TMI Blog1984 (9) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... 1934 which was then in force. The rate of duty payable under Tariff Item No. 87 was 60 per cent. The Customs authorities, however, did not accept this classification. They classified `Plasdone under Tariff Item 82(3) which deals with artificial or, synthetic resins. Under Tariff Item 82(3) the goods were assessable to customs duty at the rate of 100 per cent with countervailing duty at the rate of 36 per cent. The petitioners paid duty under Item 82(3) under protest. They submitted an application in March 1972 claiming a refund of ₹ 1,21,816.80 being the difference between the duty paid under Tariff Item 82(3) and the duty which would have been paid under Tariff Item 87, and countervailing duty. In their application the petitioners stated that Plasdone was a pharmaceutical grade material and it was used as an adjuvant in their pharmaceutical preparations. The 2nd respondent, namely, Asstt. Collector of Customs by his order dated 15th December, 1972 rejected the application of the petitioners. The petitioners preferred an appeal to the Appellate Collector of Customs. The petitioners appeal was rejected by the Appellate Collector of Customs by an order dated 18th November, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed as white to creamy white powder and it is put in the category of a pharmaceutic aid (tablet binder and coating agent ; viscosity-increasing agent). It is soluble in water, in alcohol and in chloroform ; and it is insoluble in ether. Similarly the National Formulary also describes Povidone as a synthetic polymer, pharmaceutical grade and it is put in the category of dispersing and suspending agent. The British Pharmaceutical Codex 1973 describes Povidone as the pharmaceutical grade of polyvinyl pyrrolidone. It states as follows : POVIDONE SYNONYM : Polyvinyl pyrrolidone : Povidone is the pharmaceutical grade of polyvinyl-pyrrolidone. There are two types, one suitable for oral ingestion and typical application and the other for parenteral administration. The standard in this monograph applies only to the former type used as pharmaceutical adjuvant in oral preparations; additional requirements are necessary for the injectable material . * * * * Uses. The type of povidone covered by the above standard is used in concentrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed here as a polyvinyl resin although it is soluble in water. 8. In the book Water-Soluble Resins edited by Davidson and Sittig, Chapter 6 deals with Polyvinylpyrrolidone. It is described as a relative newcomer among the commercial water-soluble polymers. The fact that PVP merits a chapter in a book on Water-Soluble resins shows that it is considered as a resin. It also shows that resins can be soluble in water. 9. The Condensed Chemical Dictionary , 10th Edition Revised by Hawley defines `resin, natural and `resin, synthetic . `Resin, synthetic is defined as A man-made high polymer (q.v.) resulting from a chemical reaction between two (or more) substances, usually with heat or a catalyst . This definition includes synthetic rubbers and silicones (elastomers), but excludes modified, water soluble polymers (often called resins). There is a note which says, Because the term `resin is so broadly used as to be almost meaningless, it would be desirable to restrict its application to natural organ-soluble, hydrocarbon-based products derived from trees and shrubs. But in view of the tendency of inappropriate terminology to `gel irreversibly, it seems like a losi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this evidence was not produced by the petitioners because they have originally contended that this item should be classified in the residuary Entry 87. But the petitioners could have produced evidence or at least filed some affidavits to this effect in the present petition. That has not been done. From the material on record it is not possible to hold that PVP of pharmaceutical grade is known in the trade as a `drug and not as a `synthetic resin . 14. Moreover, the end-use of a product is irrelevant for the purpose of interpretation of a tariff entry. The Supreme Court in the case of Dunlop India Ltd. v. Union of India and others reported in A.I.R. 1977 S.C. 597 on p. 607 was required to consider whether V.P. Latex should be classified as rubber raw or as a synthetic resin . The Court held that the end-use of an article is absolutely irrelevant for the purpose of its classification under a tariff entry where there is no reference to the end-use of the article in the entry itself. The article must be judged on the basis of its nature at the time of its importation. Its ultimate use is not relevant. The use of PVP in pharmaceutical preparations is, therefore, stric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tics Act, 1940, (23 of 1940), which is used as such, or as an ingredient in any formulations. Under the Second Schedule to this Order a list of bulk drugs is annexed. Under the heading Plasma Expanders and Transfusion Solution Item (2) is Polyvinyl Pyrrolidone. Since Polyvinyl Pyrrolidone of injectible grade is used as `plasma expander , this classification is of no assistance to the petitioners who have imported a non-injectible grade of polyvinyl Pyrrolidone. 17. In fact, it is not the case of the petitioners that every grade of Polyvinyl pyrrolidone can be classified as a `drug . There are grades which are not pharmaceutical grades at all; and it is nobody s case that these grades can be classified as drugs. The petitioners, however, have imported a grade of polyvinyl pyrrolidone which can be used in pharmaceutical preparations. The submissions in the present case are confined to this particular grade of polyvinyl pyrrolidone. 18. Can this grade of PVP be considered as a drug ? The term drug must be understood as it is understood in the trade and in common parlance. There is nothing in tariff Entry 28 which suggests that the definition of drug under the Drugs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for pharmaceutical preparations because it is found to be non-toxic. At page 119 it is stated, The adhesiveness and lack of toxicity of PVP have led to its use in pharmaceutical tablets as a granulating agent or for coating ; Plasdone grade PVP K-30 is sold by General Aniline for this purpose. The classical binders such as starch or gelatin are used in water systems. However, where the ingredients are unstable in water, alcohol-soluble PVP permits granulation . In my view, a material which is physiologically inert cannot be considered as a drug simply because it is an ingredient of a drug or medicine. 21. My attention was drawn to a decision in the case of Ramesh Chemical Industries v. Union of India and Ors. reported in 1980 E.L.T. 598 where the Madhya Pradesh High Court relied upon the definition of drug in the Drugs and Cosmetics Act, 1940 to reinforce its interpretation of an entry relating to drugs in the Central Excises and Salt Act. With all due respect to the Madhya Pradesh High Court, in my view it would not be correct to use an extensive definition given in one Act for interpretation of the same term in another Act, unless there is a reference to such an Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of V.V. Iyer v. Jasjit Singh, Collector of Customs and Anr. reported in A.I.R. 1973 S.C. 194. The Supreme Court in that case was considering two alternative reasonable interpretations of an item in Import (Control) Order, 1955. It observed that correctness of conclusions reached by customs authorities in adopting one reasonable view as against another while interpreting an entry under taxation law, cannot be disturbed. As against this submission made by Mr. Sethna, Mr. Shroff relied upon a decision of the Supreme Court in the case of Dunlop India Ltd. as also the decision of the Supreme Court in the case of Diwan Brothers v. Central Bank of India reported in A.I.R. 1976 S.C 1503 where the Supreme Court has held that in the case of a fiscal statute the provisions must be strictly interpreted giving every benefit of doubt to the assessee. Where two interpretations are possible, the one more favourable to the assessee should be adopted. Hence if an item can be classified under more than one entry, the entry more favourable to the assessee may be considered as the appropriate entry. This argument deals with the manner of interpretation in cases where two rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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