In WBAAR 16 of 2023 -AAR- AAR (West Bengal) classifies ‘Jac Olivol Body Oil’ as ‘Cosmetic Product’, not Medicine
Members Tanisha Dutta & Joyjit Banik [10-08-2023]

Read Order: In Re: Indranil Chatterjee

Chahat Varma

New Delhi, September 7, 2023: The West Bengal bench of the Authority for Advance Rulings has classified ‘Jac Olivol Body Oil’ as a cosmetic product, not a medicine.

The applicant had sought an advance ruling on the classification of their product, ‘Jac Olivol Body Oil’, which they intended to manufacture and sell as an Ayurvedic patent & proprietary medicine. They were in the process of entering into a contract manufacturing agreement with the trade name owners of the product. The applicant claimed that the product was primarily used to cure dry skin, relieve body ache, joint & knee pains, minor burns, and prevent blisters. They wanted to know whether the product should be classified under HSN No. 3004 or HSN 3304.

The bench of Tanisha Dutta and Joyjit Banik clarified that a product cannot be classified as a medicament solely because it was manufactured using ingredients regulated under the Drugs and Cosmetics Act. To qualify as a medicament, the product must have therapeutic or prophylactic uses and must be primarily manufactured to control or cure a disease.

The bench also mentioned that in matters of classifying goods, the common parlance test, which considers how the goods are understood in the market by the general public, has been recognized by various judicial forums, including the Supreme Court of India.

In this case, the bench noted that the primary use of ‘Jac Olivol Body Oil’, as indicated on the product label and declared in the market, was for skincare. The product's description emphasized caring for the skin, and there was no indication that it was primarily intended for treating ailments.

The bench further stated that the product, which had labelling instructions to ‘apply daily before or after bath all over your body’, was not typically purchased by people for treating ailments. Instead, it was commonly understood as a skincare product designed to care for the skin, making it soft and smoother. Therefore, the bench concluded that it fell under the category of ‘preparations for the care of the skin’ and should be considered a cosmetic product.

Based on this analysis, the bench classified the product ‘Jac Olivol Body Oil’ under Heading 3304 of the First Schedule to the Customs Tariff Act and determined that it should be taxed accordingly under the Goods and Services Tax Act (GST Act).