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TMI Blog1989 (6) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ve questions, the exact composition of products manufactured by the respondent company are as follows : Name of the Product Formula 1. Before Supplement Furazolidone B.P. (Vet) 3.63% w/w Nitrofurazone B.P. (Vet) 25% w/w 2. Neftin-50 Furazolidone B.P. (Vet) 5% w/w 3. Neftin-200 Furazolidone B.P. (Vet) 20% w/w" 3. It is appropriate at this stage to set out the definition of patent or proprietary medicines as given in Tariff Item 14E and of the animal feed supplement as given in Notification No. 6/84-C.E. (mentioned supra) - Definition of patent or proprietary medicine in T.I. 14E. Explanation I. - Patent or Proprietary Medicines means any drug or medicinal preparation, in whatever form, for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a Pharmacopoeia, Formulary or other publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is a name or a registered trade mark under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the pamphlet published by the respondent company on the said products has held the product under consideration are patent or proprietary medicines under Item 14 E. The benefit of the Notification 6/84 is not applicable. 5.2. The respondent Company s contention on the other hand is that these products are animal feed supplements for the proper growth of the chicks/birds, for better egg production and for improving feed conversion efficiency. In their reply dated 29th March, 1985 to the show cause notice to the Asstt. Collector at the original stage the respondent company had stated the use of the Bifuran supplement and Neftin in the following terms :- ii. Both Bifuran supplement and Neftin are used to fulfil very specific needs in poultry such as keeping coccidiosis away during growing phases and for improving feed conversion efficiency, weight gain and growth rate in broilers and growers and production efficiency in laying stock. (emphasis supplied) iii. The mixing rate of both Bifuran Supplement and Neftin in the basic feed are in micro quantities, e.g. Bifuran is recommended for mixing in 0.0125% concentration, whereas, Neftin is to be mixed at 0.005% and 0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for selling its products are adequate enough to treat or prevent diseases in the sick birds. He has also pointed out that before resorting to the applicability of Notification 6/84. The basic issue for classification of these products under Tariff Item 68 has to be established. The Tariff Item 68 is a residuary item in the Tariff. The Supreme Court in the Dunlop India s case - 1983 (13) E.L.T. 1566 (S.C.) has held as follows :- (a) The method of use or end-use of an article was not material unless the Tariff Entry so stipulates; (b) A specific entry had to be preferred to more general entry; and (c) The description of a product would not be a clinching evidence for the purpose of deciding the Tariff classification. 5.5. On the basis of above criteria the appellant Collector submits that the products would satisfy the definition of patent and proprietary medicine given in 14E. In this context it has also been pointed out that once a definition has been provided in a statute, the classification of a product has to be made in accordance with the said definition and not on the basis of trade or commercial understanding of the product. The department for this purpose h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that they do not have any therapautic effect. So far as Bifuran supplement is concerned the respondent company itself manufactures separate bifuran tablets for curative purposes and it duly pays duty on them under Tariff Item 14E. 7. Controverting the aforesaid position the learned SDR has pointed out that the judgments of the Tribunal in Baidyanath s case and the other cases were rendered without noticing the judgments of Bombay Madhya Pradesh High Courts, in Leukoplast and Ramesh Chemicals case (mentioned supra). 8.1. We have carefully considered the pleas advanced as above on the first issue. After a careful consideration of all the material available on record and the manner of classification and construction of statutes we are of the opinion that the products under consideration fall under Item 14E of CET. 8.2. The definition of patent or proprietary medicine has already been set out above. In view of the Supreme Court s clear pronouncements in Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. -1988 (37) E.L.T. 480 (S.C.) and in the case of Indo International Industries -1981 (8) E.L.T. 325 (S.C.) to the following effects It is well-settled, as ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains 20% w/w Furazolidone. Therefore, 1000 gms. of feed will contain 1/10 gms. of Furazolidone. In other words 1 million gms. of feed would contain 100 gms. of Furazolidone. 8.4. Similarly on the basis of dosage particulars given in the literature of the other product Bifuran supplement it is seen that the prescription for curative purposes is 250 ppm and 100 to 125 ppm for preventive purposes which is well above the dosage rate given for Nitrofurazolidone in the British Pharmacopoeia Codex 1979 page 578 as mentioned in the order in original. Having regard to the aforesaid factors of the prescribed dosages we do not have any doubt that the products under consideration fall under Item 14E inasmuch as they both have therapeutic and preventive purposes in respect of the specific ailments in animals. Manner of taking medicines i.e. with the feed is irrelevant for the purpose of determining whether a commodity is medicine or not. 8.5. It is also pertinent to mention that respondent company itself has admitted in its reply dated 29-3-1985 set out earlier so far as Bifuran supplement is concerned, that it keeps the coccidiosis away . This is another way of saying that Bifuran suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to the basic feed mix or parts thereof. (iii) Such mix should be to achieve a specific need. (iv) It should be added in Micro quantities. (v) It should require careful handling and mixing. 9.3. The department s content is that the aforesaid four conditions are not satisfied because the products under consideration are not mixed with any basic feed and therefore, they cannot be considered as animal feed supplement in terms of the definition. 9.4. The respondent company on the other hand has submitted that the product by itself is not required to be mixed with the basic feed at the time of clearance from the factory. It has, however, to be added at the time of preparation of feed mix for the chicks or the animals. If the department s contention is to be up-held as correct, according to the respondent company, the animal feed supplement ceases to be feed supplement; it would become animal feed itself. Thereby no differentiation would be left between the animal feed and the feed supplement as is required to be made in terms of the said notification. In order to butteress this proposition the learned Advocate for the respondent company has relied on the following d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gujarat High Court relied upon by the respondent company in the case of Glaxo Laboratories (India} Ltd. v. State of Gujarat. In this respect the following portion from the Gujarat High Court judgment at page 393-394 is quoted below :- Before the Tribunal, it appears to have been stated on behalf of the assessee that these various products have to be mixed in small proportions with the other feed given to cattle or poultry, as the case may be, and that the products can also be given in the same form without being mixed with any other feed. It also appears to have been stated that the products do not constitute food in the conventional sense of ration for maintenance and that they constitute ration for production in the sense that they supply nutrients for nourishing the body. The Tribunal, upon taking these submissions into account and relying upon its earlier decision in the case of Hoechst Pharmaceutical Limited (Appeal No. 21 of 1972 decided on 9th February, 1973), held that the products cannot be classified as cattle-feed or poultry-feed, as the case may be. It requires to be noted at this stage that the Deputy Commissioner of Sales Tax has observed that on studying the lit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the order prepared by Brother, Shri P.C. Jain. I agree with his conclusion that the goods in question in the present appeal merit classification under Item No. 14E of the Tariff Schedule and not under Item No. 68. I would, however, like to add a few words. 14. The Assistant Collector has quoted extensively from the clinical literature and the labels on the products. The leaflet on Bifuran Supplement is strong evidence of the fact that the substance is a medicine or drug. Firstly, there is a warning that it is to be sold by retail on the prescription of a Veterinary Surgeon only. Secondly, the leaflet lists two uses of the substance, one is to prevent coccidiosis and allow natural immunity to develop as well as to safeguard against setbacks to growth. The dosage rate is indicated as follows :- Mix at the rate of 100 g in 200 to 260 kg feed from 2nd to 12th week of the chick s life; where intestinal coccidiosis is a problem continue upto point of lay. The second use is in treatment of coccidiosis with a view to ensure rapid return to full performance. The dosage is indicated as follows :- Mix at the rate of 100 g in 100 kg feed and feed for 7 days only. Preferab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tariff Schedule requires inter alia that a substance to be classified as patent or proprietary medicine under the said Item should be a drug or medicinal preparation. We have already noted that the goods in the instant appeal are listed in Pharmacopoeial literature as drugs. It has also been noted that they are for use in the treatment of, or for the prevention of, ailments in birds. The substances bear registered trade marks though the names of the substances are to be found in Pharmacopoeial literature. They thus qualify to be classified under Item No. 14E. The question of considering their classification under Item No. 68 of the Tariff Schedule does not, therefore, arise. 19. Since one has to go by the definition in Item No. 14E, CET, the certificates from experts and dealers produced by the respondents are of no avail. These may show the trade understanding of the products but when the statute defines a term that definition shall prevail over trace understanding. Likewise, the alleged classification of similar goods, manufactured by other manufacturers is not a consideration which should influence the decision on classification of the subject goods. If similar goods man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eings or animals, including preparations applied on human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes . The definition covers also other substances and devices. For the present purpose it is relevant to note that the term includes all medicines for internal or external use of human beings or animals, intended to be used for treatment or prevention of any disease in human beings or animals. The definition of Patent or Proprietary medicines in Item No. 14E of the Central Excise Tariff Schedule (extracted in Shri P.C. Jain s order) also means any drug or medicinal preparation in whatever form, for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals. The substantial similarity in the two definitions is obvious. Of course, the purpose of the Drugs and Cosmetics Act being to exercise rigorous control over the manufacture of drugs and related substances, the definition is much wider than in the Central Excise Tariff Schedule. But in so far as a substance fits in with the definition in the Drugs and Cosmetics Act as well as the definition in the Central Excise ..... 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