1989 (6) TMI 62 - HC - Central Excise

Summary

Issues:
1. Interpretation of a notification exempting certain medicines from excise duty.
2. Determining whether the presence of Calcium Carbonate in Flagyl tablets affects their eligibility for the exemption.
3. Analysis of the proviso in the notification regarding pharmaceutical necessities.
4. Evaluation of the therapeutic efficacy and necessity of Calcium Carbonate in Flagyl tablets.
5. Consideration of whether the presence of an ingredient with potential therapeutic activity affects the eligibility for the exemption.

Issue 1: Interpretation of the notification
The High Court analyzed a notification exempting specific medicines from excise duty if they contained ingredients listed in the Schedule. The notification specified that pharmaceutical necessities should be therapeutically inert and not interfere with the therapeutic activity of the specified ingredients.

Issue 2: Impact of Calcium Carbonate on exemption eligibility
The petitioners manufactured Flagyl tablets containing Metronidazole and Calcium Carbonate. The Central Board determined that Flagyl tablets were not eligible for the concessional rate of duty due to the presence of Calcium Carbonate, categorized as an antacid. The petitioners contested this decision.

Issue 3: Proviso interpretation
The Court examined the proviso in the notification, focusing on whether pharmaceutical necessities like Calcium Carbonate should be therapeutically inert and not interfere with the therapeutic activity of the main ingredient, Metronidazole.

Issue 4: Evaluation of Calcium Carbonate in Flagyl tablets
The petitioners argued that Calcium Carbonate in Flagyl tablets acted as a diluent and was therapeutically inert, enhancing the tablet's handling convenience without affecting Metronidazole's efficacy.

Issue 5: Presence of potentially active ingredients
The respondents contended that the presence of Calcium Carbonate, regardless of its activity as an antacid, disqualified Flagyl tablets from the exemption. The Court analyzed whether the presence of an ingredient with potential therapeutic activity affected the eligibility for the exemption.

In the judgment, the Court ruled in favor of the petitioners, stating that Calcium Carbonate in Flagyl tablets was therapeutically inert and did not interfere with Metronidazole's efficacy. Therefore, Flagyl tablets were entitled to the exemption conferred by the notification. The Court quashed the order confirming the show cause notices and discharged the bank guarantee.