Generic-name medicaments do not qualify as patent or proprietary goods; label description controls classification and penalty exposure.

Medicaments are classified as patent or proprietary only where the label shows a name not found in a recognised pharmacopoeial or formulary source, or a brand name or invented word indicating trade connection. Where the labels display only generic names, or where the generic ingredient name remains the prominent trade description and any coined name is secondary, the products fall outside Heading 3003.10 and are treated as other medicaments under Heading 3003.20. On that basis, Modvat credit on inputs used in manufacture is unavailable. The note also states that the absence of any invented word or distinguishing mark can justify penalty for misclassification.

---

---

Issues: (i) Whether the products, as labelled, were patent or proprietary medicaments classifiable under Heading 3003.10 or other medicaments under Heading 3003.20; (ii) whether penalty was warranted.

Issue (i): Whether the products, as labelled, were patent or proprietary medicaments classifiable under Heading 3003.10 or other medicaments under Heading 3003.20

Analysis: The decisive test under Note 2 to Chapter 30 was whether the medicament bore a name not specified in a recognised pharmacopoeial or formulary source, or otherwise carried a brand name or invented word indicating trade connection. On examination of the labels, three products displayed only their generic names in bold, while the fourth prominently displayed the generic ingredient name and only secondarily the coined name. The labels therefore did not satisfy the statutory requirement of patent or proprietary medicaments.

Conclusion: The products were not patent or proprietary medicaments and were classifiable as other medicaments; the assessee was not entitled to Modvat credit on the inputs used in their manufacture.

Issue (ii): Whether penalty was warranted

Analysis: The absence of any invented word, monogram or other distinguishing mark on the labels, coupled with the clear use of generic names, showed that the description adopted could not reasonably support the claimed classification. In the circumstances, the explanation offered did not displace the finding of culpability for the misclassification.

Conclusion: The penalty was upheld.

Final Conclusion: The appeal failed in full, and the departmental classification and penalty were sustained.

Ratio Decidendi: Medicaments bearing only their generic name, or where the generic name is the prominent trade description and no brand or invented name is used as the identifying mark, do not qualify as patent or proprietary medicaments under Chapter 30.

---