Customs, Excise and Gold Tribunal - Delhi
T.M. Thakore Pharmaceutical ... vs C.C.E. on 19 January, 1998
Equivalent citations: 1998(99)ELT536(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The appellants herein are licensed manufacturers of P & P medicines falling under Chapter 30. In addition to their own manufacture, they are also carrying job work on loan licence basis on behalf of their customers. They filed classification lists for the following three products:
(1) Povidone - Iodine Ointment USP (2) Povidone - Iodine Solution USP - Classification list dated 15-1-1990 (3) Flucinalone Acetonide Ointment BP Classification list with effect from 15-7-1989, claiming classification under sub-heading 3003.20 at nil rate of duty.
2. On scrutiny of the cartons of the ointment and the labels for the solution submitted by the appellants, it was found that the cartons /labels bore on them certain symbols/markings in black and red colours in case of CL No. 21/89 and black and brown colours in the case of CL No. 37/89 which appeared to be in the nature of symbols/markings used for the purpose of indicating a connection in the course of trade between the said medicines of the assessees/appellants. In view of the above, it appeared that the products were classifiable under sub-heading 3003.10 as P & P medicines in view of Chapter Note 2(ii) of Chapter 30 of the Central Excise Tariff. The Assistant Collector rejected the explanation of the assessees that these symbols/markings had been printed only to assist their workers in sorting out the supplies made to Government hospitals and supply to other customers, and upheld classification of all the three products as P & P medicines under sub-heading 3003.10 attracting Excise duty at the rate of 15% and Special Excise duty at the rate of 5%. The lower appellate authority confirmed the order of the Assistant Collector and hence this appeal before us.
3. The appellants have asked for a decision on merits; hence we have carefully considered the written submissions filed by them and heard Shri J.M. Sharma, learned DR. The appellants explanation that the markings on the cartons/labels were not made with any purpose of indicating any connection in the course of trade between the products and the assessees but only to make it convenient to their workers to store, stock in their godown for hospital supply. They stated that they had supplied the products in dispute to Government hospitals only and they had not supplied to the trade with generic name. The markings on the cartons/labels are " !! ". There is nothing in the above symbol/markings to establish any connection in the course of trade between the products and the manufacturers namely the assessees. We have perused the judgment of the Apex Court in the case of Astra Pharmaceuticals Pvt. Ltd. v. Collector of Central Excise, Chandigarh reported in 1995 (75) EL.T. 214 in which the Court has held that the mark 'AP' or 'Astra' on the container or packing of the products manufactured by the appellants before the Supreme Court was used to project the image of the manufacturer and did not establish any relationship between the markings and the appellants. The Court also noted that the identification was absolutely necessary under the Drugs and Cosmetics Rules. Although the learned DR is correct in pointing out that in the present case the symbols/markings used by the appellants are not for conforming to the requirement of the Drugs and Cosmetics Act or Rules, still it cannot be said that the department has in anyway established that the markings/symbols used on the cartons/labels of the assessees are such as are associated in the course of Trade between the assessees' products and assessees. In the light of the above discussion, we hold that the three products above mentioned manufactured by the appellants herein fall for classification under Heading 3003.20, set aside the impugned order and allow the appeal with consequential relief, if any, due in accordance with law.
S.K. Bhatnagar, Vice President
4. The appellants have filed written submissions. We have, therefore, heard learned DR and perused the records. We have also perused the labels and the markings thereon. The basic question which has arisen is as to whether in view thereof, the items were required to be considered as P & P medicines or not. The appellants have relied heavily on the judgment of Hon'ble Supreme Court in the case of Astra Pharmaceuticals Pvt. Ltd. v. Collector of Central Excise, Chandigarh reported in 1995 (75) E.L.T. 214 (S.C.).
5. In this judgment, Hon'ble Supreme Court has mainly dealt with the difference between a 'house mark' and 'product mark' (or brand name). Since the letters 'AP' or 'Astra' on the container or packing were used to project the image of manufacturer generally and it did not establish any relationship between the mark and the medicine, Hon'ble Supreme Court did not consider the items as P & P medicines. The thrust of the Supreme Court judgment in these cases is the relationship, if any established, between the medicine and the manufacturer by the mark and it is in this context, we have to examine the case before us.
6. In this respect, I find that the learned Collector (Appeals) has observed, inter alia, as follows :-
"Perusal of the printed matter shows that the markings have not been purposelessly designed. The markings/symbols are quite prominent and strike the eye. These have been thoughtfully designed and the only possible objective thereof can be to establish or indicate a connection in the course of trade between the medicine and the manufacturer. It is not necessary that such markings or symbols, to attract the mischief of Note 2(ii) to Chapter 30, should specifically reveal the identity of the manufacturer. As long as a connection or link gets established between the medicine and the manufacturer through the printing or markings/symbol appearing on the cartons or the label in the course of Trade, the provisions of Chapter Note 2(ii) get attracted. Similarly the contention of the appellants that the medicines are only meant for hospital supply and not for sale in the course of trade is not sustainable inasmuch as the expression 'trade' as used in the said Chapter Note does not preclude hospital supplies."
7. I consider that in his observations, learned Collector is correct to the extent of pointing out that these markings are prominent and strike the eye and have been thoughtfully designed. He is also correct in pointing out that the fact that the medicines are only meant for hospital supply does not make any difference. Learned DR is also correct in pointing out that it is not a requirement of the Drug Rules but what we have to see is whether the ratio of Hon'ble Supreme Court's judgment is applicable. In this connection, I find that Chapter Note 2(ii) does not confine itself to a registered trade mark or a brand name but also takes within its ambit "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". Therefore, the Collector is right to the extent of observing that the indication of the identity of the person was not essential. All the same, it is not clear on what basis the authorities below have come to the conclusion that the markings of the type made in the present case indicate a connection between the medicine and the manufacturer.
8. I could understand if, for instance, in the case of tea, a red label or yellow label or green label, are certain brands of tea associated with the manufacturer and similarly a symbol like that of a giraffe is associated in the course of the trade with a preparation of a particular manufacturer. Similarly, writing 'paracetamol' along with a house mark or otherwise by itself will not matter but writing 'crocin' or calling the tablet by any other name or mark by which the medicine gets associated with the manufacturer in the eyes of the purchaser in the course of trade would make a difference. But, in this case, no evidence has been led by the Department in support of its contention that the markings of the type indicated on the cartons or their labels and in question here indicated a connection in the course of trade between the medicine and the manufacturer.
9. Therefore, I am of the view that the Department's case has remained unsubstantiated. There is no dispute that the names of the medicines have been indicated by the appellants as Tovidone - Iodine Ointment USP' and 'Povidone - Iodine Solution USP' and these are mentioned in the United States Pharmacopoeia which is one of the recognised Pharmacopoeia mentioned in Chapter Note 2(ii). In the above circumstances, it will only be appropriate to hold that the Department has not been able to prove that the items in question were patent or proprietary medicaments although they were allopathic medicines classifiable under Chapter 30. Therefore, the appellants' contention that they were classifiable under Chapter 30.03. Sub-heading 20 was correct and the classification proposed by the appellants was required to be accepted. The appeal is allowed in view of the above position with consequential relief, if any due, in accordance with law.