1994 (12) TMI 77 - SC - Central Excise

Construction of Item No. 14E of the Central Excise Tariff levying duty on Patent and Proprietary medicines Scope of proviso to Section 11A of the Act Held that - In the result this appeal succeeds and is allowed. The order passed by the Tribunal is set aside and the question of law raised by the appellant is decided by saying that Dextrose injections manufactured by the appellant in the relevant years were not patent and proprietary medicines dutiable under Tariff Item 14E of the Schedule. Since the appeal is being allowed on merits the question whether the Revenue was justified in reopening the case under proviso to Section 11A of the Act is rendered academic and is not necessary to be decided.

Summary

Issues:
1. Construction of Item No. 14E of the Central Excise Tariff on Patent and Proprietary medicines
2. Scope of proviso to Section 11A of the Central Excises & Salt Act, 1944

Analysis:

Issue 1: Construction of Item No. 14E of the Central Excise Tariff
The appeal raised questions regarding the classification of patent and proprietary medicines under Tariff Item 14E and the exemption criteria. The main part of the entry excludes medicines containing specific ingredients or those falling under ayurvedic, unani, sidha, or homoeopathic categories. The Explanation widens the scope to include drugs for human or animal ailments not specified in a Pharmacopoeia, except those identified by a monograph or symbol indicating a connection between the medicine and the producer. This implies that medicines in the Pharmacopoeia are exempt unless they establish a relationship through a distinctive mark. The judgment clarifies that brand name medicines under the Explanation require a registered mark and a connection between the manufacturer and the medicine.

Issue 2: Scope of proviso to Section 11A of the Act
The judgment cites precedents to affirm the interpretation of Explanation I to Item 14E, emphasizing the need for a distinctive mark indicating a proprietary interest in the medicine. The court refers to previous decisions that align with the Madras High Court's view on the connection between the medicine and the manufacturer. The appellant's case is allowed on merits, concluding that the Dextrose injections were not dutiable under Tariff Item 14E. The judgment renders the question of the Revenue's justification in reopening the case under the proviso to Section 11A academic and unnecessary to decide.

In conclusion, the Supreme Court allowed the appeal, setting aside the Tribunal's order and ruling that the Dextrose injections manufactured by the appellant were not patent and proprietary medicines subject to duty under Tariff Item 14E. No costs were awarded in this decision.