TMI Blog1994 (4) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... 00, and Simethicone. These products were stated to be manufactured strictly in accordance with pharmaceutical standards, requirements and specifications. Between August 1982 to January 1983, the appellant filed classification lists in respect of Dimethicone and Simethicone, terming them as drugs and pharmaceutical preparations classifiable under the residuary Tariff Item 68 of the Central Excise Tariff but exempt otherwise from levy under some government notifications starting from 22-2-1982 onwards reference to which would be made later. On 24-9-1983, the Superintendent of Central Excise informed the appellant that the drugs on the contrary were classifiable under Tariff Item 15A and not under Tariff Item 68 and that the benefit of exemption under the last of Notifications being No. 234/82, dated 1-11-1982 was not available to the appellant in respect of the said products. As directed by the Superintendent of Central Excise, the appellant filed the revised classification, but under protest, in respect of those products under Tariff Item 15A. The appellant thereafter successfully persuaded the Assistant Collector of Central Excise to obtain a report of the Deputy Chief Chemist, Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ad valorem and to alter any tariff values for the time being in force. Schedule 1 has three columns, first containing item numbers, the second containing description of goods and the third containing rate of duty. A quick glance through Items 1 to 67 shows that under each item certain goods are specified for levy of duty and to the goods which have not been so specified or have been left out Item 68 is attracted, the latter known as the residuary item. Rule 8 of the Central Excise Rules, 1944, as it then stood, empowered the Central Government from time to time, by notification in the Official Gazette, to exempt, subject to such conditions as specified in the notification, any excisable goods from the whole or any part of the duty leviable on such goods. Such exemption by means of notification issued under Rule 8 does not take away the levy or have the effect of erasing levy of duty. The object of the exemption notification is to forgo due duty and confer certain benefits upon the manufacturer or the buyer, or the consumer through the manufacturer, as the case may be. We must also bear in mind that the period with which are concerned relates to the period prior to the introductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 68, reproduced one after the other :- ********* 6. The explanation occurring in Item 68 is significant. It is the key to understand the nature of the exclusion of goods from the description of goods in any particular item within Items 1 to 67. The Explanation clarifies that such exclusions could be demonstrated either by clear exclusion, or by explanation, or in any other manner. Once such exclusion of goods is manifest from the description of goods, then the goods excluded shall be deemed to be goods not specified in that item. By this deeming provision the excluded goods are taken for the purposes as if not specified in that item and have, for the purposes of Item 68 to be treated to be goods not specified elsewhere falling under Item 68. So such of those specified goods which get excluded from the description of goods in a particular tariff item in whatever manner, those goods shall be deemed to be goods not specified in that item and thus becoming goods not specified elsewhere for the purposes of Item 68. 7. Now in order to proceed further, let us take note of the exemptions by means of the Notifications pressed into service by the appellant. The first is the Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole of the duty of excise leviable thereon under Section 3 of the said Act. Relevant entry in the annexed Schedule containing Entries 1 to 41 is No. 21. "21. All bulk drugs, medicines and drug-intermediates not elsewhere specified. Explanation. - In this notification, "bulk drugs" means any chemical, biological or plant product, conforming to pharmacopoeial standards, used for diagnosis, treatment, mitigation or prevention of diseases in human beings or animals, and used as such or as an ingredient in any formulation." 9. In the first Notification of February 28, 1982, specific reference of Section 3 of the Act was not made, though it was innately there. In the last notification dated 1-11-1982 there is such a reference. Thus what was implicit has been made explicit. The levy of excise duty as a whole has been foregone in so far as goods of the description as mentioned in the annexed Schedule to each notification are concerned if falling under Item 68. This is the thrust of the language of the notifications exempting goods of the description specified in the annexed Schedule. The word "and" employed in connecting those scheduled goods to Item 68 of the First Schedule to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together and keep confined the controversy as it was before the Tribunal, between Item 15A on the one side and Item 68 and the notifications on the other. 12. The explanation in the Schedule annexed to the last notification provides that `bulk drugs' meant any chemical or biological or plant product conforming to pharmacopoeial standards used for the diagnosis, treatment, mitigation or prevention of any diseases in human beings or animals, and used as such or as an ingredient in any formulation. It is thus clear from the explanation that drugs which may be called "bulk drugs" needed only to conform to pharmacopoeial standards and used as such or as an ingredient in any formulation in order to get exempted from payment of excise duty. The appellant's case before the Department was that its products were bulk drugs and were of pharmacopoeial standards as evidenced by their names finding way in pharmacopoeia of major drug producing countries of the world. Reference was made to British Pharmacopoeial Codex of the year 1973 and in particular to the following extract :- "Dimethicones are used in industrial barrier creams for protecting the skin against irritant substances. Creams, lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt products which had gained recognition by Pharma- copoeial standards and were capable of use for diagnosis, treatment, mitigation or prevention of diseases in human beings and animals and used as such or as an ingredient in any formulation should be exempt from the payment of excise duty, because of its beneficient use to human and animal life, but only if duty thereon was leviable under residuary Item 68. Support though was sought by Mr. Ganesh from a decision of a learned Single Judge of the Bombay High Court in Rakesh Enterprises Anr. v. Union of India Anr. [1986 (25) E.L.T. 906 (Bom.)] wherein was put to use Pharmacopoeia of various countries to determine that phenol was a drug, or in any event a drug intermediate, so as to fall in the residuary Item 68 attracting the concerned exemption notification of an identical value. It appears to us that the conclusion of the learned Single Judge in the given situation might have been possible in the facts and circumstances but not as a general rule that whatever is put to medicinal use automatically takes it out from industrial use. The products of the appellants as specifically classified in the lists and described as such separa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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