1996 (1) TMI 195 - AT - Central Excise

Summary

Issues Involved:
1. Classification of "Tetracycline Capsules" under Central Excise Tariff.
2. Applicability of Explanation to Item No. 14E of CET.
3. Use of the logo "Health" and its implications.
4. Relationship between the medicine and the manufacturer.
5. Legal precedents and their relevance to the case.

Detailed Analysis:

1. Classification of "Tetracycline Capsules" under Central Excise Tariff:
The appellant firm manufactured "Tetracycline Capsules" and declared them under Tariff sub-heading No. 3003.20, claiming a nil rate of duty. However, the Department contended that the product should be classified under Chapter sub-heading No. 3003.10, attracting a duty of 15% ad valorem.

2. Applicability of Explanation to Item No. 14E of CET:
The core issue was whether the product fell under the definition of "Patent or Proprietary Medicines" as per the Explanation to Item No. 14E of CET. The Explanation defines such medicines as those bearing a name not specified in a Pharmacopoeia or a brand name registered under the Trade and Merchandise Marks Act, 1958, or any mark indicating a trade relationship between the medicine and the manufacturer.

3. Use of the logo "Health" and its implications:
The Department argued that the product was cleared with the logo "Health," which indicated a trade relationship between the medicine and the manufacturer, thereby classifying it under sub-heading No. 3003.10. The appellant contended that the logo "Health" was merely for identifying the manufacturer and did not establish a proprietary interest in the medicine.

4. Relationship between the medicine and the manufacturer:
The Tribunal examined whether the use of the logo "Health" established a relationship between the medicine and the manufacturer. The Tribunal concluded that the logo was used to project the image of the manufacturer generally and did not establish any proprietary relationship with the medicine. This was in line with the principles laid down by the Supreme Court in Astra Pharmaceuticals (P) Ltd. v. Collector of Central Excise, Chandigarh.

5. Legal precedents and their relevance to the case:
The Tribunal relied on several legal precedents, including:
- Collector of Central Excise v. Bengal Chemicals & Pharmaceuticals Works Ltd.
- Indo-French Pharmaceutical Co., Madras v. U.O.I. & Others.
- Astra Pharmaceuticals (P) Ltd. v. Collector of Central Excise, Chandigarh.
- Ramsay Pharma Private Ltd. v. Superintendent of Central Excise.

The Tribunal noted that the Supreme Court, in Astra Pharmaceuticals, had clarified that a house mark used for identification under Drug Rules does not establish a trade relationship between the medicine and the manufacturer. The Tribunal also considered the Allahabad High Court's decision in Ramsay Pharma but followed the Madras High Court's interpretation, which was approved by the Supreme Court.

Conclusion:
The Tribunal concluded that the word "Health" on the container was used for identification purposes under the Drug Rules and did not establish a proprietary relationship between the mark and the medicine. Therefore, the impugned order classifying the goods under Chapter sub-heading No. 3003.10 was not legal. The appeal filed by the appellant firm was allowed with consequential reliefs.