1990 (9) TMI 72 - SC - Central Excise

Supreme Court affirms Neftin-50 & Neftin-200 as patent meds, not exempt from excise duty

ESKAYEF LIMITED Versus COLLECTOR OF CENTRAL EXCISE

ESKAYEF LIMITED Versus COLLECTOR OF CENTRAL EXCISE - 1990 (49) E.L.T. 649 (SC), 1990 (1) Suppl. SCR 442, 1990 (4) SCC 680, 1990 (4) JT 85, 1990 (2) SCALE ... Issues Involved:1. Classification of the products Bifuran Supplement, Neftin-50, and Neftin-200 under the Central Excises and Salt Act, 1944.2. Applicability of excise duty exemption under Notification No. 6/84 dated February 15, 1984.3. Determination of whether the products are 'patent or proprietary medicines' under Item 14E.4. Applicability of the residuary Item 68 for classification.5. Allegation of arbitrary and hostile discrimination in excise duty exemption.Issue-wise Detailed Analysis:1. Classification of Products:The primary issue was whether the products Bifuran Supplement, Neftin-50, and Neftin-200 are chargeable to excise duty as 'patent or proprietary medicines' under Item 14E or are exempt under Notification No. 6/84 as animal feed supplements. The appellant initially classified these products under Item 14E and paid excise duty. Post-notification dated February 15, 1984, the appellant reclassified them under Item 68, claiming exemption.2. Applicability of Excise Duty Exemption:The appellant argued that Neftin-50 and Neftin-200 should be classified as animal feed supplements under Item 68 and thus be exempt from excise duty under the notification dated February 15, 1984. The Assistant Collector initially approved this classification but later issued a show cause notice, stating that the products did not meet the conditions for exemption. The subsequent order withdrew the exemption, which was later contested and led to multiple appeals and remands.3. Determination of 'Patent or Proprietary Medicines':The Tribunal held that Neftin-50 and Neftin-200 are patent and proprietary medicines under Item 14E due to their therapeutic and preventive uses in animals. The products contain Furazolidone, an antibacterial and antifungal agent used for treating and preventing coccidiosis in poultry. The court referenced authoritative texts to establish that Furazolidone is a medicinal compound, thus classifying Neftin-50 and Neftin-200 as medicines under Item 14E.4. Applicability of Residuary Item 68:Item 68 is a residuary entry covering goods not specified elsewhere. The court noted that if a product is covered under a specific item like 14E, it cannot be classified under the residuary Item 68. The court referenced previous judgments (Dunlop India Ltd. and Krishna Carbon Paper Co.) to support this principle, emphasizing that products with a specific classification cannot be relegated to a residuary category.5. Allegation of Arbitrary and Hostile Discrimination:The appellant claimed discrimination, arguing that similar products from other manufacturers were exempted from excise duty. The court rejected this claim, stating that the appellant cannot seek exemption based on erroneous exemptions granted to others. The court emphasized that equality under Article 14 does not permit extending wrongful exemptions and highlighted that proceedings would be initiated against other manufacturers based on this judgment.Conclusion:The Supreme Court dismissed the appeal, affirming that Neftin-50 and Neftin-200 are patent and proprietary medicines under Item 14E and are not exempt from excise duty under Notification No. 6/84. The court found no merit in the discrimination claim, stating that wrongful exemptions to others do not entitle the appellant to similar treatment. The judgment underscores the importance of accurate classification and adherence to legal principles in tax matters.