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TMI Blog1984 (8) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... ed five demand notices listed below :- S. No. Period of demand Total amount of duty involved Date of demand Rs. 1. 1-9-1979 to 31-5-1980 54,430.22 11-6-1980 2. 1-1-1978 to 31-8-1979 88,694.30 17-6-1980 3. 1-6-1980 to 31-8-1980 27,785.70 9-10-1980 4. 1-9-1980 to 31-12-1980 33,945.07 24-1-1981 5. 1-1-1981 to 30-4-1981 25,548.41 8-5-1981 2,40,403.70 2. Under Notification No. 116/69-C.E., dated 3-5-1969 exemption was given under rule 8, sub-rule (1) of the Central Excise Rules, 1944 of duty in excess of 21/2% ad valorem to patent and proprietary medicines falling under item 14E containing 'chloramphenicol and its esters for oral and parenteral use'. This notification was amended by Notification No. 106/80-C.E., dated 19-6-1980 by which the exemption became total, the manufacturers claim that their preparation K V.S. was entitled to this exemption. It appears that the assessment was being made under this notification till the demands we have mentioned above were issued by the central excise because they thought that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanced before us at the hearing of the appeal. The affidavit by Mr. Bharwada, similarly states the history of the case leading to the demand and this appeal which we are hearing now. Both these persons are employees of M/s. Mac Laboratories, Mr. Bharwada as Accountant and Mr. Zaveri working in the Research and Development Department of the Laboratory. The affidavit by Dr. Tank also expounds the meaning of the word parenteral and it also expresses his opinion in the shape of answers to questions to explain different methods of administration, effects, routes and the research and development that have gone into alternative routes of administration of drugs, the effect on metabolism and the efficacy of new route administration of drugs already in use. Similarly, the affidavit given by Mr. C.Y. Dewasthali, Superintendent of Central Excise is really an exposition of his opinion and contains the opinion of technical authorities of the Food and Drug administration, the Dy. Chief Chemist of the Department. It cites a number of books that deal with drug administration, and their routes. It is in this affidavit that the department said for the first time that the drug had only a topical loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent types of this administration such as anatomical injection, epifascial injection, intracutancous injection, jet injection, and many others. A paper written by Dr. Mario Ferruzzi on the use of chloramphenicol by vaginal route in the treatment of annexitis were annexed to the affidavit and contained very interesting reports of-experiment and research conducted in the administration of the antibiotic and narrated six cases of acute, sub-acute, inflammatory forms of the female genital apparatus treated with CAF (chloramphenicol) ovular suppositories. The paper also reports a case of typhoid fever in a 30 year old woman who, after treatment with CAF by the oral route without any response, was subsequently treated with CAF ovular suppositories by the vaginal route after suitable douching with sterile water. The paper reported an improvement in the clinical symptomatology and abatement in temperature. Continuing the treatment, the patient was considered cured. The other five cases reported in the paper all deal with inflammations and laceration of the genitals or a case of abortion in the third month which resulted in profuse leucorrhea, corpusuteri slightly increased in size. Anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to be absorbed percutane-ously: they may be inhaled for direct action on the bronchial tree or to be absorbed into blood at the alveoli: they may be injected into or near the spinal canal : they may be introduced intravaginally." 9. The Pharmaceutical Handbook edited by Ainley Wade (The Pharmaceutical Society of Great Britain) defines parenteral as "not by way of the alimentary tract; administered by a route other than that of the alimentary tract". The next one quoted is the Faber Medical Dictionary edited by Sir Cecil Wakeley which defines parenteral "(1) Outside the intestinal tract; (2) Relating to administration of a substance by a way other than that of the alimentary tract e.g. by subcutaneous, intramuscular or intravenous injection." The same article defines parenteral diarrhoea as diarrhoea in infants when caused by a disease outside the alimentary tract e.g. by a respiratory infection. Black's Medical Dictionary edited by William A.R. Thomson defines parenteral as the word applied to the administration of drugs by any route other than by the mouth or by the bowel. A book called Churchill Livingstone Pocket Medical Dictionary, Nacy Roper, defines parenteral as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry defines parenteral as "otherwise than through the alimentary canal". in Butterworth's Medical Dictionary the word means "Introduced subcutaneously, intravenously or by any route other than by way of digestive tract". The Complete Medical Guide -Benjamin P. Miller at P. 576 describes parenteral as "Not in the intestine-designates substances introduced through the mucous membrances. skin blood, or other means than the intestine". 13. He describes how vaginal suppositories are applied. The suppositories are semi-solid and are introduced into the vagina by hand. They are made of wax-like material which melts at the temperature of the vagina. The medicine may then get absorbed into the systems by or through the epithelium or mucous membrane lining the vagina, and also act locally. He describes how work on this subject of vaginal administration of drugs had encouraging results. A book Drug Delivery Systems published by Oxford University Press in 1980, the chapter contributed by Chien on "Controlled Drug Release from Polymeric Systems" reviews the progress made on 'Intravaginal drug delivery systems'. Some passages are quoted from the book to show that this route can be employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estine. 14. Dr. Tank quotes from the Annual Reports in Medical Chemistry Vol. 18, sponsored by the Division of Medicinal Chemistry of the American Chemical Society and published in 1982, mentioning Chapter 28 at p. 275, contributed by Norman Henderson, which relates that drugs which are inactivated in or poorly absorbed by the gastrointestinal tract and which are subject to extensive first pass metabolism are usually administered parenterally. Various body orifices and organs are explored as alternative routes of administration of certain drugs. From p. 282 these words are reproduced- Uterine/vaginal intrauterine and intravaginal devices have been in use since the early 1970's to deliver contraceptive steroids to the target organ. The book by Chien contains individual chapters on intrauterine devices, intravaginal devices and devices for esterus control in animals. A recent report by Morimoto and co-workers on the vaginal absorption of insulin from polyacrylic acid gels indicates that this route also has potential for the systemic administration of drugs. 15. The learned Counsel for M/s. Mac Laboratories, Mr. Narasimhan reiterated the views expressed by various affidav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ything conclusively to rely on the words "other than parenteral" in Schedule 'C-1' of the Drug Rules, 1945, because classification was for the purpose of control on import, manufacture, distribution and sale of drugs. The classification under the Drug Rules was done more than 10 years before the concessional rate of duty was notified. Schedule 'C-1' involves less stringent regulations and hence the appellants did not contest this classification. In any case, classification of a patent medicine for the purpose of drugs control is not relevant or binding in central excise. He cited the following in support :- (1) Indian Chemicals & Pharmaceutical Works v. A.P. A.l.R. 1966 S.C. 713. (2) S.T. Commr. v. Jaswant Singh AIR 1967 S.C. 1454 (at p. 1457). (3) J.K. Steel v. U.O.I. AIR 1970 S.C. 1173 (Para 29) = 1978 E.L.T. (J 355). (4) The discussion at page 299 to page 301 of Taraporewala's Law of Central Excise Second edition. 18. The learned Counsel's last submission was that an estoppel operates against the central excise authorities. According to the Drugs (Price) Control Order, only the excise duty that will be charged in the ultimate price to the consumer can be added as excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or passage, the other, through the skin bypassing the alimentary canal. The most common form of this second mode of application is an injection. Injections can be given directly into the blood vessels or into the muscles or given subcutaneously. The two methods have their own separate uses : the same drug can be applied either way depending on the disease to be treated and the best method that has been devised for combating the disease. A drug that may be administered by the mouth, can also be administered as an injection directly into the body. A third mode of application -local or topical, is also employed when the ailment affects only a localized spot on the surface of the body. He pointed out to definitions in Remington's Pharmaceutical Sciences which have described parenteral administration of drug as an injection given through layers of the skin or mucous membrane. He also referred to the various technical authorities cited by the appellants themselves to argue that a parenteral administration cannot be given but by an injection. He read various dictionaries and books of reference to illustrate that parenteral administration is always understood to be by routes such as intrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age. The assessee never had a chance to deal with or refute this contention, and it cannot be allowed to be raised now by the Counsel for the department. He further said that it would be wrong to see in their declaration of kemicetine suppositories under Schedule `C-1' as meaning that they had been classifying their product under this Schedule. In all likelihood, this had been made by the drug control authorities but they had nothing on record to prove this, as this is a very old practice, the origin of which is no longer known to them. It makes no difference to their manufacture since they had given the full details to the drug control authorities and if they choose to put their preparations under Schedule 'C-1' it made no adverse effect on the manufacture and so nothing was done about it. But when an exemption was given to a medicine which, in their view, was a parenteral administered preparation, they saw no reason why they could not claim the exemption when they are entitled to it. The central excise are required to verify and satisfy themselves before they approve the classification list. If they did not, it was not the factory's fault. The manufacturers cannot be accused of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itates the stomach, causing the patient to void it. In small children, a bitter tasting medicine will be spat out. In this case, the rejection is in the very primary stage of administration. Another disadvantage is that the patient may not co-operate. This can happen when the physician is not present to administer the medicine but leaves it to the patient to administer it to himself. If the patient, for whatever reason, dislikes the medicine, either because of its taste or its affects, he may not administer the medicine. Another disadvantage of oral administration is that its affects are usually not felt until the lapse of, in some cases, a considerable time. Administration of medicine through the other end of the alimentary canal-the anus-has only limited application because the drugs administered by this route sometimes will not reach into the higher intestines. Frequently, the medicines are inactivated by the body fluids, the enzymes and other digestive secretions. At other times, the drug has deleterious effects on intestinal walls, flora and fauna. 25. An injection, on the other hand, overcomes many of the disadvantages of administration by or into the alimentary canal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and other foreign matters normally present in the enteral tract. In all the thirties cited by M/s. Mac Laboratories, and the dictionaries quoted by them, the word parenteral has been defined variously as the method of administration of drug when the drug is introduced intravenously, subcutaneously or by any route other than by way of the digestive tract, or introduced not into the intestines but introduced through the mucous membranes, skin, blood even by injection of a fluid into the spinal fluids. Various definitions and explanations in the authorities also speak of implantation of pellets under the skin to be absorbed during periods that may range up to a few months. They are not even reports of injections to the heart muscles in an extreme case. All the dictionaries agree that parenteral refers to introduction of a medicine by a route other than the alimentary tract. 27. The appellants have taken these definitions to mean that the word parenteral therefore, refers to any mode of administration which is not by way of the gastrointestinal or alimentary tract. They understand the word to refer to administration whether it is injection or application by any other method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle; the chapter gives an article on Parenteral Administration. This is how the book describes the methods. The term parenteral administration (par-beyond, enteral-intestinal) implies that the drug is given by a route which takes it directly into the body fluids, bypassing the preliminary process of transport through the intestinal wall or pulmonary alveoli which is necessary when drugs are ingested, inhaled or placed in the rectum. With all forms of parenteral administration, sterile precautions are necessary. Some of the parenteral administrations discussed, are subcutaneous administration, intramuscular injection, intraperitoneal injection. In a sub-article Microinjectiun and Microiontophoretic administration, the book relates that these are the most refined forms of local administration yet devised for use in the laboratory. They permit the application of minute quantities of drugs directly to individual neurones in the central nervous system; however they have no clinical application being of value largely to the laboratory worker. There is also a paragraph on Vaginal Administration reproduced here- The drug is presented in the form of a nessary or tablet or it may be use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n et al., 1978). 34. There can be no doubt whatever from these paragraphs which have been relied upon by the appellants that when they speak of vaginal drug delivery by which the drug is absorbed, the drug spoken of is a systematically active steroid hormone, and is said to be effectively absorbed through the vaginal mucosa. The drug being a hormone, its effects will depend on its systemic absorption, although the administration of the progesterone was by means of a suppository. This route appears to have been explored because progesterone was found to be orally inactive. Even for the contraceptive, the article describes the advantage of the continuous infusion when the vaginal route is used, as it can prevent the possibility of systemic toxicity that can result from the surging and ebbing plasma drug levels. The systemic absorption and action of the drug is beyond doubt. In other words, the paragraph describes a systemic drug administration through the route of the vagina. 35. The same book carries the following sentences- Thus, the vaginal route may be of great value with drugs like progesterone and estradiol, which have poor bioavailability when taken orally because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drug to penetrate into the body system, thereto act and to be physiologically taken up and become integral with the system in such a manner that after a lapse of a period, depending upon the speed and degree of penetration/absorption, rejection whether voluntarily or involuntarily becomes impossible. The appellants are mistaken when they speak of their kemicetine vaginal suppositories as being parenterally administered. It was argued by the learned Counsel that the term parenteral diarrhoea has been used for a diarrhoea caused by agents outside the intestinal tract: but this is to misunderstand the implication of the description. Diarrhoea is always associated with the entric system, beginning and ending in the alimentary tracts, being caused by organisms taken into the alimentary tract by the subject. When the diarrhoea is caused by reasons outside the alimentary tract, it could be described as a parenteral diarrhoea, but that is all for the purpose of differentiating it from the diarrhoea normally encountered in clinical observations. For reasons that are obvious, the symptoms are enteral in their manifestations even when the implicated agents are lodged outside the alimentary sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pses". The first page of the paper announces that the suppositories are "for treatment of infectious vaginitis" and its indications are "infectious, acute and chronic vulvovaginitis, cervicitis, cervical erosion". In an inner page of the paper is reported a case of treatment with KVS in a research project. It reports "The local treatment was given by pessary of 0'25 G Chloramphenicol which has a pH of 5.7, and the base is used as a mixture of polyethylene glycols. Unlike Tetracyclines, Chloramphenicol pessary had no direct effect on the vaginal epithelium in the form of massive desquamation. In our study, the treated group had clearer smears, providing better hormonal interpretation than the untreated group". (This is an abstract from : Acta Cytological, Vol. 19, No. 4, 1975 of the International Academy of Cytology). The epithelium is a non-vascular tissue forming the outer layer of the mucous membranes in animals. It should be noted that the report speaks of the treatment with the pessary as a local treatment. 40. The infections treated with kemicetine vaginal suppositories are all local infections and inflammations of the female genital tract. The absorption aimed at i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een dealing with the drug control office as if their KVS were non-parenteral, but the Counsel for M/s. Mac Laboratories said that this was a very old practice for which they no longer bad any record and they are unable to ascertain its origin. In all likelihood this had been done on the initiative of the drugs control authorities but he was not able to vouch for this. The Counsel for the department said that the manufacturers were experts in the field and they would have known the difference in the declaration to the drugs control authorities and to the central excise, and that their declaration to central excise would make all the difference between assessment to full duty and assessment to reduced duty or nil duty. There has been fraudulence in their dealing with the central excise, and therefore, the demands were all in order. 43. If there was fraudulence in M/s. Mac Laboratories' dealings with central excise, we cannot see it in the orders and proceedings before the central excise authorities. None of the show cause notices charged M/s. Mac Laboratories with fraudulence or suppression; they merely say that the party had been clearing the material at concessional rate of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een suppressed etc. etc. We can see none of this in these proceedings. In fact, we would even say that the Assistant Collector exceeded his powers by saying that there had been wilful misstatement and suppression of facts when the notices of demand did not charge the assessee with such malfeasance. It is also a matter of great significance that the proceedings do not invoke the penal provisions of the central excise laws, nor did the Assistant Collector impose a penalty, which we think should be done if an assessee has defrauded the revenue. Non imposition of a penalty is an indication, generally speaking, of the absence of any criminal wrong doing. We are not satisfied by the proceedings that the Central Excise have succeeded in bringing home a charge of suppression or misstatement. They made no attempt to establish such a charge. They merely profess they have discovered one. Unless a charge of this kind is explicitly proved, we will not be able to accept it. 45. An objection was raised by the learned Counsel for M/s. Mac Laboratories that the argument of the department that the suppositories were topical or local in their application was a new argument and should not be per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der notification. This classification claimed by the assessee was accepted by the central excise which approved them until it changed its mind to say that the preparations were not parenterally administered. There is much to be said for the assessee's argument that the department had the duty to satisfy itself and make enquiries before approving the classification lists. If it did approve them, it cannot blame the assessee later on for misstatement. The learned Counsel for the department countered this argument by saying that the officers of central excise were not experts and cannot always determine the nature of the products. In our opinion, this is a weak argument and will not stand scrutiny. The short answer is that, since the assessment depended on the nature of the product, the central excise officers must know what they are about, unless of course, they maintain that they can approve anything without verification. The very fact that they did discover and change their mind about the nature of the drug proves that the officers can do it and we know for a fact that they have done it in countless instances in the past by issuing demands after approving a classification in one ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the mere change of the opinion without any basis, is not sufficient to conclude that the earlier orders were incorrect". It is not so here. There was strong basis for central excise demanding duty and for saying that the previous assessment was erroneous. The Court's decision quoted here does not debar the action taken by central excise in respect of M/s. Mac Laboratories 50. The next case quoted by the learned Counsel for M/s. Mac Laboratories, in Bhor Industries v. Union of India - 1980 (6) E.L.T. 752. The Assistant Collector had classified certain goods in a certain manner and this was challenged in appeal. At this stage, the Collector sitting in appeal set aside the order of the Assistant Collector and ruled in favour of the manufacturer. The central excise, however, reopened the proceedings by issuing a fresh show cause notice. The fresh notice to show cause used languages found in proceedings of the conference of the Collectors of Central Excise. The Court criticized the reliance by central excise adjudicating authority, on decisions taken in the Collectors' conference. The Court, of course, went into the merits of the assessment of the goods and came to its own conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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