2005 (9) TMI 85 - SC - Central Excise

Supreme Court: Import of Medicines Not 'Manufacture' under Excise Act

COMMISSIONER OF CENTRAL EXCISE, MUMBAI Versus JOHNSON & JOHNSON LTD.

The Supreme Court determined that the import of medicines Eprex and Topamac did not qualify as 'manufacture' under the Central Excise Tariff Act, 1985. ... Duty demand - Exciseability of product - medicines, namely, Eprex and Topamac - whether these two medicaments were manufactured for the purposes of attracting duty under the Act - Held that:- What has been overlooked by the appellant is that merely packing for being marketed would not do. The repacking would have to be from bulk packs to 'retail packs' so as to render the product marketable directly to the consumer. There is no evidence relied upon by the appellants to the effect that the cardboard boxes in which the units were placed or the thermocole containers were 'retail packs'. There is an additional fact that the Commissioner of Central Excise had found as a fact that the products are imported as ready for sale to consumers in retail packs. These retail packs were then taken to the appellant's warehouses where stickers were affixed to them containing information like names and addresses of the importers, maximum retail price, net weight etc. In these cases the appellants therefore, admittedly merely imported ready to market retail packs. There is no evidence of the appellants' themselves indulging in any further activity which required the packing or repacking of bulk packing into retail packs within the extended meaning of 'manufacture' as contained in Chapter Note 3 in Chapters 18 and 19 of the Act - Decided against Revenue. Issues:1. Whether the import of two particular medicines, Eprex and Topamac, falls under the Central Excise Tariff Act, 1985.2. Interpretation of Note 5 Chapter 30 regarding the meaning of 'manufacture' in relation to products of Heading No. 30.03.3. Determination of 'manufacture' in the context of repacking from bulk packs to retail packs for marketability.4. Applicability of Note 3 to Chapter 18 and Chapter 19 of the Central Excise Tariff Act, 1985 in extending the meaning of manufacture to labelling, relabelling, and repacking activities.5. Examination of whether imported products were ready for sale to consumers in retail packs or required further repacking activities to qualify as 'manufacture.'Analysis:1. The Supreme Court considered the import of Eprex and Topamac under Chapter Heading 3003.10 of the Central Excise Tariff Act, 1985. The question revolved around whether these medicines were manufactured to attract duty under the Act.2. Note 5 Chapter 30 was interpreted to extend the meaning of 'manufacturers' by including activities like converting powder into tablets, labelling containers for consumers, and repacking for marketability. The Tribunal emphasized that repacking from bulk packs to retail packs was necessary for an activity to be classified as 'manufacture.'3. The appellant argued that repacking occurred after importation, with medicines like Eprex repacked into thermocole boxes and Topamac tablets placed in cardboard boxes for marketing. However, the Court highlighted that repacking into 'retail packs' was essential for direct marketability to consumers, which lacked evidence in this case.4. In the context of Note 3 to Chapter 18 and Chapter 19, the Court dismissed appeals related to imported items under these chapters. The legal fiction extending 'manufacture' to labelling, relabelling, and repacking activities was not found applicable in the absence of evidence of repacking from bulk to retail packs.5. Additionally, in cases involving imported ready-to-market retail packs, where stickers were affixed with necessary information, the Court noted that no further repacking activities were undertaken by the appellants. As a result, the appeals were dismissed without costs, as the activities did not align with the extended meaning of 'manufacture' as outlined in the relevant chapters of the Act.