Classification of Medicaments as Patent or Proprietary Medicines Under Chapter Heading 3003.10

The Tribunal classified the medicaments as patent or proprietary medicines under Chapter heading 3003.10, allowing the appellant to claim Cenvat Credit. The Tribunal determined that the names of the medicaments were not listed in any pharmacopeia but were created as brand names for the buyer, supporting their classification as patent or proprietary medicines. Consequently, the original order demanding Cenvat Credit on inputs used in the medicaments was overturned, and the appeal was allowed in favor of the appellant.

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Issues: Classification of medicaments under Chapter heading 3003.20, eligibility for Cenvat Credit, whether medicaments are patent or proprietary medicines.

In this case, the appellant, engaged in the manufacture and export of medicaments, faced a show-cause notice from the department arguing that the medicaments were generic and not patent or proprietary, thus classifiable under Chapter heading 3003.20. In the initial litigation, the adjudicating authority upheld the demand for Cenvat Credit on inputs used in all medicaments, except for Indosam, P500, and Ampi Cloxa. The Tribunal previously held that these three medicaments were not pharmacopoeia medicaments and were classifiable under a different sub-heading. However, the Revenue challenged this decision, leading to the Commissioner (Appeals) overturning the original order based on the packaging bearing the name of the buyer company. The Commissioner relied on a Supreme Court judgment to support this decision. The appellant contested this ruling.

The appellant argued that despite the packaging bearing the foreign buyer's name, the medicaments' actual names - Indosam, P500, and Ampi Cloxa - were the brand names of the buyer company. Therefore, they contended that these were not pharmacopeial products but patent or proprietary medicines, correctly classifiable under 3003.10, making them eligible for Modvat Credit on inputs used for manufacturing. The Revenue, represented by the Assistant Commissioner, stood by the findings of the impugned order.

Upon careful consideration, the Tribunal noted that the names Indosam, P500, and Ampi Cloxa were not found in any pharmacopeia and were created as brand names for the buyer. Consequently, the Tribunal classified these medicaments as patent or proprietary medicines under 3003.10, subject to excise duty, entitling the appellant to Cenvat Credit. Thus, the impugned order was modified, and the appeal was allowed. The decision was pronounced on 19/01/2017.

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