Formulary. In fact the talcum powder forms 78.5 % ingredients of this powder, which is basically a cosmetic item.
(b) Learned counsel emphasised on -the absence of perfume, but we find from Item 28 of the First Schedule that perfumery is a separate item and it not need be a part of the cosmetic.
(c) Counsel also emphasised upon the certificate of Dr. Nusrat A.I Sheikh that MYCIL Powder was a medicinal preparation for local use and not as a cosmetic preparation.
19. We feel that Dr. Nusrat A.I Sheikh could certify to the medicinal aspect of the Powder, but since, he did not claim to be an expert of the cos--metic, therefore, he could not say whether the said powder was a cosmetic or not.
(d) Counsel asserted that since MYCIL Powder was mentioned in the Drug Manufacturing Licence, 1957 to 1969, therefore, it was a medi--cine and not a toilet.
20. We are not impressed by this argument as the nature of the product is to be determined on the basis of the words used in the Item 28 of Schedule of the Central Excises Act. We feel that the words "whether medicated or not" have basically changed the concept of the cosmetics for the purposes of the Excises Act.
(e) Mr. Nomani argued that this Powder was .Sold through licensed chemists only, and therefore, it was a medicine. However, one finds so many articles of cosmetics of general nature being sold by licensed chemists, therefore, this is not a criterion to determine whether the said powder was cosmetic or not.
(f) He further asserted that the National Formulary of 1972 under its generic name "Chlorophenesin Compound", has given recognition to MYCIL Powder as a medicine as the ingredients of "Chlorophenesin Compound", and "MYCIL Powder", are the same.
21. We are, however, of the view that a mere mention of a preparation in the National Formulary would not take the same out of the list of medicated cosmetic if it was in fact a medicated cosmetic. In fact a product could find a mention in the National. Formulary if it satisfied the requirement of the National Formulary and yet it could be a medicated cosmetic if it actually has the qualities of cosmetic added with some medicine.
(g) Mr. Nomani further referred to the definition of Cosmetic in Encyclopaedia Britainica and urged that it should not be relied upon as it is obsolete.
22. However, we cannot agree with this submission of the learned counsel as we find that , Encyclopaedia Britainica (XV) Edition, which was published as recently as 1974, in its Volume V contains the following description for Cosmetic Industry: "The Cosmetics Industry today includes in its scope not only preparation (other than soaps) designed to clean or beautify the face and body, such as are normally associated with the word cosmetics, but also perfumes, dentifrices, and other toilet preparations, some of which are treated in some countries as non-prescription drug products. In general, it may be said that the term is used to cover all the products applied to the body that help the user to look or feel more attractive, accept--able and desireable to others. Such products also deal with the abnormalities caused by normal daily stresses but not with those abnor--malities that are the proper field of medicine."
23. The above description of the Cosme tic Industry would show that in 1974 the item of cosmetics would include the non-prescription drug products. The description, which the petitioners have given for their product is MYCIL Powder and one of its quality is that it can be used for "personal freshness", therefore, such item does come within the description of Cosmetic industry as explained by Encyclopaedia Britainica (1974 Edition), which is quite recent and cannot be termed as obsolete.
(h) An important part of the argument of Mr. Nomani was that in Petition No. 242 of 1969 decided on 23rd September, 1971, a Bench of this High Court had ruled that prickly heat powder produced by Messrs. Bliss & Company was a medical preparation though its subsidi--ary use may be cosmetic.
24. Reliance was placed on Item No. 29 of the Excises and Salt Act, 1944 which read as under :--- "Cosmetics, toilet preparations and perfumery, all sorts excluding soap assessable under Item No. 23."
25. It would, therefore, be very clear that the decision in question referred to by Mr. Nomani was not in respect of the present Item No. 28, which reads as under 28: "Perfumery, cosmetics and toilet preparations, all sorts, whether medicated or otherwise, including soap not falling under item.
26. 29 . . . . . .".
27. Therefore, the decision in Constitution Petition No. 242 of 1969 would not be relevant for the purposes of the present Petition where the emphasis is on medicated cosmetic. In fact there are certain observations in that deci--sion which show that their Lordships had taken note of the change brought about in the First Schedule of Excises and Salt Act in 1969 where Item 29 of the Schedule was changed to item 28 and the words "whether medicated or otherwise" were added after perfumery, cosmetics and toilet preparations, all sorts". Relying upon the change in Schedule brought about in 1969, their Lordships held that Prickly Heat Powder was primarily a medicinal product and up to 1969 it could not be subjected to Excise Duty. The reasoning of the learned Judges appeared to be that if the words "medicated or otherwise" had been present in Item 29 of the then Schedule for the period of 1967 then the decision might have been otherwise even in the case of Prickly Heat Power of Bliss & Company. Therefore, the decision in Consti--tution Petition No. 242 of 1969 does not really help the petitioners as we have now to deal with the medicated cosmetics.
28. We also find that the decision in Constitutional Petition No. 242 of 1969 was based on the primary and subsidiary use of the Powder in question in that Petition. The Government felt aggrieved against that judgment and filed Petition C. P. S. L.'A: No. K-185 of 1971 before the Supreme Court and it was contended that the distinction made by the High Court between "Primary use" and "Subsidiary use" is artificial. Their Lordships of the Supreme Court halve admitted the said Petition and leave has been granted against the judgment of the High Court, and therefore, the judgment of the High Court in that Petition is under consideration of the Supreme Court, and therefore, it has not assumed that finality as it would otherwise have if the Petition against the same had not been admitted, and hence, Mr. Nomani could not really base his argument on the same.
(i) The last argument of Mr. Nomani is that in PLD 1979 Kar. 643 (1) and PLD 1980 Kar. 434 (2), the two Division Benches of this High Court have decided that the primary use of a product should be the creterion for determining the. Liability of that product for the purpose of ascertaining its liability under the Excises and Salt Act. Both these judgments have, however, followed the reasoning of the judgment in Petition No. 242 of 1969. Since Petition No. 242 of 1969 is under appeal before the Supreme Court, these judgments are in the same position as the judgment in Petition No. 242 of 1969.
29. Moreover, we find in PLD 1979 Kar. 643 the judgment was really based on the consideration that 0.75 % of Haxachlorophene, if used in preparation, is to be regarded as a drug and, in fact in that case it was the use of 3 of Haxachlorophene used in that preparation which was considered by that Bench to be a medicine and not a cosmetic. Therefore. That decision is distinguishable from the present case where only 0.5 % of Haxachlorophene has been used in the MYCIL Powder.
30. PLD 1980 Kar. 434 in the case of Powder produced by Messrs Hoecht Pakistan Limited, it was held by the Bench that the basis of treating the Powder as a detergent by the Excise Authorities, was the capability of the product to be used as a detergent. But their Lordships' considered that it is primary use of the commodity, as understood generally by the public, which normally will be relevant consideration for the purposes of classification. The product in that case was mainly used in the manufac--ture of insecticides and pesticides and its nature as a detergent was determined by Excise Authorities on the basis of tests carried out in the Laboratory which showed that every ingredient of that Powder was a detergent. That case is really not applicable to the present case where according to the Peti--tioners itself MYCIL Powder was to be used for "personal freshness" and "For Prickly Heat Control'.", and therefore, the primary uses of this product were both "Personal Freshness" as well as "Prickly Head Control".
31. We also find that at page 438 of Shorter Oxford English Dictionary, 1978 Edition, the word "Cosmetic" has been defined as follows: "Cosmetic, having power to beautify (esp. The complexion) ; also relat--ing to cosmetics, a preparation for beautifying the hair, skin, or complexion. The art of adorning or beautifying the body."
32. The above meaning would show that a product which is used "F Personal Freshness" can be covered in the definition of "Cosmetic" and medicated cosmetic would cover those products which are preparations forbeautifying the complexion and they also have some medicinal capabilities.
33. We find that in I L R 27 Bom. At page 551: the term "Medicated Article," was interpreted. It was held that the term "Medicated Article" must apply to something which is manufactured and by that manufacture is imbued with certain medicinal properties. In that case cocaine was held to be a medicine per se and not a medicated article. The above interpretation of the term "Medicated Article" as an article imputed with certain medicina properties leads us to conclude that a "Medicated Cosmetic," is a cosmetic which is imbued with certain medicinal properties in its manufacture. of Schedule to the C Excises and Salt Act, 1944, therefore, clear intention was that even those cosmetics which have some curative and medicinal qualities should bet burdened with Excise liability.
34. We may also note that important words in' the item 28 of the Schedule are "Whether medicated or not" without specifying the quantity of medica--petition. Therefore, irrespective the quantity or quality of medication, ,the cosmetics would be liable to excise duty and it would amount to amending -the language of the Schedule if we were to hold that a cosmetic which is heavily medicated would not be covered by this item. We cannot amend the Schedule.
35. Mr. Syed Inayat A.I learned counsel for the Central Government also relied upon section 3-B of the Central Excises and Salt Act of 1944 which is to the following effect "3-B. Goods partially composed of dutiable articles. --- Goods whereof any article liable to duty under this Act forms a part or ingredient shall be chargeable with the full duty which would be payable on such goods if they were entirely composed of such article, or, if, composed of more than one article liable to duty, then with the full duty which would be payable on such goods if they were entirely composed of the article on which the highest amount of duty would be payable."
36. His contention is that Talcum Powder which is the main ingredient of MYCIL Powder is an item of Cosmetics and, is, therefore, chargeable to duty under item 28 of the Schedule- and hence the whole MYCIL Powder is chargeable to duty under Section 3-B. However, it is not necessary to examine this contention elaborately as we are holding that MYCIL Powder is a medicated Cosmetic and not mere medicine. Therefore, we do not find any ground to interfere in the orders of the Excises Authorities, where they have treated MYCIL Powder as a medicated Cosmetic, as the same comes within the definition of medicated Cosmetic under Item 28 of relevant Schedule.
37. The Petition is accordingly dismissed, but in view of the difficulties involved in interpretation we would leave the parties to bear their own costs.