' ALLY MADAD SHAH, J.- The petitioners, Nabiqasim Industries, are manufacturers of pharmaceutical products, which include "HEXACHLOROPHANE SOAP." They did not pay excise duty over their products. It was represented to the Central Excise and Land Customs personnel at Karachi, through undisclosed sources, that "HEXACHLOROPHANE SOAP" was not a medicinal drug but it was a toilet preparation liable to excise duty. The Central Excise and Land Customs Personnel obtained sample of the same product viz. "HEXACHLOROPHANE SOAP" and its litrature and got it examined in their laboratory. They found that although the product was a medicated soap yet it was essentially a toilet product and hence liable to excise duty. Accordingly, a show-cause notice was issued to the petitioners for alleged contravention of several provisions of the Central Excise Rules of 1944, and also for raising demand against them of Excise Duty to the tune of Rs,74,993. The petitioner made reply to the show-cause notice. However, the Deputy Collector, Central Excise and Land Customs, Karachi passed an order, dated 8-12-1976 that the product "HEXACHLOROPHANE SOAP" was a toilet product falling under item No,28 of the First Schedule to the Central Excise and Salt Act, 1944 and imposed excise duty thereon and raised demand of excise duty of Rs,31,497.06 on the petitioners and also imposed penalty on them of Rs,10,000 for contravention of certain provisions of the Rules.
The petitioners' appeal before the Collector (Appeal), Central Excise and Land Customs, Karachi was dismissed on 20-7-1977; with modification in the magnitude of penalty, which was reduced to Rs,2,000. The Revision application filed before the Federal Government in the Central Excise Department was dismissed by an Additional Secretary to th Government of Pakistan by the order, dated 8-6-1978 with the modification of remittance of the penalty in full. The petitioners have thereafter filed this petition seeking following reliefs:- "(A) to declare that the following three impugned orders viz:
(a) order passed by the 3rd respondent on 8-12-1976 (Annexure X-3);
(b) order passed by the 2nd respondent on 24-7-1977 (Annexure X-4) and
(c) order passed on 8-6-1978 by the 1st respondent (Annexure X-6).
(B) to declare that Hexachlorophane Soap produced by the petitioner is a drug and is not subject to payment of excise duty under item No,28 of the 1st Schedule of the Central Excise and Salt Act, 1944;
(C) to award costs of the petition; and
(D) to give such other additional and further relief as thjis Hon'ble Court may be pleased to consider fit and prepare in the circumstances of this case."
2. The learned counsel for the petitioners urged 'that "HEXACHLOROPHANE SOAP" is essentially a drug notified at Item No,38 in the National Pharmulary of Pakistan issued in the year 1973 and it was not a preparation for toilets etc. According to him, the Soap is basically used by Surgeons for pre- operative preparation and is also used for skin diseases such as Acne, Eczema, Diaper Rash, Cradel Cap caused by germs such as Staphlececci and Streptececci and is sold through licensed Chemists and Druggist on only prescriptions issued by qualified Doctors. He made pointed reference to the ingredients of the Soap which, according to him, are Sodium Octyphenoxyeth- exythyl, Ether Sulfenate, Lenolin Cheles-terole Petrolatum, and Hexachlorophene. He urged that the product is registered under the generic name "HEXACHLOROPHANE SOAP" in the National Pharmulary of Pakistan, 1973 published under the Drugs (Generic Names) Ordinance, 1972 and it falls within the definition of a "Drug" as contained under section 3(G) of the Drugs Act, 1976. He contended that the same product viz. "HEXACHLOROPHANE SOAP" is also classified as the Medicinal Drug in the British as well as the United States of America Medical Drugs Pharmularies. He has made reference to several authorities which would be referred to at appropriate place hereinbelow.
3. On the other hand, learned counsel for the respondents contended that the produce known as "HEXACHLOROPHANE SOAP" is basically a toilet product and is liable to excise duty. According to him, the soap falls within the catogery of the toilet preparations described at Item No,28 of 1st.
Schedule to the Central Excise and Land Customs Act, 1944
4. To appreciate the contentions of the learned counsel, it would be worth while to reproduce certain passages from the orders of the Deputy Collector and the Collector of the Central Excise and Salt Act and the Additional Secretary, Government of Pakistan, referred to above, as regards the nature of the product "HEXACHLOROPHANE SOAP." The Deputy Collector, Central Excise and Land Customs, Karachi, in his order, dated 8-12-1976, held as under:- "The name of the produce Hexachlorophene Skin Cleanser and Hexachlorophene Soap (liquid) itself suggest that these products are nothing but medicated toilet preparations falling under item 28 of the First Schedule. It is not doubted that these toilet preparation has medicinal characteristics. It has a high degree of cleansing and detergent characteristics and is good as cleansing agent for Skin and Hair. It is, therefore, preparation for personal hygiene. In this connection I have seen the Chemical Test Report which supports my view that it is a toilet preparation medicated. I, therefore, classify this product under item 28 of the First Schedule to the Central Excise and Salt Act, 1944. The amount of duty evaded i.e. Rs,31,497.06 shall be recovered from the manufacturer under rule 226(2) read with rule 10 of Central Excise Rules, 1944."
' The Collector, Central Excise and Land Customs, dismissed the appeal by the order, dated 20-7- 1977 by making the following observations:- "The main contention of the appellant is that Hexachlorophene is a drug and is used by surgeons for pre-operative preparations and for treating skin diseases such as Diaper-rash, Acne, Exzema etc and is not a toilet preparation. The fact of the preparation having germicidal and anti-bacterial properties, is not disputed. Its use as a washing preparation by surgeons before operations and as a soap and shampoo, however, brings it within the scople of item 28 of the First Schedule to the Central Excise and Salt Act, 1944. The order passed by the Deputy Collector, Central ' Excise and Land Customs, Karachi, being correct in law and on facts is, therefore, upheld."
' The Additional Secretary, Government of Pakistan dismissed the revision application by his order, dated 8-6-1978, the operative part of which is as follows:- "Hexachlorophane liquid soap is a solution containing 0.25% Hexachlorophane is a 12% solution of potassium soap. Potassium soap is prepared by heating linseed oil with potassium hydroxide and is used in the preparation of skin cleanser and is 40 per cent more effective than soap. Its uses include baby care, personal hygiene, as Shampoo, care of the feet besides the use as medicinal disinfectant for cleansing of skin. Hexachlorophene is not essentially is a madicine.
Hexachlorophene is used as a raw material for the manufacture of medicines, cosmetics and toilet preparations like deodorant sticks, hand creams, shaving lotions, antiseptic lipsticks, baby powders, prickly heat powders, tooth-pastes, soaps, shampoos etc. The medicinal character of a product will not affect its liability under item No,28 of the First Schedule to the Central Excises and Salt Act, 1944. In this case the classification and liability of the product under the said item No,28 will not be affected simply because the liquid soap contains 0.25% Hexachlorophene. Even its registeration as a drug does not affect its classification under item No,28 as "perfumery, Cosmetics and toilet preparation all sorts, whether medicated or otherwise, including soap not falling under item 29."
' On the basis of the aforesaid reasoning, the three forums in the Central Excise and Land Customs Organization held that the "HEXACHLOROPHENE SOAP" is and exciseable product in the category of toilet articles liable to excise duty vide item 28 in part I of the First Schedule to the Central Excise and Salt Act 1944, which may be reproduced hereinbelow:-Perfumery, Cosmetics and Toilet preparations.--Perfumery, Cosmetics and toilet preparations, all sorts, whether medicated or otherwise, including soap not falling under item 29."
' Since there is reference to item 29 in the item 28 reproduced above, its text also is reproduced hereinbelow for making out distinction between the products mentioned in the two items:-
5. Soaps and Detergents.--Soaps, all sorts, but excluding liquid soaps paste soap, shaving soap and depilatory soap."
5. In the above context, the contention of the petitioners has been that the product "HEXACHLOROPHENE SOAP" is an antiseptic solution containing Sodium Octyphenoxyeth-e-exythyl, Ether Sulforate, Lonolin Cholesteroles Perrolatum and Hexacholorophene and is manufactured in accordance with the specific formula and is marketed by pharmaceutical concerns and is sold on medical prescriptions only and is used by Surgeons for pre-operative preparations and for treating skin diseases such as Diaper-rash, Acne, Eczema etc and is not a toilet preparation, and its preparation has anti germicidal and anti-bacterial properties. It has also been urged that the "HEXACHLOROPHENE SOAP" is a registered medicinal drug appearing at item 38 at page 43 of the National Formulary of Pakistan published under the drugs (Generic Names) Act of 1972 and falls within the definition of a "DRUG" under section 2(c) of the Drugs (Generic names) Ordinance, 1972 and section 3(g) of the Drugs Act 1976. The learned counsel has further urged that "HEXACHLOROPHENE" liquid Soap is classified as a Drug even in the United States Pharmacopiea-19, and the Britain Martindale, The Extra Pharmacopeia (26th Edition) at page 193.
6. The medicinal composition of the Hexachlorophene liquid is reflected in the order of the Additional Secretary, dated 8-6-1978 reproduced above that Hexachlorophene liquid soap is a solution Containing 0.25% Hexachlorophene in 12$ solution of potassium soap and Potessium soap is prepared by heating linseed oil with potassium hydroxide and is used in the preparation of liquid soaps." It is not disputed that the product is used for medicinal and hygenic care as a medicinal disinfectant for the treatment of the skin. The learned authorities in the excise department treated it as an article of toilet adopting the view that the product was used in the forms of Soaps, sticks, lotions, powders, paste and Shampoos etc, and classified it to be a product falling within the category of the exciseable products as per item 28 in para. I of the First Schedule to the Central Excise and Salt Act, 1944. It would appear from the properties of the Drug and its use in its different forms that the product is essentially of medicinal character and its primary use is that of medicinal treatment of the skin. The nature of a product can be gauged from the properties of its compound and its primary use.
7. Some products of like nature were similarly put on the list of the toilet preparations by the Central Excise establishment on the similar grounds and the Manufacturers thereof challenged in the Court such classifications of those products and it would be worthwile to make reference to some of those cases and the ruling of the Courts thereon.
8. Reference may be made to an exactly identical case M/s Sterling Products (Pakistan) Ltd. v.
Deputy Collector, Central Excise and Land Customs, Karachi and another, reported in PLD 1979, Kar.
643. The petitioners were manufacturers of a drug known as "PHISOHEX" which was beig manufactured previously under the generic name as "HEXACHLOROPHENS CREAM". The Central Excise Department classified the product in the category of "perfumery, cosmetic and toilet preparation falling within item 29" of the First Schedule to the Central Excise and Salt Act, 1944. This classification was made by a ,Deputy Collector on the basis that the product was a medicated Shampoo described by the Chemical Analyst as a white, milky paste freely soluble in water and slightly acidic and was highly surface active with high foaming powders and that it had all the properties/traits of a detergents though containing 2:8. Of "HEXACHLOROPHENE" as antibacterial agent. The manufacturers challenged in Court the so made classification of their product. Their Lordship who heard and decided the above case observed that the classification of a product could better be made on the basis of. Its primary use although it may have subsidiary use as an article of toilet preparation, etc., and held that the product "HEXACHLOROPHENE CREAM", which had been registered as a madicine under the Drug Act, 1976 was essentially a medicinal drug and not a product of perfumery, cosmetic and toilet preparation. Reliance in that case was placed on an unreported judgment in Constitutional Petition No,242 of 1969 decided in this Court on 23-9-1971.
The learned counsel for the petitioners also cited another case M/s Hoechst Pakistan Ltd., Karachi v.
Government of Pakistan, reported in PLD 1980 Kar. 434 as a supporting authority. In that case a product sold in the brand name "GENOPON TP POWDER" was treated by the Central Excise Department as an article falling under item 29 of the First Schedule to the Central Excise and Salt Act, 1944. In that case too, it was held that the classification of the product could be based on its primary use and not on the basis of its capability of being a commodity to be used as an excisable item in the First Schedule to the Central Excise and Salt Act. The learned counsel made reference yet to another case of Glaxo Laboratories (Pakistan) Ltd. v. Government of Pakistan and 2 others, reported in PLD 1981 Kar. 107, which has also been relied upon by the learned Advocate for the respondents. In that case, the petitioners were manufacturers of pharmaceutical products and one of the products manufacture by them was known as "MYCIL" powder. The Collector of Central Excise and Land Customs classified the said product "MYCIL" powder as a cosmetic preparation on the basis that it was packed in a container like other talcum powders and displayed the words "for personal freshness" and "for prickly heat control". This view was upheld by the Central Board of Revenue as well as by the Central Government. It was held therein that mere combination of a medicinal ingredient in preparations of a product does not necessarily make it a medicinal drug. It was also held that mere use of a product could not be conclusive basis for making its classification as a drug or otherwise. The principle of classification enunciated in the aforesaid cases was not approved and those cases were also distinguished on facts. The learned counsel for the petitioners, however, attempted to distinguish this case from the cases referred to above by contending that the product in that case was not registered as a drug in the National Pharmulary, whereas the product invloved in this case is registered in the National Pharmulary. But this argument was advanced before their Lordships who decided the aforesaid cae of Glaxo Laboratories (Pakistan) Ltd. PLD 1981 Kar. 107 and they made observation that mere registration of a drug in National Pharmulary did not necessarily make it a drug.
9. What we have construed from the aforesaid authorities is that the classification of a drug for the purpose of excise duty cannot be based on only its primary use or on only its compound properties, but both the facts have to be taken into consideration for making classification of the products. Applying that principle in this case, were come to the conclusion that "HEXACHLOROPHENE SOAP" containing 0.25$ of Hexachlorophene in 12% solution of potassium soap and registered in the National Pharmulary as a drug and primarily used for the care and treatment of skin is essentially a medicinal drug and it is not an article of perfumery, cosmetic or toilet preparation. For the aforesaid reasons, we allow the petition with the declaration that the petitioners product "HEXACHLOROPHENE SOAP" is a medicinal drug and not product of perfumery, cosmetic or toilet purpose. No order is made for costs.