Tariff classification of Erythromycin estolate upheld as covered by the exemption, with the amendment treated as clarificatory.

Heading 3003.11 of Chapter 30 expressly covered Erythromycin, its salts and esters, so medicaments containing Erythromycin Estolate fell within the tariff entry attracting nil duty. The later amendment to Notification No. 122/86-C.E. was treated as clarificatory, reflecting the original scope of the exemption rather than introducing a new benefit, and thus operated retrospectively. On that construction, the duty demand was unsustainable and the exemption remained available for the goods described.

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Issues: Whether products containing Erythromycin Estolate were covered by Heading 3003.11 of Chapter 30 of the Central Excise Tariff Act, 1985 as Erythromycin, its salts and esters, and whether the amendment to Notification No. 122/86-C.E. was clarificatory so as to extend the exemption.

Analysis: Heading 3003.11 expressly included Erythromycin, its salts and esters, and therefore the medicaments manufactured with Erythromycin Estolate fell within the tariff entry carrying nil rate of duty. The subsequent amendment to Notification No. 122/86-C.E. was treated as clarificatory, supported by the departmental circular letter, and did not create a new exemption but only made explicit what was already covered by the original notification.

Conclusion: The goods were classifiable under Heading 3003.11 and eligible for nil duty exemption. The demand was unsustainable, and the assessee succeeded.

Final Conclusion: The impugned orders were set aside and the appeal was allowed.

Ratio Decidendi: Where the tariff entry expressly covers a drug and its salts and esters, a medicament containing its ester form falls within that entry, and an amendment that only clarifies the position operates retrospectively as clarificatory.

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