1996(01)LCX0108
IN THE CEGAT, EASTERN BENCH, CALCUTTA
S/Shri P.C. Jain, Member (T) and T.P. Nambiar, Member (J)
INDIAN HEALTH PHARMACEUTICALS LTD.
Versus
C. C. EX., CALCUTTA-II
Order No. A-2 Cal/96, dated 1-1-1996 in Appeal No. E(SB) 4004/95
Cases Quoted
Collector v. Bengal Chemicals & Pharmaceuticals Works Ltd. — 1989(06)LCX0063 Eq 1989 (043) ELT 0591 (Tribunal) [Paras 4, 9]
Indo-French Pharmaceutical Co. v. UOI — 1978 (002) ELT (J 478) [Paras 4, 9]
Astra Pharmaceutical (P) Ltd. v. Collector — 1994(12)LCX0084 Eq 1995 (075) ELT 0214 (SC) [Paras 4, 7, 10]
Ramsay Pharma Pvt. Ltd. v. Supdt. — 1976(09)LCX0001 Eq 1983 (012) ELT 0078 (All.) [Paras 5, 9, 10]
Advocated By : Shri P.K. Das, Advocate, for the Appellant.
Shri B.B. Sarkar, JDR, for the Respondents.
[Order per : P.C. Jain, Member (T)]. - This is an appeal filed by the appellant firm against the Order passed by the Collector of Central Excise, Calcutta-II in Order-in-Original No. 85/Ch. 3003.10/Collr./CE/Cal-II/94 dated 21-9-1994. In terms of the impugned order, the learned Collector confirmed the Central Excise duty of Rs. 19,356.23 and imposed a penalty of Rs. 2000.00 on the appellant firm.
2. The facts of the case are that the appellants, M/s. Indian Health Pharmaceuticals Ltd. manufactured a product namely, “Tetracycline Capsules” declaring them under Tariff sub-heading No. 3003.20 and they accordingly claimed nil rate of duty by producing a Certificate that - “the pharmacopoeial preparation mentioned in the classification list in Form-I will not bear either on itself or container caps, cartons, any mark such as symbol, monogram, levels, signature, words, any written indication or so on to indicate a relation in course of Trade, between the medicaments and the manufacturers.” The case of the Department is that the said product was actually cleared with the logo, “Health”, which is a monogram and the foil of the said capsule was marked with logo, “Health”. So the case of the Department is that the product is classifiable under Chapter sub-heading No. 3003.10 of the Central Excise Tariff Act attracting duty @15% adv. Hence the show cause notice was issued to the appellant company for recovery of the differential duty in respect of the clearance taken place during the period from 30-5-1992 to 8-6-1992, invoking the longer period of limitation under Section 11A of the Central Excises and Salt Act, 1944 (CESA for short).
3. After personal hearing the learned Adjudicating Authority classified the same under sub-heading No. 3003.10 of the Central Excise Tariff (CET for short) and demanded the duty.
4. Ld. Advocate, Shri P.K. Das contended before us that the logo, “Health” which is used by the appellant firm does not indicate that the medicine in question is a special preparation made by them. It was his contention that in order to classify the same under the sub-heading 3003.10 (CET) the connection between the medicine and the manufacture, contemplated under Explanation to Item No. 14E of CET should be established to indicate that the appellant firm has the proprietary interest in the medicine. He contended that it is well-known that in all medicinal preparations, the manufacturer’s name is and has necessarily to be indicated. Therefore, the word - `Health’ - only indicates manufacturer’s name. In this connection, he pointed out that in the letter-heads of the appellant company, the samples of which were also produced along with appeal memo, the word, “Health” was always mentioned. Therefore, it is only mentioned by the appellant firm as the name of the manufacturer. But that will not automatically become patent or proprietary medicine as defined in Explanation to Item No. 14E of CET. In support of his contention, he relied upon the following decisions :
(i) 1989(06)LCX0063 Eq 1989 (043) ELT 0591 (Tribunal) in the case of Collector of Central Excise v. Bengal Chemicals & Pharmaceuticals Works Ltd.;
(ii) 1978 (002) ELT (J 478) in the case of Indo-French Pharmaceutical Co., Madras v. U.O.I. & Others;
(iii) 1995 (075) ELT - 214 (S.C.) in the case of Astra Pharmaceuticals (P) Ltd. v. Collector of Central Excise, Chandigarh.
5. But the learned J.D.R., Shri B.B. Sarkar contended before us that the appellant firm used the logo, “Health”, in the case of sale of their product, `Tetracycline Capsule’. He contended further that the product was sold by the appellant firm as “patent and proprietary medicament”. The very fact that they used the logo, “Health” goes to show that there is a connection between the medicine and the appellant firm, as contemplated under Explanation to Item No. 14E of CET. In that view of the matter, he stated that the conclusion arrived at by the adjudicating authority is in accordance with law. In support of his contention he relied upon the following decision reported in 1976(09)LCX0001 Eq 1983 (012) ELT 0078 (All.) in the case of Ramsay Pharma Private Ltd. v. Superintendent of Central Excise.
6. We have considered the submissions of both sides. The point to be determined is whether the `Tetracycline Capsule’ prepared by the appellants herein carries a brand name which is registered under the Trade and Merchandise Mark Act, 1958 (43 of 1958) and the appellant firm describes that medicine by any symbol or monogram or lebel so as to establish a relationship between the manufacturer and the medicine manufactured by them and whether they could be included in the Explanation appended to Item No. 14E of CET.
7. The Explanation to Item No. 14E of CET defines “Patent or Proprietary Medicines” as any drug or medicinal preparation, in whatever form, for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a Pharmacopoeia, Formulary or other publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person, having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person. It is thus seen that to attract the mischief of the Explanation what is required is that the medicine should carry a brand name which is registered under the Trade and Merchandise Marks Act and further it should be shown that the appellant firm describes the medicine by any symbol or monogram or label so as to establish the relationship between the appellants and the medicine in question. Then only, the item in question could be included in the Explanation appended to Item No. 14E of CET. But the appellant firm in this case has merely mentioned the word, “Health”. But the word, “Health” is printed for identification of the manufacturer. The identification of the medicine that it is manufactured, should not be confused with the produce-mark. Identification is compulsory under the “Drug Rules”. Technically, the same is known as “house mark”. Therefore, the word, “Health” on the container was used by the appellant firm to project the image of the manufacturer generally. It did not establish any relationship between the mark and the medicine. It is further noted that even in the letter-heads of the appellant firm, they have used this logo, “Health”. It is further abundantly clear that it is printed only to project the image of the appellants as the manufacturer of the product in question. These principles are laid down by the Hon’ble Supreme Court in the above-cited decision in the case of Astra Pharmaceuticals (P) Ltd. v. Collector of Central Excise, Chandigarh wherein at para 6 their Lordships held as follows :-
“6. As has been explained earlier the first part of the Explanation widens the ambit of the entry by extending it to any drug or medicinal preparation for use in internal or external administration for prevention of ailments in human beings or animals. But then it narrows it by restricting the applicability of the tariff item to only such medicines which bear either on itself or on its container or both a name which is not specified in a monograph in a Pharmacopoeia. This obviously is not applicable to the appellant as the injections manufactured by the appellant are specified in a Pharmacopoeia. The other class of medicines to which this Explanation applies are those which have a brand name that is a name or a registered trade mark under a Trade & Merchandise Marks Act. The medicine manufactured by the appellants is not registered under the Trade and Merchandise Marks Act. Therefore, it would attract levy only if its container or packing carried any distinctive marks so as to establish the relation between the medicine and the manufacturer. But the identification of a medicine should not be equated with the produce mark. Identification is compulsory under the Drug Rules. Technically, it is known as `house mark’. In Narayan’s Book on Trade Marks and Passing-Off, the distinction between `house mark’ and `product mark’ (brand name) is brought out thus,
`677A. House mark and product mark (or brand name).
In the pharmaceutical business a distinction is made between a house mark and a product mark. The former is used on all the products of the manufacturer. It is usually a device in the form of an emblem, word or both. For each product a separate mark known as a product mark or a brand name is used which is invariably a word or a combination of a word and letter or numeral by which the product is identified and asked for. In respect of all products both the product mark and house mark will appear side by side on all the labels, cartons etc. Goods are ordered only by the product mark or brand name. The house mark serves as an emblem of the manufacturer projecting the image of the manufacturer generally.’
The `AP’ or `Astra’ on the container or packing was used to project the image of manufacturer generally. It did not establish any relationship between the mark and the medicine. For instance, if the appellant instead of using Dextrose injections would have described it as Astra injections or Astra Dextrose injections then it could be said that a relationship between the monograph and the medicine was established. In the case of appellant it was only a monograph to identify the manufacturer."
8. The above-said principles enunciated in the decision referred to supra goes to show that the logo, “Health” which is printed by the appellants herein, is only for the purpose of projecting the image of the manufacturer and it does not establish any relationship between the mark and the medicine in question.
9. But the learned J.D.R., Shri Sarkar relied on the decision of the Allahabad High Court in the case of Ramsay Pharma Private Ltd. cited supra. This decision was considered by the Tribunal in the decision reported in 1989(06)LCX0063 Eq 1989 (043) ELT 0591 (supra). The Tribunal also followed the Single Judge decision of the Madras High Court reported in 1978 (002) ELT (J 478). Accordingly, the Tribunal in the case reported in 1989 (043) ELT 591 at para 12 held as follows :-
“12. In the Ramsey Pharma Private Ltd. case, the medicines in question bore names contained in the Indian Pharmacopoeia, they did not have any brand names and the petitioners did not have any registered trade mark in respect of the said medicines. The word `Ramsey’ was, however, printed in calligraphic letters on the labels in a circle both vertically and horizontally. The High Court considered that this special design brought the medicines within the mischief of Item 14E, CET. This authority no doubt supports the Revenue’s stand. But, with respect, we follow the Madras High Court judgment. In doing so, we are bearing in mind a crucial distinction from the Ramsey Pharmaceutical case, that is, the absence of any special design or logo in the instant case, the legend simply being ”Bengal Chemicals".
10. But it is further seen that this decision of the learned Single Judge of the Madras High Court reported in 1978 (002) ELT (J 478) was approved by the Division Bench of the Madras High Court in the case of Union of India v. Indo-French Pharmaceutical Co. reported in 1982(11)LCX0015 Eq 1983 (012) ELT 0725 (Mad.). All these decisions are considered by the Honourable Supreme Court in the above-cited decision reported in 1994(12)LCX0084 Eq 1995 (075) ELT 0214 (SC) wherein at para 7 their Lordships held as follows :-
“7. In M/s. Indo French Pharmaceutical Co., Madras v. Union of India and Others - 1978 (002) ELT (J 478) a learned Single Judge of the Madras High Court while construing Tariff Item 14E observed,
“a close reading of the Explanation however in my view indicates that the marks, symbols, monogram, label, signature or other words which are used in the medicinal preparation or its container should be such as to indicate that the medicine is a special preparation made by the manufacturer. The connection between the medicine and the manufacturer contemplated under the Explanation should be such as to indicate that the manufacturer has a proprietary interest in the medicine.”
This was approved by Division Bench of the same High Court in Union of India v. Indo-French Pharmaceutical Company - 1982(11)LCX0015 Eq 1983 (012) ELT 0725 (Mad.). Reliance was placed on Ramsey Pharma Private Ltd. v. Superintendent, Central Excise, Allahabad & Ors. - 1976(09)LCX0001 Eq 1983 (012) ELT 0078 (All.) for the Revenue and it was claimed that this decision was followed by the Tribunal and since it was based on correct interpretation of Explanation I the appellant was not entitled to any relief. It would be seen that in the decision rendered by the Allahabad High Court it is not clear if the container bore the name of the medicine as well. What has been extracted in the judgment is that the medicine has been manufactured by M/s. Ramsey Pharma Pvt. Ltd. As stated earlier if the container of the appellant would have stated that these were Astra Dextrose injections then it could be said that a relationship between the medicine and the manufacturer was established. The ratio laid down by the Madras High Court is approved as correctly enunciating the scope of Explanation I. Since the appeal is being allowed on merits the question whether the Revenue was justified in reopening the case under proviso to Section 11A of the Act is rendered academic and is not necessary to be decided."
11. It is thus seen that applying the above principles to the facts of this case, it is clear that the word, “Health” on the container and packing box was used by the appellants herein only to project the image of the manufacturer generally and this identification is compulsory under the “Drug Rules”. This identification mark, “Health”, did not establish any relationship between the mark and the medicine in question. In that view of the matter, the case of the appellant firm is covered by the above-cited Supreme Court decision and the impugned order classifying the goods under Chapter sub-heading No. 3003.10 is not legal and we set aside the same. Accordingly, the appeal filed by the appellant firm herein is allowed with consequential reliefs.
Equivalent 1996 (083) ELT 548 (Tribunal)