Pharmacopoeia-based exemption requires product coverage during the material period, with suppression supporting extended limitation and moderated penalties.

A pharmacopoeia-based exemption was available only where the product was shown to fall within the relevant publication during the material period; Roxythromycin did not satisfy that condition before 1-1-1997, and suppression justified invocation of the extended limitation period. By contrast, Nimesulide qualified for exemption because Martindale Extra Pharmacopoeia was treated as an official pharmacopoeia and the declaration covered the relevant period. On penalties, Section 11AC applied, but the full 100% penalty was not warranted on the facts, and the separate Rule 173Q penalty was not sustained.

---

---

Issues: (i) Whether Roxythromycin was eligible for exemption under Notification No. 8/96-C.E. and whether the extended period of limitation could be invoked; (ii) whether Nimesulide was eligible for exemption on the basis of its inclusion in Martindale Extra Pharmacopoeia; (iii) whether the penalty imposed under Section 11AC and Rule 173Q was sustainable in full.

Issue (i): Whether Roxythromycin was eligible for exemption under Notification No. 8/96-C.E. and whether the extended period of limitation could be invoked.

Analysis: The product was not shown in the Second Edition of the European Pharmacopoeia, and the Third Edition became effective only from 1-1-1997. The declaration on record did not cover the relevant period, and the declaration filed related to an earlier year and a different notification. In these circumstances, the exemption was not available for the period prior to 1-1-1997 and the charge of suppression was upheld.

Conclusion: The demand of duty on Roxythromycin was sustained and invocation of the extended period was upheld.

Issue (ii): Whether Nimesulide was eligible for exemption on the basis of its inclusion in Martindale Extra Pharmacopoeia.

Analysis: Martindale Extra Pharmacopoeia was treated as an official pharmacopoeia, and the product being specified therein satisfied the notification condition for the relevant period. The declaration under Rule 173B covered the relevant period and was annexed to the show cause notice.

Conclusion: The demand of duty on Nimesulide was set aside.

Issue (iii): Whether the penalty imposed under Section 11AC and Rule 173Q was sustainable in full.

Analysis: Penalty under Section 11AC was held applicable to the relevant period, but the facts did not justify imposition of the full 100% penalty. The separate penalty under Rule 173Q was not sustained.

Conclusion: The penalty under Section 11AC was reduced to Rs. 3 lakhs and the penalty under Rule 173Q was set aside.

Final Conclusion: The appeal succeeded only in part, with relief granted on Nimesulide and on penalties, while the duty demand on Roxythromycin was maintained.

Ratio Decidendi: For exemption under a pharmacopoeia-based notification, the product must be shown to fall within the relevant pharmacopoeia during the material period, and suppression with an incomplete declaration can justify invocation of the extended limitation period; penalty may be moderated where the statutory default does not warrant the full measure imposed.

---