1990 (11) TMI 223 - AT - Central Excise

Issues Involved:
1. Classification of White Petroleum Jelly I.P.
2. Eligibility for exemption under Notification No. 234/82.
3. Interpretation of the term "drug" versus "pharmaceutical".

Detailed Analysis:

1. Classification of White Petroleum Jelly I.P.:
The Assistant Collector of Central Excise, Madras V Division, classified White Petroleum Jelly I.P. as a mixture of white mineral oil and wax, sometimes used as a vehicle for cosmetics and drugs. It was held that it cannot be called a medicine but can be classified as pharmaceuticals. This classification was based on the definition of "pharmaceuticals" from Chambers 20th Century Dictionary, which defines it as "a chemical used in the medicine." Consequently, the product was classified under TI 68 without exemption under Notification No. 234/82. The Collector (Appeals), however, overturned this decision, stating that White Petroleum Jelly I.P. is mentioned in the Indian Pharmacopoeia, which lists drugs, thus classifying it as a drug eligible for exemption.

2. Eligibility for Exemption under Notification No. 234/82:
The core issue was whether White Petroleum Jelly I.P. qualified for exemption under Notification No. 234/82, dated 1-11-1982, which exempts "all bulk drugs, medicines and drug intermediates not elsewhere specified." The Revenue argued that the product is not a drug but a pharmaceutical and thus not eligible for exemption. They emphasized that the term "bulk drug" was inserted before "drugs" and "pharmaceuticals" was deleted from the notification, indicating that only bulk drugs, medicines, and drug intermediates were exempt. The assessee contended that the product is used for treating cuts and wounds and should be considered a bulk drug, thus qualifying for exemption.

3. Interpretation of the Term "Drug" versus "Pharmaceutical":
The Revenue relied on definitions from Hedman's medical dictionary and argued that the product does not meet the criteria of a drug used for therapeutic purposes or in the prevention, diagnosis, alleviation, treatment, or cure of diseases. They cited that the product is used for cuts and wounds, which does not qualify as treatment of diseases. The assessee countered by referencing the Indian Pharmacopeia and their licensing under the Drugs Act, arguing that the product is a drug used for treating cuts and wounds, thus falling under the exemption. The Tribunal noted that the dictionary meaning alone is insufficient for classification; instead, trade understanding and commercial parlance must be considered. The burden of classification lies with the department, while the burden of claiming exemption lies with the assessee.

Conclusion:
The Tribunal concluded that the matter requires de novo consideration by the original authorities to allow the assessee to provide evidence on the trade parlance test to seek exemption under Notification No. 234/82. The Tribunal emphasized that mere dictionary definitions are inadequate, and the commercial understanding of the product is crucial. The case was remanded for further examination, setting aside the previous order.

The Tribunal also noted that previous cases cited, such as Oil Dale Trading Co. Ltd. and Mahata Petro Chemicals, did not fully address the exemption under Notification No. 234/82, thus requiring a fresh evaluation of the current case. The Tribunal highlighted that obtaining a drug license under the Drugs and Cosmetics Act is not conclusive proof of trade and commercial understanding for exemption purposes.

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