1990 (2) TMI 150 - AT - Central Excise

Summary

Issues:
- Determination of eligibility for exemption from Central Excise duty under Notification No. 116/69 for a specific product containing certain ingredients.

Analysis:
The central issue in the present appeal before the Appellate Tribunal CEGAT, New Delhi was whether a product called Idometrin Suspension manufactured by the respondents qualified for exemption from Central Excise duty under Central Excise Notification No. 116/69 dated 3-5-1969. The notification exempts patent and proprietary medicines containing specified ingredients from excise duty. The product in question contained Di-iodohydroxyquinoline and Metronidazole Benzoate, with a dispute arising over the eligibility of the latter ingredient for exemption. The Assistant Collector initially ruled against the respondents, while the Collector (Appeals) favored them, leading to the appeal by the Collector of Central Excise, Bombay-I.

The notification in question exempts medicines containing specified ingredients, including Metronidazole, from excise duty, provided certain conditions are met. The critical aspect was whether the use of Metronidazole Benzoate in the product should disqualify it from the exemption. The Assistant Collector contended that since Metronidazole Benzoate was not explicitly listed in the Schedule to the notification, unlike certain other substances, the benefit of the exemption should not apply. However, the Collector (Appeals) sided with the respondents, emphasizing that the benzoate was used to enhance palatability for children, thereby maintaining the presence of the active ingredient, Metronidazole.

During the hearing, the appellant Collector argued against the reasoning of the Collector (Appeals), while the respondents relied on a judgment from the Bombay High Court in a related case involving Metronidazole. The Tribunal noted that the purpose of the notification was to exempt medicines containing specified ingredients, such as Metronidazole. It highlighted that the use of Metronidazole Benzoate, as an ester of Metronidazole, to improve palatability should not negate the eligibility for exemption. Referring to the pharmacopoeia of India, the Tribunal observed that the benzoate form was also indicated as anti-amoebic, with dosage equivalencies to Metronidazole, supporting the respondents' argument of palatability enhancement for children.

In conclusion, the Tribunal upheld the decision of the Collector (Appeals) and dismissed the appeal by the Collector of Central Excise, Bombay-I. It emphasized that the presence of the specified ingredient, Metronidazole, in the form of its benzoate ester, justified the eligibility for exemption under the notification. Additionally, a cross-objection raised by the respondents was deemed not maintainable as it did not challenge any part of the impugned order but merely sought confirmation of the Collector's decision.