1998 (12) TMI 128 - AT - Central Excise

Summary

Issues:
Exemption for patent and proprietary medicines under Notification No. 48/77-C.E.
Interpretation of condition (3) of the Exemption Notification.
Distinct marking and packing requirements for physician samples.
Verification of eligibility for Modvat credit.

Exemption for Patent and Proprietary Medicines:
The case involved the appellants seeking exemption for patent and proprietary medicines cleared as physician's samples under Notification No. 48/77-C.E. The Notification imposed three conditions for the exemption, including limited clearances based on value, intended supply to specific entities, and distinct packing with clear markings. The Assistant Collector denied the benefit citing non-fulfillment of condition (3) due to similar packing as regular trade packing. The Collector (Appeals) upheld this decision based on a previous Tribunal order. The appeal challenged this denial of exemption.

Interpretation of Condition (3) of Exemption Notification:
The main contention revolved around whether the marking "physician sample, not to be sold" on the Unizyme Syrup constituted a difference from regular trade packing. The appellant argued that this marking itself created a distinction. However, the learned SDR pointed to a previous Tribunal order emphasizing the need for distinct packing beyond just markings. The Tribunal found the previous order applicable to the current case, upholding the denial of exemption based on this interpretation.

Distinct Marking and Packing Requirements for Physician Samples:
The Tribunal noted that the previous order had thoroughly addressed all aspects, including the distinction between packing for regular trade and physician samples. The judgment from the earlier case was deemed relevant and applicable, leading to the rejection of the appeal. However, the appellants were granted the request for money credit of the duty paid subject to verification for Modvat credit eligibility, as their claim under the Modvat Scheme remained uncontested by the Department.

Verification of Eligibility for Modvat Credit:
While upholding the denial of exemption based on distinct packing requirements, the Tribunal acknowledged the appellants' compliance with other conditions, such as supplying samples to hospitals and doctors free of charge and proper marking of the samples. The Tribunal highlighted the importance of the distinct packing condition and deemed it crucial for compliance with the Notification. The decision emphasized that non-observance of this condition could not be considered a minor procedural lapse, leading to the rejection of the appeal on this ground. However, the Tribunal directed the authorities to consider the appellants' request for Modvat benefit, subject to further verification as announced during the proceedings.