Customs, Excise and Gold Tribunal - Delhi
Hoechst India Ltd. vs Collector Of Central Excise on 6 May, 1992
Equivalent citations: 1992(39)ECC96, 1993ECR380(TRI.-DELHI), 1992(62)ELT165(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. By this appeal the appellants challenge the Order-in-Original dated 9th October, 1984 passed by the Assistant Collector of Central Excise, Division V, Bombay-II and Order-in-Appeal dated 8th January, 1987 passed by the Collector of Central Excise (Appeals), Bombay.
2. The appellants' company filed their Classification List inter alia in respect of their product Tripartigen Plates on 30th November, 1981. The said product comprises of an ordinary plate on which a solution of Sera is added. The said product is said to be a biological substance intended to be used for diagnosis of disease in human beings. On receipt of the said Classification List, the Assistant Collector approved the same on 23rd January, 1982 and accepted the Classification made by the appellants under Tariff Item 14E of the Central Excise Tariff. Since the said product was covered by Notification No. 33/62-C.E., dated 24th April, 1962, the appellants company was not paying any excise duty on the said product. However, it appears that subsequent to the approval of the Classification List, as aforesaid, two Show Cause Notices were issued to the appellants calling upon them to pay the duty specified therein on the ground that the said product is assessable to duty under Tariff Item 68 and, therefore, the appellants were not entitled for the benefit of the Notification No. 234/82-C.E. The appellants contested the Show Cause Notices on merits. They also contended that the demand was time-barred for the period from January 1982 to December 1983 being raised beyond six months. However, the Assistant Collector negatived the said defence and held that the said product Tripartigen Plates be classified under Tariff Item 68 and he assessed the duty accordingly. Against that Order of the Assistant Collector the appellants filed their appeal before the Collector (Appeals), who vide his impugned Order-in-Appeal affirmed the findings of the Assistant Collector that the said product is classifiable under Tariff Item 68 and, therefore, benefit of the said Notification No. 234/82-C.E. cannot be extended. However, he modified the demand restricting it for a period of six months from the date of the issue of the Show Cause Notice. Hence the present appeal.
3. Arguing on behalf of the appellants, Shri J.R. Cama, learned counsel, submitted that according to the findings of the authorities below, it is clear that, Sera is manufactured by the appellants' company and then formulated by placing the same in a plastic plate (container) which is used for diagnosis of diseases in human beings. But curiously enough, the authorities below denied the Classification of the said product under Item 14E. Elaborating on his submission, he drew our attention to paragraph 3 of the impugned Order-in-Appeal wherein the Collector (Appeals) held that the product in question, namely, Tripartigen, is not a drug used for the treatment of human being. It is at best a diagnostic tool in the sense it is used for determining immunoglobins. He stressed that once it is held that it is a diagnostic tool it comes within the definition of "Drug" and cited the case of Ramesh Chemical Industries v. Union of India, 1980 (6) E.L.T. 598 (M.P.) . In reply, Smt. Ananya Ray, learned SDR, faced with the aforesaid judgment of the Madhya Pradesh High Court left the matter to the discretion of the Bench.
4. We have considered the submissions. The point for consideration in this appeal is whether the product Tripartigen Plates are classifiable under Tariff Item 68 as held by the Department or under Tariff Item 14E as claimed by the appellants. In paragraph 2 of the impugned Order-in-Appeal, the Collector (Appeals) has recorded that "The product is a plastic product with walls in it and with which the patients' sera and control serum are filled and the lid closed. These are immunodiffusion plates for the quantitative determination of immunoglobins". In paragraphs he has also stated that "Taking the question of classification it is seen that the product is not a drug used for the treatment of human being. It is at best a diagnostic tool in the sense it is used for determining immunoglobins". The Tariff Item 14E reads as follows :-
"14E. Patent or proprietary medicines not containing alcohol, opium, Indian hemp or other narcotic drugs or other narcotics other than those medicines which are exclusively Ayurvedic, Unani, Sidha, or Homeopathic Twelve and a half per cent ad valorem.
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 whether 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 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 in Section 2 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955."
From the above, it is clear that, patent or proprietary medicines within Tariff Item 14E must be a 'drug' or medicinal preparation. There is no definition of 'drug' contained in the Act. 'Drug' is, however, defined in Section 3(b) of the Drugs and Cosmetics Act, 1940 as follows :-
"(b) drug includes -
(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals; and
(ii) such substances, (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette."
4.1. A look at the above definition will show that the 'drug' includes not only medicines for internal or external use of human beings or animals but also all substances intended to be used for or in the diagnosis, treatment etc. In the instant case, there is a finding of the Collector (Appeals) himself that the subject product, namely, Tripar-tigen Plates is a diagnostic tool. Therefore, applying the definition of the 'drug', as aforesaid, the subject product namely, Tripartigen Plates' in our considered opinion falls within the definition of 'Drug' and therefore, rightly classifiable under Tariff Item 14E. In this view of the matter, we are supported by the decision of the Madhya Pradesh High Court rendered in the case of Ramesh Chemical Industries, supra. Consequently, the appellants are entitled for the benefit of the said Notification as done by the Department while approving the Classification List on 23rd January, 1982. Thus, there was no cause for issuing the two Show Cause Notices in the present case for reclassification of the subject goods under Tariff Item 68.
5. In the result, we allow the appeal and set aside both the impugned Orders with consequential relief to the appellants, if any.