1995 (9) TMI 163 - AT - Central Excise

Summary

Issues:
Classification of medicine for exemption under Notification No. 116/69-C.E., dated 3-5-1969 as amended - Whether 'Opthomycetin Eye Drops' containing Chloramphenicol is eligible for exemption under the notification.

Detailed Analysis:

1. Background and Claim for Exemption:
The appellants were involved in manufacturing patent and proprietary medicines, specifically 'Opthomycetin Eye Drops' falling under Tariff Item 14E. They claimed full duty exemption under Notification No. 106/80-C.E., dated 19-06-1980, which amended Notification 116/69-C.E., exempting medicines containing Chloramphenicol for parenteral use. However, the Assistant Collector Central Excise denied the exemption, stating that as the medicine was labeled for external use, it did not qualify as meant for parenteral use.

2. Appellant's Argument and Legal Precedent:
The appellant contended that 'Opthomycetin Eye Drops,' despite being for external use, should be deemed as meant for parenteral use as it is absorbed through the mucous membrane of the eye. Citing the Supreme Court judgment in Mac Laboratories (Pvt.) Ltd. v. Collector of Central Excise, Bombay, it was argued that the term 'parenteral' should be broadly interpreted to include medicines applied locally or topically that enter the bloodstream through mucous membranes or skin. Relying on this interpretation, the appellant sought exemption based on the broader understanding of the term 'parenteral.'

3. Respondent's Stand and Impugned Order:
The respondent, representing the Collector (Appeals), reiterated the decision that the medicine did not qualify for exemption under the notification. The Collector (Appeals) had upheld the Assistant Collector's decision, emphasizing that the medicine was intended for external use only and not for parenteral administration.

4. Judgment and Legal Interpretation:
After reviewing the submissions and legal precedents, the Tribunal referred to the Supreme Court's ruling in Mac Laboratories case, which clarified that 'parenteral' should encompass medicines bypassing the elementary canal, including those applied locally that enter the bloodstream through mucous membranes or skin. The Tribunal emphasized the broad interpretation of 'parenteral' and concluded that 'Opthomycetin Eye Drops' containing Chloramphenicol, intended for application in the eyes, qualified for exemption under the notification as amended. Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellants.

This judgment highlights the importance of interpreting legal terms broadly to ensure the intended benefits of exemptions are not unduly restricted by technicalities, thereby providing clarity on the eligibility of medicines for duty exemptions under specific notifications.