1994 (4) TMI 75 - SC - Central Excise

Drugs - Silicones - Exemption - Object and effect - Classification of goods - Residuary tariff entry - Interpretation of taxing statute - Appeal to Supreme Court

Issues Involved:

1. Classification of Dimethicone and Simethicone under the Central Excise Tariff.
2. Applicability of exemption notifications to the products.
3. Interpretation of Tariff Items 15A and 68.
4. Relevance of pharmacopoeial standards in classifying the products.
5. Examination of the intent behind exemption notifications.

Detailed Analysis:

1. Classification of Dimethicone and Simethicone under the Central Excise Tariff:

The appellant manufactured medicinal Silicone products, Dimethicone and Simethicone, and classified them under Tariff Item 68, claiming exemption from excise duty under various notifications. The Revenue contended that these products should be classified under Tariff Item 15A, which covers Silicone in all forms, thus not eligible for exemption under Item 68. The Assistant Collector initially classified the products under Item 15A, but this was overturned by the Collector of Central Excise. The Tribunal later restored the Assistant Collector's order, leading to this appeal.

2. Applicability of Exemption Notifications to the Products:

The appellant argued that their products, being "bulk drugs," were exempt under Notification Nos. 104/82, 197/82, and 234/82. These notifications exempted "all bulk drugs, medicines, and drug-intermediates not elsewhere specified" under Item 68. The Revenue countered that since Silicone was specifically covered under Item 15A, the exemption notifications did not apply. The Court noted that the principle governing these notifications is that goods not falling under specific items (Items 1 to 67) should be classified under the residuary Item 68, provided they meet the exemption criteria.

3. Interpretation of Tariff Items 15A and 68:

Tariff Item 15A covers "Silicone in all forms," while Item 68 is a residuary item for goods not specified elsewhere. The Court emphasized that the explanation in Item 68 clarifies that goods excluded from specific items should be treated as falling under Item 68. However, the products in question, containing Silicone, were explicitly covered under Item 15A. Therefore, they could not be classified under Item 68 for the purpose of claiming exemptions.

4. Relevance of Pharmacopoeial Standards in Classifying the Products:

The appellant presented evidence that their products conformed to pharmacopoeial standards, citing references from the British Pharmacopoeial Codex and the United States Pharmacopeia. The Court acknowledged that the products were recognized in pharmacopoeial standards and could be considered "bulk drugs." However, the primary issue was whether these products, containing Silicone, could be excluded from Item 15A and classified under Item 68. The Court concluded that the presence of Silicone in the products meant they were covered under Item 15A, regardless of their pharmacopoeial recognition.

5. Examination of the Intent Behind Exemption Notifications:

The Court examined the intent behind the exemption notifications, which aimed to exempt chemicals, biological, or plant products used for diagnosis, treatment, mitigation, or prevention of diseases, provided they fell under Item 68. The Court noted that the language of the notifications and the tariff items should be interpreted clearly, without a purposive approach. Since the products contained Silicone, they were explicitly covered under Item 15A and could not benefit from the exemptions intended for goods under Item 68.

Conclusion:

The Court affirmed the Tribunal's judgment, holding that the appellant's products, Dimethicone and Simethicone, were correctly classified under Tariff Item 15A and were not eligible for exemption under the notifications applicable to Item 68. The appeal was dismissed, and the Tribunal's order was upheld. No costs were awarded.

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