2018 (1) TMI 636 - AT - Central Excise

Classification of goods - Natural Micronised Progesterone - exemption under N/N. 4/2006 dated 01.03.2006 - The department s case is that as per Sr. No. 47 of 4/2006 and list 3 of Sr. No. 58 the product covered under exemption is Natural Micronised Progesterone tablet whereas the appellants product consist of various ingredients, and is not alone Natural Micronised Progesterone, accordingly, exemption is not available - Held that - as per the exemption entry the drug and medicine both are exempted. Drug contains only one ingredient i.e. basic drug whereas any medicine which is manufactured out of a drug is invariably consist of other ingredients which is normally form of excipient - Merely by adding the excipient, the medicine which has character of basic drug does not get altered. Therefore, only by adding excipient the exemption cannot be denied, in the facts of the present case - appeal dismissed - decided against Revenue.

Summary

Issues:
Claim of exemption under notification no. 4/2006 for Natural Micronised Progesterone product with additional ingredients.

Analysis:
The case involved a dispute regarding the eligibility of a product for exemption under notification no. 4/2006. The department argued that the product, named 'Sugest', did not qualify for exemption as it contained multiple ingredients besides Natural Micronised Progesterone. The revenue contended that only products listed in notification 21/2002-Cus were exempted, and since 'Sugest' contained additional ingredients, it did not meet the criteria for exemption. However, the respondent argued in support of the impugned order.

Upon careful consideration, the tribunal noted that the exemption entry covered both drugs and medicines, with drugs typically consisting of a basic drug ingredient and medicines containing other excipients. The tribunal emphasized that the addition of excipients did not alter the character of a medicine if it retained the basic drug's properties. In this case, the product 'Sugest' was found to be Natural Micronised Progesterone, despite containing various excipients, making it eligible for exemption under notification no. 4/2006.

Furthermore, the tribunal referenced various judicial pronouncements, emphasizing that notifications should not be interpreted in a manner that defeats their intended purpose. Citing cases such as Herculas Tyre and Rubber Ind, Asea Brown Boveri Ltd., Baxter (I) Ltd., and Pitamber Coated Paper, the tribunal highlighted the importance of aligning with the government's policy and intention when granting exemptions. In this instance, the tribunal agreed with the Commissioner (Appeals) that the government's policy was to grant exemption to generic medicines like Micronised Progesterone, which 'Sugest' complied with. The tribunal criticized the Assistant Commissioner's erroneous presumption and penalty imposition without adequate justification, noting the potential misuse of power against taxpayers.

Ultimately, the tribunal upheld the impugned order, dismissing the revenue's appeal and affirming the eligibility of 'Sugest' for exemption under notification no. 4/2006.