2017 (2) TMI 936 - AT - Central Excise

CENVAT credit - generic medicines - whether classifiable under 3003.10 or not? - Held that - as per the definition of patent or proprietary medicaments, the product which bears the name other than the name of the appearing in the pharmacopeia, it will classify as patent or proprietary medicines - In the present case, the names of the medicines are Indosam, P500 and Ampi Cloxa which are the names which are not appearing in any of the pharmacopeia. These names were created names as brand name of the buyer. Therefore, it clearly falls under the category of patent or proprietary medicines and classifiable under 3003.10 which attracts excise duty - appellant is entitled for Cenvat Credit - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of medicaments under Chapter heading 3003.20, eligibility for Cenvat Credit, whether medicaments are patent or proprietary medicines.

In this case, the appellant, engaged in the manufacture and export of medicaments, faced a show-cause notice from the department arguing that the medicaments were generic and not patent or proprietary, thus classifiable under Chapter heading 3003.20. In the initial litigation, the adjudicating authority upheld the demand for Cenvat Credit on inputs used in all medicaments, except for Indosam, P500, and Ampi Cloxa. The Tribunal previously held that these three medicaments were not pharmacopoeia medicaments and were classifiable under a different sub-heading. However, the Revenue challenged this decision, leading to the Commissioner (Appeals) overturning the original order based on the packaging bearing the name of the buyer company. The Commissioner relied on a Supreme Court judgment to support this decision. The appellant contested this ruling.

The appellant argued that despite the packaging bearing the foreign buyer's name, the medicaments' actual names - Indosam, P500, and Ampi Cloxa - were the brand names of the buyer company. Therefore, they contended that these were not pharmacopeial products but patent or proprietary medicines, correctly classifiable under 3003.10, making them eligible for Modvat Credit on inputs used for manufacturing. The Revenue, represented by the Assistant Commissioner, stood by the findings of the impugned order.

Upon careful consideration, the Tribunal noted that the names Indosam, P500, and Ampi Cloxa were not found in any pharmacopeia and were created as brand names for the buyer. Consequently, the Tribunal classified these medicaments as patent or proprietary medicines under 3003.10, subject to excise duty, entitling the appellant to Cenvat Credit. Thus, the impugned order was modified, and the appeal was allowed. The decision was pronounced on 19/01/2017.