2006 (8) TMI 217 - HC - Central Excise

Summary

Issues:
Classification of Dexovon Capsules containing 70 mg of Dextropropoxyphene-HCl under State Excise Duty.

Analysis:
1. The petitioners argued that Dexovon Capsules, containing 70 mg of Dextropropoxyphene-HCl per dosage unit, did not meet the prescribed limit of 135 mg per dosage unit to classify as narcotic drugs under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955. They contended that the capsules were medicinal preparations, not subject to State Excise Duty.

2. Respondent No. 3 insisted that any medicament containing Dextropropoxyphene, regardless of quantity, fell under the Act and was liable for State Excise Duty. The authorities seized the petitioners' product and initiated criminal proceedings based on this interpretation.

3. The Central Government's notification of June 1986 declared substances as narcotic drugs, specifying that preparations containing less than 135 mg of Dextropropoxyphene per dosage unit were excluded. The petitioners argued that their capsules, with 70 mg per dosage unit, were exempt from classification as narcotic drugs.

4. The Court ruled that the petitioners' product did not meet the criteria to be classified as a narcotic drug under the Act, as it contained only 70 mg of Dextropropoxyphene per dosage unit. Therefore, the demand for State Excise Duty was deemed untenable, and the impugned order was set aside.

5. The Court emphasized that the quantity of Dextropropoxyphene was crucial in determining the classification as a narcotic drug. The decision in a previous case was distinguished, highlighting the importance of the quantity of the substance in question.

6. The State Government was directed to reimburse the Central Government for any Central Excise Duty paid by the petitioners during the relevant period. The petitioners were granted CENVAT Credit, and the rule was made absolute with costs. A stay of the order was granted for six weeks from the date of the judgment.