9911796707
TMI Blog1980 (7) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. " 2% Adrenaline cartridges 6. " 5% heavy ampules 7. " 4% topical vials 8. " 5% ointment tubes 9. " 2% jelly tubes 10. " 2% Viscous vial 11. Butazolidin 3ml. ampules. 12. Irgapyrin 3 ml. ampules. 13. Irgapyrin 5 ml. ampules. Items 1 to 10 are injections and items 11 to 13 are or a drugs. 2. The petitioner challenges in this petition the validity of the impugned demands made by the Central Excise authorities, on more than one ground. The principal contention which Mr. Nanavaty who appears on behalf of the petitioner has raised is that by virtue of a notification issued by the Central Government, items 1 to 10 have been exempted from payment of excise duty under Item 14E in the First Schedule to the Central Excises and Salt Act, 1944. He has further argued that within the meaning of Sec. 3 read with Item 1 (iii) in the Schedule to the Medicinal and Toilet Preparation (Excise Duties) Act, 1955, these 13 medicinal preparations are not liable to be taxed. In support of his argument, he has indeed invited our attention to Seventh Schedule to the Constitution-in particular to Entry 51 in the State List and Entry 54 in the Union List. Reference to these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nesthetics from the payment of excise duty leviable thereon." 3. The first leg of the argument raised by Mr. Nanavaty is that the Central Government itself has regarded anesthetics as falling under Item 14E and have, therefore, exempted them from the payment of excise duty leviable thereon under Item 14E in the First Schedule read with Sec. 3 of the Central Excises and Salt Act, 1944. The inference which Mr. Nanavaty, therefore, wants us to draw is that the first ten items which are anaesthetics do not contain 'narcotic drugs' or 'other narcotics'. According to him, if they were otherwise not covered by Entry 14E, the Central Government could not have granted an exemption to them. The petitioner in its petition has stated that Items 1 to 10 which it has been manufacturing are local anaesthetics and Items 11 to 13 are broad-spectrum anti-inflamatory and anti-rheumatic range of medicines containing a very small percentage of xylocaine as a local anaesthetic to avoid any pain arising out of the administration of drug. These averments made on behalf of the petitioner have not been controverted therefore, undisputed fact that whereas Items 1 to 10 are local anaesthetics, Items 11 to 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of applicability or otherwise of Item 1 (iii) in the Schedule to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955. Even then, the argument raised by Mr. Nanavaty cannot be said to be irrelevant. While construing Entry 1 (iii) in the Schedule to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, we have got to bear in mind the behaviour of the Central Government in granting exemption to first ten medicinal preparations for payment of excise duty, under Item 14E of the Central Excises and Salt Act, 1944. 5. We now turn to Item 1 (iii) itself. It renders liable to payment of excise duty the medicinal preparations which contain 'narcotic drug' or 'narcotic' but do not contain alcohol. It is nobody's case that any of these 13 preparations contain alcohol. Therefore, it is not necessary for us to dwell on that aspect at all. 6. `Narcotic drug' or 'narcotic' has been defined by the Act. At the relevant time in respect of which impugned demands have been made, 'narcotic drug' or `Narcotic' was defined as follows by Sec. 2 (h) : "`Narcotic drugs or 'narcotic' means a substance (other than alcohol) which when swallowed or inhaled by, or injected i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of various central nervous system centres sub-serving sensation, muscle activity, respiration, circulation other autonomic and visceral functions and mental activity.' At page 920A, this is what has been stated: 'A local anesthesia or conduction block has enjoyed a sustained popularity for relief of surgical pain of minor operations ... The local anaesthetics produce anaesthesia by preventing the depolarization of the nerve-fibre membrane, thus hindering the conduction of nerve impulses. Infiltration of an area or the body with a local anaesthetic prevents perception or sensory simuli by nerve endings in the area and blocks conduction of impulses over nerve fibres passing.through the area.' This distinction between a general anaesthetic and a local anaesthetic makes it clear that the latter does not affect the central nervous system. It only benumbs a local area. In order to be a 'narcotic drug' or a 'narcotic', it is necessary that it must affect the central nervous system and produce drowsiness, sleep, stupefaction and insensibility. 8. In Steadman's Medical Dictionary, 1968-Reprint, Anaesthesia has been defined as loss of sensation in a part, or in the body generally, indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rug by producing that effect after all has been said and done. An after-effect is not a direct proximate ordinary or a normal effect. An after-effect in this context is, in our opinion a side effect which is produced after the utility of the drug for the purpose for which it has been administered is exhausted. Therefore, it is difficult to say that the first ten medicinal preparations which are known by the name of xylocaine (indeed in different forms) contain a "narcotic drug" or "narcotic." 10. Mr. Patel has then invited our attention to Pharmacology and Pharmacotherapeutics by Satoskar and Bhandarkar. Third Revised Edition, 1973, in which reference has been made to Lignocaine which is also another name for xylocaine. It has been stated in that context that it is recommended inter alia, for nerve blocks and may cause drowsiness but produces no action on the blood vessels. According to Mr. Patel, since xylocaine produces drowsiness, it answers the description of a narcotic drug or a narcotic as given in the definition of that expression in the said Act. It is necessary to read closely what the authors have said in that behalf They do not say that it causes drowsiness. They s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. It may not produce such symptoms when it acts on human body as a component of a particular medicinal preparation which has been manufactured out of several other things. 12. If we were required to examine the concept of a 'narcotic. drug' or 'narcotic' in the light of scientific data available in that behalf, we would have indeed given greater weight to the argument which Mr. Patel has advanced. In the instant case, we are not required to do so because we are required to examine the characteristics of a `narcotic drug' or a 'narcotic' as specified in section 2 (h) of the said Act at the relevant time. It is wrong to say, therefore that though a 'narcotic drug' or a 'narcotic' is one which should produce drowsiness, sleepiness, stupefaction or insensibility, it need not necessarily produce such symptoms when it forms a component part of a medicinal preparation which is made up of several other things. When a 'narcotic drug' or a 'narcotic' which is a component part of a medicinal preparation ceases to produce the symptoms laid down in the definition of that expression given in Section 2 (h) of the Act, it ceases to be a `narcotic drug' or a `narcotic'. What other characteristi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Nanavaty is well-founded and must be upheld. It is not open to the central excise authorities to levy throughout the country on a particular medicinal preparation excise duty under the said Act and to collect it from some of its manufacturers and not to collect it from others. 15. In reply, Mr. Patel who appears on behalf of the State of Gujarat has argued that since the proceeds of the excise duties collected under the said Act to the State Exchequer, a comparison between what is done in two States cannot be made. The argument raised by Mr. Patel is misconceived. It is immaterial to which Exchequer the proceeds of the tax goes. The fact remains that the said Act imposes an all India levy which must be uniformly collected from all the concerned manufacturers in the country. Therefore, the action of the central excise authorities in levying and collecting the excise duty on 13 medicinal preparations which the petitioner has been manufacturing is hit by Article 14 of the Constitution. 16. The next argument which has been raised by Mr. Nanavaty turns upon the promissory estoppel. The facts which he has stated in order to attract, the applicability of the doctrine is that by is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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