Pharmacopoeial drug exemption and Article 14 classification upheld for unrecognised mixtures and compounds

Recognised pharmacopoeial drugs may fall within the exemption for patent or proprietary medicines, but a compound made from recognised ingredients is not exempt merely because its component drugs are recognised unless the compound itself is separately recognised. The Article 14 challenge to differential treatment between recognised drugs and unrecognised mixtures or compounds was rejected because the classification was held to rest on an intelligible differentia with a rational relation to the statutory object. The text also notes that the pleadings did not properly raise the challenge and the record did not establish that the medicines fell outside the statutory definition.

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Issues: (i) whether mixtures or compounds of drugs recognised in the specified pharmacopoeias were exempt from duty as patent or proprietary medicines under the Drugs Act, 1940; (ii) whether the levy of duty on unrecognised mixtures or compounds while exempting recognised drugs was discriminatory and violative of Article 14 of the Constitution of India.

Issue (i): whether mixtures or compounds of drugs recognised in the specified pharmacopoeias were exempt from duty as patent or proprietary medicines under the Drugs Act, 1940.

Analysis: The exemption applied to drugs actually recognised by the relevant pharmacopoeias. A medicine that was a compound of several recognised drugs was not for that reason alone excluded from the statutory definition if the compound itself was not separately recognised. The challenge also failed because the point had not been properly raised on the pleadings and the record did not establish that the medicines in question fell outside the statutory definition.

Conclusion: The contention was rejected and the duty demand was upheld on this ground.

Issue (ii): whether the levy of duty on unrecognised mixtures or compounds while exempting recognised drugs was discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The classification between recognised drugs and mixtures or compounds not so recognised was held to rest on an intelligible differentia. The appellant failed to show that the two classes stood on the same footing or that the distinction lacked a rational relation to the object of the legislation. The constitutional challenge was also not properly raised earlier in the proceedings.

Conclusion: The challenge under Article 14 was rejected.

Final Conclusion: The appeal failed and the duty demand was sustained.

Ratio Decidendi: A fiscal classification will withstand Article 14 if it is based on an intelligible differentia having a rational relation to the statutory object, and a compound medicine is not exempt merely because its ingredients are individually recognised in a pharmacopoeia unless the compound itself is separately recognised.

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