Ophthalmological-use exemption under Notification No. 29/88 applies to eye ointments containing tetracycline or hydrocortisone.

Formulations based on bulk drugs in the First Schedule to the Drugs (Price Control) Order, 1987 remained eligible for exemption under Notification No. 29/88 when the products were eye ointments meant for ophthalmological use, even though they contained tetracycline or hydrocortisone. The notification's exclusion was confined to therapeutic use other than ophthalmological use, so the specified use satisfied the exemption condition. The view that duty could be demanded only prospectively on reclassification was rejected as unsupported by law.

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Issues: (i) Whether formulations based on bulk drugs specified in the First Schedule to the Drugs (Price Control) Order, 1987, containing tetracycline or hydrocortisone, are eligible for exemption under Notification No. 29/88 when meant for ophthalmological use; (ii) whether duty could be demanded for the past period upon reclassification of the goods.

Issue (i): Whether formulations based on bulk drugs specified in the First Schedule to the Drugs (Price Control) Order, 1987, containing tetracycline or hydrocortisone, are eligible for exemption under Notification No. 29/88 when meant for ophthalmological use.

Analysis: The notification grants nil rate of duty to formulations based on the bulk drugs specified in the First Schedule, while excluding formulations based on tetracycline or hydrocortisone for therapeutic use other than ophthalmological use. The products in question were eye ointments and were shown to be meant for ophthalmological use. On that basis, the condition in the notification was satisfied and the benefit of exemption was available.

Conclusion: Yes. The formulations were entitled to exemption under Notification No. 29/88, notwithstanding the presence of tetracycline or hydrocortisone, because they were used for ophthalmological purposes.

Issue (ii): Whether duty could be demanded for the past period upon reclassification of the goods.

Analysis: The view that duty could be demanded only prospectively upon revision of classification was rejected as not supported by law.

Conclusion: No. The observation limiting demand to a prospective period was incorrect in law.

Final Conclusion: The Revenue's challenge failed because the disputed products qualified for the exemption, and the appeal was therefore dismissed.

Ratio Decidendi: A formulation containing tetracycline or hydrocortisone remains exempt under the notification if it is meant for ophthalmological use, and the exemption turns on the use specified in the notification.

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