1996 (12) TMI 239 - AT - Central Excise

Summary

Issues Involved:
1. Concessional rate of duty under Notification 29/88.
2. Classification of pharmaceutical products as patent or proprietary Medicaments.
3. Applicability of limitation on the demand.
4. Imposition of penalty on the appellants.

Detailed Analysis:

1. Concessional Rate of Duty under Notification 29/88:
The core issue was whether Zoacide Infusion, Anarobin, and Mirapyl qualified for a concessional rate of duty under Notification 29/88 during March 1993 to May 1993. The Notification stipulated that single ingredient formulations based on bulk drugs specified in the Second Schedule to the Drugs (Price Control) Order, 1987, were exempt from duty in excess of 10% ad valorem. The term "single ingredient formulations" was defined to include medicaments processed out of a single bulk drug, with or without pharmaceutical aids that are therapeutically inert.

The appellants argued that Sodium Chloride used in their products was merely a vehicle, not an active ingredient. They supported their claim with a certificate from the Food and Drug Administrator of Gujarat and technical literature. Conversely, the department contended that Sodium Chloride had therapeutic value, supported by a certificate from the Food and Drug Administrator, Pune, which opined that Sodium Chloride Injection I.P. has therapeutic value as a fluid and electrolyte replenisher.

Upon examination, the Tribunal found that Sodium Chloride is used as a vehicle and does not possess therapeutic value when used in combination with Metronidazole. Therefore, the concessional rate of duty under Notification 29/88-C.E. was applicable to the products in question.

2. Classification of Pharmaceutical Products as Patent or Proprietary Medicaments:
The issue was whether the appellants' products should be classified under sub-heading 3003.10 as patent or proprietary Medicaments. The department argued that the products were marketed in bottles with logos, satisfying the definition of Patent or Proprietary Medicaments under Chapter Note 2(ii) to Chapter 30 of the Central Excise Tariff.

The appellants contended that the logos were merely identification marks and did not indicate a proprietary interest in the medicines. They cited several judgments, including Astra Pharmaceuticals (P) Ltd. and Aphali Pharmaceuticals Ltd., which clarified that a monograph identifying the manufacturer does not make a medicine patent or proprietary.

The Tribunal, referencing the recent Apex Court judgment in Astra Pharmaceuticals, held that the embossed "MPC" on the bottles was a house mark, not a product mark. Thus, the products were not patent or proprietary medicines.

3. Applicability of Limitation on the Demand:
Given the Tribunal's findings on the concessional rate of duty and classification of the products, the question of limitation became irrelevant. There was no short levy, and thus, no need to address the limitation issue.

4. Imposition of Penalty on the Appellants:
The Tribunal found that no case was made out for imposing a penalty. Since the products were eligible for concessional duty and were not patent or proprietary medicines, there was no basis for penal action.

Conclusion:
The Tribunal set aside the impugned order of the Collector of Central Excise, Pune, and allowed the appeal. The products were entitled to a concessional rate of duty under Notification 29/88, were not classified as patent or proprietary medicines, and no penalty was imposed on the appellants.