- (1.) This appeal under Section 35-L of the central Excises and Salt Act, 1944 ('act' for short) raises two important questions of law, one relating to construction of Item 14 E of the central Excise Tariff levying duty on patent and proprietary medicines and other the scope of proviso to Section 11-A of the Act
(2.) For purposes of duty, patent and proprietary medicines were classified in relevant period in two broad categories one, which were dutiable undertariff Item 14-E and other which fell under the Residuary Item 68. The latter were wholly exempt from duty under Notification No. 55/75 dated 1/3/1975. The appellant manufactured pharmacopoeia] and non-pharmacopoeial medicines. One of the items manufactured by the appellant was 20% Dextrose injection. It is a trade name in the Indian pharmacopoeia. It being one of the medicines specified in pharmacopoeia it was wholly exempt from duty. An item which fell under Tariff Item 68 and was wholly exempt from duty was further exempted from operation of Rule 174 and no central Excise licence to manufacture it was required to be taken out. The appellant, therefore, did not obtain any licence and cleared the Dextrose manufactured by it without paying any duty since the date of manufacture in December 1978 till 23/01/1982 when notice was served on it for showing cause as to why Dextrose manufactured by it may not be subjected to duty under Tariff Item 14-E as even though it was pharmacopoeial product, yet the label used on the packing and the container bore a monogram which indicated a connection between the medicine and the appellant
(3.) To determine if the appellant was liable to pay duty on Dextrose injection manufactured by it, it will have to be examined if it fell under Tariff Item 14-E extracted below : Explanation ii.- "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 monogram 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 trademark under the Trade and Merchandise Marks Act, 1958 (43 of 1958 or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person, having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person. Explanation II. 'alcohol', 'opium', "indian Hemp", "narcotic Drugs" and 'narcotics' have the meanings respectively assigned to them 87 in Section 2 of the Medicinal and Toilet Preparations (Excise Duties) Act. 1955 (16 of 1955. The entry is in two parts, one the main and other explanatory. The main part negatively excludes those medicines which contain any of the ingredients mentioned in it or are Ayurvedic, Unani, Sidha or Homeopathic medicines. The range of patent and proprietary medicines thus having been determined by the main part the explanation spells out the exact scope of the entry by first widening its ambit by including any drug or medicinal preparation in whatever form and used for any ailment in human beings or animals, then carves out an exception in favour of any pharmacopoeial medicine or medicines which have been mentioned in a publication issued by the central government, but excludes again from it those medicines which even though mentioned in pharmacopoeia are identified by a monogram or a symbol, signature or invented words so as to establish a relationship between the producer and the medicine. To put it simply, all those patent and proprietary medicines which are mentioned in pharmacopoeia are excluded from the entry unless the manufacturer or producer by use of any distinctive mark establishes connection with the medicine. In other words, all those medicines which either bear a name which is not specified in the pharmacopoeia or which is a brand name and that brand name is used by any symbol, monogram or signature so as to establish a relationship between the medicine and the person manufacturing or selling it then such patent or proprietary medicine would be covered in it. The purpose appears to be that if a manufacturer manufactures medicines which were mentioned in pharmacopoeia then it was not liable to pay any duty. But if it produced a medicine which carries its own name which was not mentioned in the pharmacopoeia, then it was liable to pay duty under this item. That is, a patent or proprietary medicine to attract levy under this tariff item must either be a medicine which was not specified in a pharmacopoeia or other publication and carried on it or its container name of the produce by symbol or invented name etc. A medicine of which the producer is the proprietor and it is known by its name would be covered in this clause. The other class of patent or proprietary medicines to which this tariff item applies are those medicines which have a brand name or a registered trademark under the Trade and Merchandise Marks Act and carry such mark, symbol or monogram as to establish relation between medicine and producer or manufacturer. That is, the writing or monogram on the medicine must establish that it was the producer or the manufacturer who was proprietor of the medicine.;