1979 (11) TMI 102 - CGOVT - Central Excise

Summary

Issues:
Classification of medicines under Tariff Item No. 14E of the Central Excise Tariff, application of brand name "Dabur" on containers, caps, and labels, invocation of Rule 9(2) of the Central Excise Rules, time-barred demand for duty, penal action under Rule 173Q of the Central Excise Rules.

Detailed Analysis:
The petitioner-firm was charged with clearing medicines as non-excisable pharmacopoeial preparations despite the presence of the brand name "Dabur" on the caps and containers, which indicated a trade connection with the manufacturer, attracting duty under Tariff Item No. 14E. The firm argued that the medicines were not "P or P medicines" as defined in the CET and had the right to use the brand name "Dabur" as per Drugs & Cosmetics Rules, 1945.

The Collector of Central Excise ruled that the products fell under Tariff Item 14E due to the brand name "Dabur" on the containers and caps, demanding duty and imposing penalties. The petitioner's appeal to the Board was rejected, leading to a revision application where various grounds were raised, including the issue of the brand name registration and approval for labeling.

The Government noted that the brand name "Dabur" was registered under the Trade and Merchandise Marks Act and considered it a distinctive mark for the medicines, making them proprietary medicines. The Government distinguished this case from previous judgments, emphasizing the importance of a registered mark indicating a trade connection between the medicine and the manufacturer.

Regarding the invocation of Rule 9(2) of the Central Excise Rules, the Government clarified that it could not be applied in this case as the goods were cleared with proper approval from Central Excise officers regarding non-excisability. Citing judicial pronouncements, the Government highlighted that Rule 9(2) cannot be invoked retrospectively based on a later view of excisability.

The Government observed that the demand for duty, issued after a significant lapse of time from clearance, was time-barred, as the approval for the medicines had been given earlier by Central Excise officers. Therefore, penal action under Rule 173Q was deemed unsustainable in law.

Consequently, the Government upheld the classification of the medicines under Tariff Item 14E but set aside the duty fines and penalties imposed on the petitioner-firm, considering the demand time-barred and the approval given by Central Excise officers. The revision application was disposed of accordingly.