Customs, Excise and Gold Tribunal - Delhi
Veronica Pharmaceuticals vs Collector Of Central Excise on 17 March, 1992
Equivalent citations: 1992(60)ELT488(TRI-DEL)
ORDER N.K. Bajpai, Member (T)
1. This is an appeal against orders of the Collector of Central Excise, Aurangabad ordering confiscation of 95 jars of Neomycin Sulphate Capsules valued at Rs. 12,350 with an option to clear them on payment of fine of Rs. 5000 besides demanding the following duties :-
(a) duty short levied on clearances effected to Government Institutions in terms of Notification 45/82-C.E., dated 28-2-1982;
(b) differential duty on account of wrong availment of exemption under Notification 85/85-C.E., dated 1-3-1985 for the period of six months from 11-12-1985;
(c) duty leviable on quantity of medicines cleared against invoices marked 'A' from July, 1983 to the date of detection;
(d) imposing penalty of Rs. 50,000/- under Rule 173Q.
2. The first question that has arisen is whether Neomycin Sulphate manufactured by the appellants which bears a certain symbol on its labels should be regarded as Patent & Proprietary Medicine under Item 14E of the erstwhile Central Excise Tariff. While the appellants had claimed before the adjudicating authority that the symbol printed on the labels did not attract the mischief of ingredients specified in the Explanation to Item 14E, the Collector has held to the contrary. The label on which the symbol is printed was placed before us during the hearing, and we observe that the symbol is in the form of an inverted triangle within which some mark is also printed. Besides this symbol, the label also has rectangles of three different colours printed in a row and there is no doubt that the two taken together are in the nature of a symbol and monogram used in relation to the medicines for the purpose of indicating a connection in the course of trade between the medicine and the manufacturer. This being so, we consider that the impugned goods are Patent & Proprietary Medicine within the meaning of Item 14E of the erstwhile Central Excise Tariff.
3. During the hearing, Shri Gopal Prasad, learned Counsel for the appellants referred to the decision of the Madras High Court in the case of Indo-French Pharmaceutical Co. Madras v. Union of India and Ors. 1978 (2) E.L.T. J 478 as well as the decision of the Tribunal in the case of Collector of Central Excise v. Bengal Chemicals & Pharmaceuticals Works Ltd. 1989 (43) E.L.T. 591, in both of which it. was held that the mark must be a distinctive mark so as to attract Explanation I of Tariff Item 14E. In the Bengal Chemical case, the Tribunal had rejected the Department's plea that the words "Bengal Chemicals" printed on the P.P. Caps of the bottles constituted a distinctive mark so as to attract the mischief of the Explanation in question because the words "Bengal Chemicals" represented the name of the manufacturer. On the contrary, the learned SDR Smt. Ananya Ray referred to the decision of the Allahabad High Court in the case of Ramsey Phama Private Ltd. v. Superintendent of Central Excise 1983 (12) E.L.T. 78 in which it was held by the High Court that calligraphic types used for the name "Ramsey" as distinct from the ordinary block letters together with the geometrical design of the circle in which the word "Ramsey" is printed both vertically and horizontally constituted a distinctive design so as to distinguish the medicines manufactured by the petitioners from the medicines manufactured by others. Thus, the criterion laid down in these decisions cited before us is whether a distinctive design is used which would distinguish the medicines in question from those manufactured by others. If this test is applied, the symbol in the form of inverted circle in sky blue colour with a mark inside and coloured rectangles of three distinct colours in a row constituting a design do indicate a distinctive mark on the labels of the appellants. The Collector has, therefore, correctly held that Neomycin Sulphate Capsules manufactured by the appellants on which labels with distinctive design were affixed was a Patent & Proprietary Medicine and we uphold that order.
4. The other grounds taken in the appeal before us are those which were also taken before the adjudicating authority but he does not appear to have considered them properly and has passed an order without dealing with the submissions made before him. One of the allegations in the show cause notice was that the value of clearances under invoices marked 'A' had not been taken into account by the appellants and duty was therefore demandable on such clearances. The appellants had taken the plea in their reply to the show cause notice that such goods had been supplied by a Bombay firm and the goods were either exempt from duty or appropriate amount of duty had been paid on them. We observe that without looking into this aspect of the matter, the adjudicating authority has relied upon a statement recorded from one of the partners of the appellant firm and concluded that the goods were non-duty paid. It is necessary for the adjudicating authority to have examined this plea even though it was made later in reply to the show cause notice and was contrary to what had been stated at the time of visit of the departmental authorities to the manufacturing premises of the appellants. Similarly, the other plea taken by the appellants before the adjudicating authority as well as before us was that certain clearances were made to the Sales Office against Gate Passes and these should be excluded from the calculation of the amount of duty demandable from the appellants. The third plea was that besides eligibility to exemption under Notification 45/82-C.E., dated 28-2-1982, the appellants were also entitled to the Small Scale exemption under Notification 85/85, dated 1-4-1985 and they had the option to choose between the two. This aspect of the matter has also not been considered by the Collector. His order is therefore, liable to be set aside for non-application of mind on all these counts, while, at the same time, upholding the liability to duty on Neomycin Sulphate Capsules manufactured by the appellants as a Patent & Proprietary Medicine. We therefore set aside the order and refer the matter back to the Collector of Central Excise, Aurangabad for fresh adjudication after taking into account all the pleas which were raised before him and after granting hearing to the appellants before passing an order. There is also a ground in the appeal that the basis of calculation of duty has not been indicated and the appellant has, therefore, not been in a position to deal with the allegations. The Collector is directed to work out the calculation which we find missing from Annexure-II to the show cause notice. The work-sheet shall first be supplied to the appellants based on which they would be at liberty to make representation which should be considered before the order is finally passed.
5. Thus, the appeal is allowed by remand to the extent indicated in the preceding paragraph.