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Macleods Pharmaceuticals Ltd, Govind Ruia Versus The Union of India, The Commissioner of Central Excise, The State of Maharashtra, The Commissioner of State Excise

2017 (9) TMI 877 - BOMBAY HIGH COURT

Classification of goods - whether formulations containing less than 135 mgs. i.e. 65 mgs of Dextropropoxyphene can be classified as 'Narcotic Drug' or 'Narcotic' within the meaning of Section 2(h) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 and liable to State Excise Duty? - Held that: - The term “Narcotic Drug” or “Narcotic” with which we are concerned with in the present case has been defined under Section 2(h) of the M & T P Act to mean a substance which is coca leaf, o .....

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per dosage unit.n declared as Narcotic Drug or Narcotic - In the present case admittedly the subject formulations contain less than 135 mgs i.e. 65 mgs of Dextropropoxyphene and hence cannot be classified as a Narcotic drug or Narcotic in view of the said Notification. - The subject formulations of the Petitioners containing less than 135 mgs i.e. 65 mgs of Dextropropoxyphene are excluded from being classified as a Narcotic Drug under the Section 2(h) of the M & T P Act. We find that the vi .....

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a J. ) 1. The issue which arises for determination in this Petition is whether formulations containing less than 135 mgs. i.e. 65 mgs of Dextropropoxyphene can be classified as 'Narcotic Drug' or 'Narcotic' within the meaning of Section 2(h) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 ( for short M & TP Act ) and liable to State Excise Duty. The brief facts that arise in the present case are as under :- 2. The first Petitioner is a company manufacturing .....

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entry No.86 was inserted, which read thus :- (+) - 4 - dimethylamino - 1 - 2 diphenyl - 3 - methyl - 2 - butanol propionate, (the international non-proprietary name of which is Detropropoxyphene), and its salts, preparations, admixures, extracts and other substances containing any of these drugs, except preparations for oral use containing not more than 125 miligrams of Dextropropoxyphene base per dosage unit or with a concentration of not more than 2.5 percent in undivided preparations, provid .....

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gs per doze under the Notification. The Petitioners had claimed the subject formulations were liable to duty under Chapter heading 30.03 of Central Excise Tariff Act, 1985 and not under the M & T P Act. 5. Respondent No.4 issued a show cause notice on 24th October 1997 calling upon the Petitioners to submit information in a form attached to the notice. The Petitioners submitted the information called for by the show cause notice on 15th December, 1997. The Respondents addressed a communicati .....

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phene and since the notification issued by the first Respondent provided for formulations having more than 135 mgs of Dextropropoxyphene to be classified as a narcotic substance, the subject formulations would not be covered by the definition of Narcotic under the M & TP Act. 6. The Inspector of State Excise department, Vashi on 29th December 1998 visited the factory of the Petitioners and seized the stock of the subject formulations on the ground that the Petitioners had evaded State Excise .....

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etitioners having not received any communication from the Central Excise Authorities filed this Petition. 7. The Petition came up for admission on 4th May 1999 when the Division Bench of this Court passed an order wherein the Petitioners were directed to pay duty at the rate of 20% to the State Government under the M & TP Act and the Petitioners were directed not to deposit any duty with the Central Excise Authorities under the Central Excise Act till the hearing of the Petition. In the even .....

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tial amount payable by the Petitioners, in the event it was held that the M & TP Act is applicable. This was to be intimated to the Petitioners and Petitioners were to deposit the said amount within four weeks of the receipt of the intimation by the State Government. By a further order dated 13th February 2006 passed in a Civil Application taken out by the Petitioner, order dated 2nd February 2005, by which the Petition was dismissed for default was recalled and Rule was issued. 8. An Affida .....

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, UP and Ors AIR 1971 SC 378 where it was held that mere presence of alcohol in a medicine is sufficient to make the medicine dutiable under the M & T P Act. The formulations containing less than 135 mg. Dextropropoxyphene was held to be dutiable under the M & TP Act by the said Government order. An Affidavit has also been filed in reply to the Petition by the Commissioner of Central Excise, Vasai-II, Division Thane II dated 7th November 2003, wherein it is stated that the Central Board .....

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mitted that the above issue is no more res integra. This issue has been answered by the Division Bench of this Court in USV Limited Vs. State of Maharashtra 2007 (3) Bom. C.R. 316 paragraph 13, of which reads thus:- 13. Plain reading of the Notification dated 12th June 1986 would disclose that any medicinal preparations containing Dextropropoxyphene base per dosage unit not more tha 135 mg are excluded from being classified as narcotic drug or narcotic within the meaning of the said expression u .....

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has considered the notification dated 12th June 1986 and its applicability and as set out above held that the subject formulation of Dextropropoxyphene being less than 135 mg viz. 70 mg would stand exempted in terms of the said notification and not classified as a narcotic drug or narcotic under the said Act. The said judgment has also considered the Supreme Court judgment relied upon in the Central Government order dated 13th April 1999, in paragraph 15, which reads thus: The decision of the Ap .....

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the product can be called as narcotic drug or narcotic under the said Act and as already seen above, the product of the Petitioners cannot be considered as containing narcotic drug or narcotic. 11. Mr. Daruwalla has accordingly submitted that the very same issue having already been answered by the Division Bench of this Court in favour of the Petitioner the demand of duty payable under the M & TP Act in the present case is thoroughly untenable. It was held in the said judgment that the State .....

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the wrongful seizure of the subject formulations by the Respondents Nos. 3 and 4, and costs should be awarded to them. 12. Mr. Patel, AGP appearing for Respondents Nos. 3 & 4 and Mr. Jitendra Mishra, learned Advocate appearing for Respondents Nos. 1 & 2 have supported the action taken by the Respondents. 13. Having heard the arguments, we are of the view that this Petition is squarely covered by the judgment of this Court in USV Ltd. (Supra). The term Narcotic Drug or Narcotic with whic .....

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