Introduction

Drugs and cosmetics are products that may have a very thin line of difference in certain cases. There are various products in the market, which, on the face of it, would be classified as cosmetics. However, due to the features and medicinal value of such products, they might fall under the category of drugs under the Drugs and Cosmetics Act, 1940 (“Act”). For example, a massage oil, that is simply intended to lubricate the skin and impart fragrance is a cosmetic, but if the product is intended for therapeutic use, such as relieving muscle pain, it may be classified as a drug. This differentiation plays a relevant role in determining the legal healthcare compliances concerning a product. Thus, it is important in such scenarios that the products are classified correctly as it is the classification of the product which dictates the requirements under the Act with regards to licensing, labelling, and packaging. 

Definition of Drugs and Cosmetics

In India, the production, manufacturing, trade and sale of drugs and cosmetics are governed by the Act, the Cosmetic Rules, 2020 (“Rules”), and the Drugs Rules, 1945 (“1945 Rules”).

Section 3(b) of the Act defines ‘drug’ as “all medicines and all substances intended for internal or external use of human beings or animals to be used for, or in, diagnosis, treatment, mitigation or prevention of any disease or disorder including preparations applied on body for purpose of repelling insects, or cause destruction of disease-causing insects, or to be used as component of a drug or medical devices”.

Section 3(aaa) of the Act defines ‘cosmetic’ as “any article intended to be rubbed, poured, sprinkled or sprayed on, or introduced into, or otherwise applied to, the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and includes any article intended for use as a component of cosmetic”.

The Primary Purpose Tests

The courts in India have established a criteria to differentiate between a ‘drug’ and a ‘cosmetic’ under the Act. In the case of Himani Limited v. The Commissioner of Commercial Taxes ¹, the Allahabad High Court introduced the primary purpose test. This test helps determine the classification based on the product’s intended primary role. The court also discussed situations in which there may be products which have characteristics of both. The court illustrated the same by giving an example of a medicated soap. For example, a medicated soap may have facets of enhancing beauty and maintaining hygiene but could also be prescribed by a doctor for a specific medical condition. The primary role and purpose determine its classification under the Act.

A similar view was taken in the case of the State of Gujarat v. Sintex International Limited ², in which the respondent was engaged in manufacturing and selling various ayurvedic oils. It was pointed out that the hair oils were made from ayurvedic products applying ayurvedic methodology. It was argued that though these hair oils did not contain any fragrance or perfume, they were used as ordinary cosmetic hair oils. The court held that while categorising a product, one must look at the point of view from which a product has been manufactured. The court stated that if a product has certain medicinal ingredients and is being used due to medical advice, then it cannot be classified as a cosmetic just because of its beauty-enhancing qualities. The court applied the primary purpose test in this case for examining the usage of the product and the ingredients used and concluded that the product could be classified as a drug. It opined that the test which determines the classification of a product under the Act is a subjective test rather than an objective one.

Similarly, in the case of Ponds India Ltd. v. Commissioner of Trade Tax ³, the court had to consider whether white or yellow petroleum jelly (non-perfumed) sold as ‘Vaseline’ was a ‘drug’ or a ‘cosmetic’. Here, the guiding principle for determination was whether the primary function of the products is to care or cure, a crucial aspect in healthcare regulatory compliance. 

Conclusion

The test to determine the classification of a product under the Act cannot be standardised. One needs to look at these products on a case-to-case basis, to decide which category a particular product would fall under the Act. However, there are certain aspects that a manufacturer or an importer of cosmetics could consider while applying for a license under the Act. Based on the intended usage, the products shall be categorised as a drug or a cosmetic.

[1](2011) 2 All LJ (NOC 149) 39.

[2]2004 (3) ALD 4.

[3]2008 (9) SCR 496.