Holding

The benefit of the exemption notifications is confined to goods falling under Item 68; since the appellant’s silicone products are covered by Item 15A, they are not exempt from excise duty.

Summary

HICO Products Ltd., a manufacturer of medicinal silicone products such as dimethicone and simethicone, claimed that these goods should be classified under the residuary Tariff Item 68 and therefore be exempt from excise duty under government notifications of 1982. The Central Excise authorities directed classification under Tariff Item 15A (silicones), leading to a series of orders that were appealed up to the Supreme Court. The key issue was whether medicinal silicone products fall within Item 15A or Item 68 and whether the exemption notifications applied to them. The Court held that the language of the notifications binds the exemption to goods falling under Item 68 and does not extend to goods classified under Item 15A; consequently, the products are chargeable under Item 15A and not exempt. The appeal was dismissed, affirming the Tribunal’s decision.

Issues considered

Whether medicinal silicone products (dimethicone, simethicone) are classifiable under Tariff Item 15A or the residuary Item 68 of the Central Excise tariff.
Whether the exemption notifications of 28‑Feb‑1982, 22‑Jun‑1982 and 1‑Nov‑1982 apply to the appellant’s products.
How the explanation to Item 68 and the definition of "bulk drugs" affect the classification.

Legislation cited

Central Excise and Salt Act, 1944s. 3, s. 35-L
Central Excise Rules, 1944s. 8
Medicinal and Toilet Preparations (Excise Duties) Act, 1955s. 2(c)

Subjects

excise dutytariff classificationItem 15AItem 68exemption notificationbulk drugsmedicinal siliconestatutory interpretation

Judgment

_. HICO PRODUCTS LTD. A
v.
COLLECTOR OF CENTRAL EXCISE

APRIL 22, 1994

[A.M. AHMADI, CJ. AND M.M. PUNCHHI, J.] B

• Central Excises and Salt Act, 1944: Section 3, ScHedule I-Medicinal
Silicone products--Dimethicone and Simethicone-Classification-Tariff
Item 15A or 68-Examption Notifications dated 28.2.82 and 22.6.82 from levy
of duty to goods falling under res;duary Tariff Item 68--Benefit of exemption c
from duty-Cannot be claimed as Silicone falls under specific Item 15A and
not under item 68.

The appellant is a manufacturer of medicinal Silicone prodncts
named Dimethicone and Simethicone amongst others. It tiled classifica-
tion list in respect of these products under residuary Tariff Item 68 of the D
Central Excise Tariff bot exempt otherwise from levy under government
~ notifications. It was however directed by Superintendent of Central Excise
to put them under Item lSA.

The Assistant Collector on appeal passed an order rejecting the E
• contention of the appellant holding that the products were classifiable
under Tariff Item lSA. The Collector of Central Excise on appeal by the
appeal set aside the order of the Assistant Collector holding that the
products were classifiable under Tariff Hem 68 and were exempt from
Excise duty. Further appeal of the respondent before the Tribunal was
F
, allowed and the order of the Assistant Collector was restored. Aggrieved
by the Tribunal's Judgment the appellant preferred the present appeal.

On behalf of the appellant it was contended that only industrial
Silicone was covered by Tariff Item ISA and the products in question being
medicinal Silicone were not covered under Tariff Item l?A, and that these
G
products fell under the residuary Item 68 and being "bulk drugs" stood
exempted from payment of excise duty under the notifications dated 28.2.82
and 22.6.82 read \\ith the annexed Schedule and explanation thereto .
•
" On behalf of the respondent it was contended that Silicone, be it
termed medicinal or industrial, in all forms was covered under Item lSA H
1
625
626 SUPREME COURT REPORTS [1994] 3 S.C.R. •
",_
A and it having been specified there got stock up in that Item and thus In
no event could it slide down to the residuary Item 68; and that the question
of exemption notification applying to the products did not arise.

Dismissing the appeal, this Court
•
B HELD : 1. The manufacture and production of all goods in India
attract excise duty. Those may be goods specified or goods not specified
elsewhere. Those goods may be falling under any of the Item 1 to 67, or '
instead in the residuary Item 68 attracting ad-velorem duty as due thereon.
Those goods are exempt from payment of excise duty because ·of the
language of the notification binding it to a particular Item and not univer-
c sally. It is the clarity of the language which governs the issue, not involving
any purposive approach. Interpreted in this manner, the benefit of the
notifications was rightly denied to the appellant. (640-D-F]

2. The explanation occurring in Item 68 is significant. It is the key
D to understand the nature of the exclusion of goods from the description of
goods in any particular item within Items 1 to 67. The Explanation clarifies
that such exclusions could be demonstrated either by clear exclusion, or ~

by explanation, or in any other manner. Once .such exclusion of goods is
manifest from the description of goods, then the goods excluded shall be
deemed to be goods not specified in that item. By this deeming provision
E the excluded goods are taken for the purposes as if not specified in that
item and have, for the purposes of Item 68 to be treated to be goods not
specified elsewhere falling under Item 68. So such of those specified goods
which get excluded from the description of goods in a particular tariff item
in whatever manner, those goods shall be deemed to be goods not specified
F in that item and thus becoming goods not specified eleswhere for the
purposes of Item 68. (634-B-C-D]

3. In the first notification of February 28, 1982, specific reference of
Section 3 of the Act was not made, though ii was innately there, in the last
notification dated 1.11.82 there is su~h reference. Thus what was implicit
G has been made explicit. The levy of excise duty as a whole bas been foregone
in so far as goods of the description as mentioned in the annexed Schedule
to each notification are concerned if falling under Item 68. This is the
thrust of the language of the notifications exempting goods of the descrip-
tion specified in the Annexed Schedule. The word "and' employed in
..
H connecting those schedule to the Act makes if<?xplicit. The Principle (

)-

l
HICO PRODUCTS LTD. v. COLLECTOR OF CENTRAL EXCISE 627

governing is that if the case does not fall under any of the specific items A
mentioned in the tariff either expressly or by means of exemptions, ex-
planations, or otherwise, then place can be found in the residuary Item 68.
Now here the Revenue insists that Silicone as such specifically is covered
under Tariff Item lSA and since the products of the appellant have a
Silicone element in it the products get stuck up in Item lSA and cannot be
permitted to slide down to the residuary Item. [636-B-C-D)
B

' 4. The explanation in the Schedule annexed to the last notification
dated 22.6.82 provides that 'bulk drugs' meant any chemical or biological
or plant product conforming to pharmacopoeial standards used for the
diagnosis, treatment, mitigation or prevention of any diseases to human C
being or animals, and nsed as such or as an ingredient in any formulation.
It Is thus clear from the explanation that drugs which may be called "hulk
drugs" needed only to conform to pharmacopoelal standards and used as
such or as an ingredient In any formulation in order to get exempted from
payment of excise duty. Still it remains whether these bulk drugs, D
medicines and drug intermediates are anywhere exempt to as not to fall in
Item 15A of the Tariff, where Silicone is mentioned as covered by it. It
cannot be denied that the medicinal products as described In Hem 21 of
the annexed Schedule to the notification are comprehensive enough to
cover products having Silicone as Its content as well those having no such
content. Here the intention of the Central Government will have to be E
discerned as to what it intended to derive when exempting all bulk drug
etc., when covered under Item 68. The object is not far to seek. It wa~
thought that such of those chemicals, biological or plant products which
had gained recognition by Pharmacopoeia( standards and were capable of
use for diagnosis, treatment, mitigation or prttvention of diseases in
• human being and animals and used as such as an ingredient in any
F
formulation should b< exempt from the payment of excise duty, because of
its beneficient use to human and animal life, but only if duty thereon was
Ieviable under residuary Item 68. [638-D-E; 639-F-G-H; 640-A)

British Pharmacopoeia/ Code, 1973, United States Pharmacopoeia of G
January 1, 1986 and Martindals, "The Extra Phannacopoeia", referred to.

, 5. The products of the appellants as specifically classified in the lists
and described as such separately are not noticed and classified as such in
the Pharmacopoeia as drugs by themselves or drugs intermediate. Rather H
628 SUPREME COURT REPORTS [1994] 3 S.CJ

A the products of the appellant are found by expert opinion to be Silicones
in the primary form, of the grades specified. There is thus no basis to
distinguish Silicone as industrially used or medicinally used. There is no
general rule that whatever is put to medicinal use automatically takes it
out from industrial use. [640-B-D)

B Rakesh Enterprises and Anr. v. Union of India &Anr., (1986) 25 E.L.T.
906 (Bombay), held inapplicable'. t

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4372 of
1990.

c From the Judgment and Order dated 29.5.1990 of the Customs,
Excise And Gold (Control), Appellate Tribunal, New Delhi in A.No.
E/1012/86-C.

S. Ganesh, K.J. John, Ms. Deepa Dikshit for Mis Swarup John & Co.
D for the Appellant.

M. Gauri Shankar Murty, Mrs. Susbma Suri, and Heman! Sharma
for the Respondent.

The Judgment of the Court was delivered by.
E PUNCHHI, J. This is an appeal under Section 35-L of the Central
Excise and Salt Act, ,.1944 against the judgment and order of the Customs,
Excise and Gold (Control) Appellate Tribunal, Special Bench, New Delhi,
dated 29.5.90 whereby the appeal of the Revenue stands allowed and the
appellate order of the Collector (Appeals), Bombay, in favour of the
F appellant-Company .set aside.

The case of the appellant is that umler a licence to manufacture
drugs obtained on .27.7.82 from the Food and Drugs Administration,
Maharashtra, it manufactured thenceforth medicinal Silicone products
named Dimethicone of the descrip(ion Dimethicone - 20, Dimethicone
G -350, Di~ethicone ~2000, Dimethicone - 1000 and Dimethicone - 100, and
Simethiccine. These products were stated to be manufactured strictly in
accordance with pharmaceutical standards, requirements and specifica-
tions. Between August 1982 to January 1983, the appellant filed classifica-
tion lists in respect of Dimethicone and Simethicone, terming them as
H drugs and pharmaceutical preparations classifiable under the residuary
HICO PRODUCTS LTD. e. COLLECTOR OF CENTRAL EXC!SE(PUNCHHI, J.]629

Tariff Item 68 of the Central Excise tariff but exempt otherwise from levy A
under some government notifications starting from 22.2.82 onwards refer-
ence to which would be made later. On 24.9.83, the Superintendent of
Central Excise informed the appellant that the drugs on the contrary were
classifiable under Tariff Item 15A and not under Tariff Item 68 and that
the benefit of exemption under the last of Notifications being No. 234/82
dated 1.11.82 was not available to the appellant in respect of the said
B
products. As directed by the Superintendent of Central Excise, the appel-
lant filed the revised classification, but under protest, in respect of those
products under Tatiff Item 15A. The appellant thereafter successfully
persuaded and Assistant Collector of Central Excise to obtain a report of
the Deputy Chief Chemist Bombay as to whether or not the products c
conformed to pharmaceutical standards. The report received stated that
Dimethicone of the varieties were poly silozone compounds (Silicone oils)
stated to have defoaming properties and Simethicone a form of jelly like
mass composing of silicone oil and silicone. Beforehand on 22.11.83, a
notice had been issued by the Department to the appellant to show cause D
why the products be not classified under Tariff Item 15A. The appellant
in reply pointed out that the products were "bulk drugs" as defined in the
up-to-dated Notification No. 234/82 dated 1.11.82. The Department did not
• relent and on receipt of the report of the Deputy Chief Chemist Bombay,
issued a second show cause notice to the appellant. Finally on contest, the
Assistant Collector passed an order on 4.1.85 rejecting the contention of E
the appellant holding that the products were classifiable under Tariff Item
15A. The Collector of Central Excise, Bombay, on appeal by the appellant
set aside the order of the Assistant Collector. He took the view that both
the products were drugs and pharmaceutical preparations and conforming
to pharmacopoeia! standards, classifiable under Tariff Item 68 and exempt
F
from Excise duty. Further appeal of the Revenue before the Tribunal was
allowed and the order of the Assistant Collector was restored. The
Tribunal's view was that both the products were silicone and it was im-
material whether they were conforming as drugs, hence the classification
under Tariff Item 15A. Therefore, this appeal.
G
Before we go on to deal with the diverse contentions raised by Mr.
S. Ganesh, learned counsel for the appellant, we deem it prudent to give
a broad outline of the interplaying of the charging Section 3 of the
aforesaid Act and its Schedule i embodying the tariff items. Section 3
mandates that there shall be levied and collected, in such manner as may H
,_,,.
\

630 SUPREME COURT REPORTS (1994] 3 S.C.R.

A be prescribed, duties of excise on all exciseable goo<ls other than salt
produced or manufactured in India, and a duty on salt manufactured in,
or imported by land into, any part of India as, at the rates set forth in the
First Schedule. Sub-Section (2) allows the Central Government, by means
of a notification to fix for the purpose of levying the said duties, tariff values
of any articles enumerated either specifically or under general headings,in
B
the first Schedule, as chargeable with duty ad velorem and to alter any tariff
values for the time being in force. Schedule 1 has three colnmns, first
containing item numbers, the second containing description of goods and ,
the third containing rate of duty. A quick glance through Items 1 to 67
shows that under each item certain goods are specified for levy of duty and
C to the goods which have not been so specified or have been left out Item
68 i> attracted, the latter known as the residuary item. Rule 8 of the Central
Excise Rules, 1944, as it then stood, empowered the Central Government
from time to time, by notification in the Official Gazette, to exempt, subject
to such conditions as specified in the notification, any excisable goods from
D the whole or any part of the duty leviable on such goods. Such exemption
by means of notification issued under Rule 8 does not take away the levy
or have the effect of erasing levy of duty. The object of the exemp-
tion notification is to forgo due duty and confer certain benefits upon the
manufacturer or the buyer, or the consumer throngh the manufacturer, as
•
the case may be. We must also bear in mind that the period with which
E we are concerned relates to the period prior to the introduction of the
Central Excise and Tariff Act, 1985, which .came into force on March 1,
1986.

Leaving aside the case of salt, with which we are presently not
F concerned, Section 3 of the Act authorises levy and collection of excise
duty on all goods produced or manufactured in India. If the goods are
specified in one or the other item containe:.I in Items 1 to 67, the duty
payable is referable to the concerned item. Should any goods be not
specified in any of those Items 1 to 67, excise duty would be leviable on
those remaining goods under the residuary Item 68. When by an exemption
G notification under Rule 8 of the aforereferred to Rules, any excisable goods
get exempted from payment of duty under a particular Item it only implies
that the levy and collection of excise duty on those goods would have been
there under the said Item but for the exemption. The case of the appellant
is that its products afore-mentioned being 'bulk drugs' have been exempted
H by notifications reference to which shall presently be made. The argument
J

HICO PRODUCTS Lill. '·COLLECTOR OF CENTRALEXCTSE [PUNCHHI, J.)631

presupposes that but for the exemption excise duty was leviable. . A

Now the dispute between the Revenue and the appellant has
diametrically opposite dimensions. Mr. S. Ganesh, learned counsel for the
appellant, in the first instance urged that though Silicone was a product
specified in Tariff Item 15A, the product meant to be covered therein was B
industrial Silicone, and since the products in question were in contrast
medicinal Silicone bearing the names Dimethicone and Simethicone, those
were not covered under Tariff Item 15A. Pursuant thereto it was urged that
medicinal Silicone fell in the residuary Item 68 attracting a lesser ad
. valorem duty and having found its place there stood exempted from pay- C
ment of excise duty under the notifications. The case of the Revenue on
the other hand is that Silicone, be it termed medicinal or industrial, in all
forms was covered in Tariff Item 15A. and it having been specified there
got stuck up in that item and thus in no event could it slide down to the
residuary item 68. Sequally it was .urged that when the products in question
could never come to the residuary Item 68, the question of exemption D
notifications applying to the products did not arise. Thus the question
which primarily falls for consideration is how do we interpret the exemp-
tion notifications. But before we do that we take note of Tariff Items 15A
and 68, reproduced one after the other :-
E
Item Tariff description Rate of
No. Duty
1 2 3
15A. Artificial or Synthetic resins and plastic
materials; and other materials and articles F
specified below :-
( 1) Condensation, polycondensation and 50%
polyaddition products, whether or not modified Ad-
or polymerised, and whether or not linear (for valorem
example, pheno-phasts, amino-plasts, alkyds, G
polyallyl esters and other \rnsaturated polyesters,
silicones); polymerisation and co-polymerisation
products (for example, polyethylene polytetra-
haloethylenes, polyisobutylene, polystyrene,
polyvinye cloride, polyvinel acetate, polyvinel
H
,..,
\

632 SUPREME COURT REPORTS [1994] 3 S.C.R.

A chloroacetate and other polyvinyl derivatives,
polyacrylic and polymethacrylic deri- vatives,
coumaroneindene resins); regernerated cellulose;
cellulose nitrate, cellulose acetate and other
cellulose esters, cellulose ethers; and other
chemical derivatives of cellulose, plasticised or
B
not (for example collodions, celluloid); vulca-
nised fibre; hardened proteins (for example,
hardened casein and hardened gelatin); natural
resins modified by fusion (run gums); artificial
resins obtained by esterification of natural resins
c or of resinic acids (ester gums); chemical
derivatives of natural rubber (for example,
chlorinated rubber, rubber hydrochloride,
oxidised rubber cyclised rubber); other high
polymers, artificial resins and artificial plastic
D materials, including alginic acid, its salts and
esters, linoxyn.
(2) Articles of materials described in sub-item 50%
(1), the following, namely :- Boards, sheeting Ad- •
sheets and films, whether lacquered or mata- valorem
llised or laminated or not; lay flat tubing not
E containing any textile materials.
(3) Ployurethane foam 75%
Ad-
valorem
(4) Articles made of Polyurethene foam 75%
F
Ad-
valorem

Explanation I - Sub-item (1) does net include :-

G (i) polyurethane foam;

(ii) artificial waxes;

(iii) starches (including dextrin and other forms of modified star-
H ches).
HICO PRODUCTS LID. v. COLLECTOR OF CENTRAL EXCISE [PUNCHHI. J.]633

·Explanation II - In sub-item (1), "condensation, polycondensation, polyad- A
11
dition, polymerisation and copolymerisation products are to be taken to
apply only to goods of a kind produced by chemical synthesis answering to
one of the following descriptions :-

(a) Artificial plastics, including artificial resins;
B
(b) Silicones;

(c) resols, liquid polyisobutylene, and similar artificial polyconden-
sation or polymerisation products.

Explanation III - Sub-item (1) is to be taken to apply to materials in the C
following forms only :

(a) liquid or pasty (including emulsions, dispersions and solutions);

(b) blocks, lumps, powders (including moulding powders), granules,
flankes and similar bulk forins; D
(c) waste and scrap
.. ITEM NO. 68. - ALL OTHER GOODS, N.E.S.
Item Tariff description Rate of
No. Duty
E
68. All other goods, not elsewhere specified but 8%
excluding : Ad-
valorem
(a) alcohols, all sorts, including alcoholic liquors
F
for human consumption;
,
(b) opium, Indian hemp and other narcotic drugs
and narcotics and
(c) dutiable goods as defined in Section 2(c) of
the Medicinal and Toilet Preparations (Excise
G
Duties) Act, 1955 (16 of 1955).

Explanation - For the purposes of this Item, goods which are referred to
in any preceding Item in this Schedule for the purpose of excluding such
goods from the description of goods in that Item (whether such exclusion
is by means of an Explanation to such Item or by words of exclusion in the H
634 SUPREME COURT REPORTS [1994] 3 S.C.R.

A description itself or in any other manner) shall be deemed to be goods not
specified in that Item.

The .explanation occurring in Item 68 is significant. It is the key to
understand the nature of the exclusion of goods from the description of
goods in any particular item within 1 to 67. The Explanation clarifies that
B such exclusions could be demonstrated either by clear exclusion, or by
explanation, or in any other manner. Once such exclusion of goods is
manifest frcim the description goods, then the goods excluded shall be
deemed to be goods not specified in that item. By this deeming provisions
the excluded goods are taken for the ·purposes as if not specified in that
C item and have, for the purposes of Item 68 to be treated to be goods not
specified elsewhere falling under Item 68. So such of those specified goods
which get excluded from the description of goods in a particnlar tariff item
in whatever manner, those goods shall be deemed to be goods not specified
in that item and thus becoming goods not specified elsewhere for the
purpose of Item 68.
D
Now in order to proceed further, let us take note of the exemptions
by means of the Notifications pressed into service by the appellant. The
first is the Notification No. 104/82-C.E., dated 28.2.82, which reads as
follows :
E 11
Exemption to certain specified goods - In exercise of the
powers conferred by sub-rule (1) of rule 8 of the Central Excise
Rules, 1944, and in supersession of the notification of the Govern-
ment of India in the Ministry of Finance (Department of Revenue
and Insurance ) No. 55/75-Central Excises; dated the 1st March,
F 1975, the Central Government hereby exempts goods of the
description specified in the Schedule annexed hereto and falling
under Item No. 68 of the First Schedule to the Central Excise and
Salt Act, 1944 (1 of 1944), from the whole of the duty of excise
leviable thereon.
G The SCHEDULE annexed thereto contains Serial Nos. 1 to 34,
giving description of goods. Relevant entry in the Schedule being
21, reads as follows :

"it. All drugs, medicines, pharmaceuticals and drug- intermediates
H not elsewhere specified."
HICO PRODUCTS LTD. v. COLLECTOR OF CENl'RAL EXCISE [PUNCHHI, J.j635

Then by Notification No. 197/82-C.E. dated. 22.6.82, the Central A
Government exercising the same powers made an amendment to the earlier
Notification of February 28, 1982 in this manoer :

"In this. notification :

(a) in the Schedule for serial number 21 and entries relating B
thereto, the following serial number and entries shall be sub-
stituted, namely : -
•
"21. All bulk drugs, medicines and drug-intermediates not else-
where specified!!,
c
(b) after the proviso, the following Explanation shall be inserted,
namely:-

!!Explanation : In serial number 21, "bulk drugs" mean :?.ny
chemical or biological or plant product, conforming to phar-
D
macopoeial standards, used for the diagnosis, treatment, mitigation
or prevention of diseases in human being or animals, and used as
, such or as an ingredient in any formation.".

Lastly by notification No. 234/82-C.E. dated 1.11.82 the Central Govern-
ment again in supersession of the· notification dated February 28, 1982 E
provided as follows :

"In exercise of the powers conferred by sub-rule (1) of rule 8
of the Central Excise Rules, 1944, and in supersession of the
notification of the Government of India in the Ministry of Finance
(Department of Revenue) No. 104/82- Central Excises, dated the F
28th February, 1982, the Central Government hereby exempts
goods of the description specified in the Schedule hereto annexed
and falling under Item No. 68 of the First Schedule to the Central
Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty
of excise leviable thereon under Section 3 of the sa'd Act. G
Relevant entry in the annexed Schedule containing Entries 1
to 41 is No. 21.

" 21. All bulk drugs, medicines and drug,intermediates not else-
where specified. H
636 SUPREME COURT REPORTS [1994] 3 S.C.R.

A Explanation : in this notification, 11 bulk drugs 11 means any chemical,
biological or plant product, conforming to phar.nacopoeial stand- ..... -
ards, used for diagnosis, treatment, mitigation or prevention of
diseases in human beings or animals, and used as such or as an·
ingredient in any formulation."

B In the first Notification of February 28, 1928, specific reference of
Section 3 of the Act was not made, though it was innately there. In the last
notification dated 1.11.82 there is such a reference. Thus what was implicit
has been made explicit. The levy of excise duty as a whole has been '
foregone in so far as goods of the description as mentioned in the annexed
c Schedule to each notification are concerned if falling under Item 68. This
is the thrust of the language of the notifications exempting goods of the
description specified in the annexed Schedule. The word "and" employed
in connecting those scheduled goods to Item 68 of the first Schedule to the
Act makes it explicit. The principle governing is that if the case does not
D fall under any of the specific items mentioned in the tariff either expressly
or by means of exemptions, explanations, or otherwise, then place can be
found in the residuary Item 68. Now here the Revenue insists that Silicone
as such specifically is covered under Tariff Item 15A and since the products
of the appellant have a Silicone element in the products get stuck up in
item 15A and cannot be permitted to slide down to the residuary Item.
E
The argument of the Revenue was further buttressed with the aid of
Tariff Item 14E which is to the following effect :

Item No. 14E - PATENT OR PROPRIETARY MEDICINES

F Item Tariff description Rate of
No. Duty
14E. Patent or proprietary medicines not containing 12.5%
alcohol, opium, Indian hemp or other narcotic Ad-
drugs or other narcotics other than those valorem
G medicines which are exclusively Ayurvedic,
Unani, Sidha or Homeopathic

Explanation I - 'Patent or Proprietary medicines'
means any drug or medicinal preparation, in
whatever for1n, for use in the internal or external
H
HICO PRODUCTS LTD. v. COLLECTOR OF CENfRALEXCISE [PUNCHHI, J.]637

treatment of, or for the prevention of ailments in A
human beings or animals which bears either" on
itself or on its container either both, a name
which is not specified in a monograph in a
pharmacopoeia, formulary or other publications
notified in this behalf by the Central Government
B
in the Official Gazette, or which is a brand name,
• tb.at is, a name or a registered trade mark under
the Trade and Merchandise Marks Act, 1958 (43
/ of 1958), or any other mark such as a symbol
monogram, label, signature or invented words or
. any writing which is used in relation to that c
medicine for the purpose of indicating or so as
to indicate a conoection in the course of trade
between the medicine and some person, having
the right either as proprietor or otherwise to nse
the name or mark with or without any indication D
of the identity of that person.

Explanation II - 'Alcohol', 'Opium', 'Indian
Hemp', 'Narcotic Drugs' and 'Narcotics' have the
meanings respectively assigned to them in
Section 2 of the Medicinal and Toilet E
Preparations (Excise Duties) Act, 1955.
Notification No. 47/63-CE dated 1.3.1993

In pursuance of the Explanation to Item No. 14E of the First Schedule to
the Central Excises and Salt Act, 1944 (1 of 1944) and of the Explanation F
to Item No. 28A of the First Schedule to the Indian Tariff Act, 1934 (32
of 1934), the Central Government hereby notifies all editions of the follow-
ing Pharmacopoeia, formularies and other publications for purpose of the
said Explanation, namely : -

1. The Indian Pharmacopoeia, 2. The loternational Pharmacopoeia, G

-. 3. The National Formulary of India, 4. The British Pharmacopoeia, 5. The
British Pharmaceutical Codex, 6. The British Veterinary Codes, 7. The
United States Pharmacopoeia, 8. The National Formulary of the U.S.A., 9 ..
The Dental Formulary of the U.S.A. and 10. The State Pharmacopoeia of
the U.S.S.R. H
638 SUPREME COURT REPORTS [1994] 3 S.C.R.

A According to the Revenue, if the exempted goods are bulk drugs,
medicines and drug intermediates not elsewhere specified then those,
would justly have to fall under the residuary Item 68 so as to alter that duty ·
•
to 8% ad velorem and be exempt from payment by the thrust of the
notification, only if those goods did not have Silicone element in them.
Besides, it was urged that the products in question were neither patent nor
B proprietary medicines so as to attract Item 14E in which, certain events
Pharmacopoeia, formularies and other publications are put to use for the
purpose of the explanation thereunder. It was also added that Item 14E
was never invoked by the appellant in the Tribunals below and that the
debate carmot be enlarged. On this objection of the Revenue, even though
C Mr. Ganesh made an attempt in that direction, we think that it would be
appropriate to leave out the involvement of Item 14E altogether and keep
confined the controversy as it was before the Tribunal between Item 15A
on the one side and Item 68 and the notifications on the other.

D The explanation in the Schedule armexed to the last notifieation
provides that 'bulk drugs' meant any chemical or biological or plant
product conforming to pharmacopoeia! standards used for the diagnosis,
treatment, mitigation or prevention of any diseases in human beings or
animals, and used as such or as an ingredient in any formulation. It is thus
E clear from the explanation that drugs which may be called "bulk drugs"
needed only to conform to pharmacopoeia! standards and used as such or
as an ingredient in any formulation in order to get exempted from payment
of excise duty: The appellants' case before the Department was that its
products were bulk drugs and were of pharmacopoeia! standards as
evidenced by their names finding way in pharmacopoeia of major drug
F producing countries of the world. Reference was made to British Phar-
•
macopoeia! Codex of the Year 1973 and in particular to the following
extract :

!IDimethicones are used in industrial barrier creams for protecting
G the skin against irritant substances. Creams, lotions, and ointments
containing 10 to 30 per cent of a Dimethicone are employed for
the prevention of bedsores and to protect the skin against trauma
from urine or faecal discharge. Dimethicones are also used in
conjunction with antacids to assist the expulsion of flatus prior to
....
H radiographic examination of the gastro-intestinal tract."
HICO PRODUCTS LID. v. COLLECTOR OF CENTRAL EXCISE lPUNCHaJ, J.]639

'•. \, Our attention was also invited to the United States Pharmacopoeia A
of January 1, 1985 and in particular to the following paragraph :

The preface of the Pharmacopoeia of 1820 reads in part:

"It is the object of a Pharmacopoeia to select from among
substances which possess medicinal power, those, the utility of B
which is most fully established and best understood; and to form
from them preparations and compositions, in which their powers
may be exerted in the greatest advantage. It should likewise dis-
tinguish those articles by convenient and definite names, such as
may prevent trouble or uncertaintly in the intercourse of physicians C
and apothecaries.

The value of Pharmacopoeia depends upon the fidelity with
which it conforms to the best state of medical knowledge of the
day. Its usefulness depends upon the sanction it receives from the
medical community and the public and the extent to which it D
governs; the language and practice of th()Se for whose use it is
11
> intended.

Our attention was also invited to Martindale, "The Extra Phar-
macopoeia" wherein Simethicone tablet and Dimethicone emulsion are
mentioned as drugs of human and veterinary preparations. Pharmacopoeia E
references to Dimethicone and Simethicone may be urged as satisfying the
explanation letting fall the products within the expression "bulk drugs,
medicines and drug intermediates". Still the point remains whether these
bulk drugs, medicines and drug intermediates are anywhere exempt so as
not to fall in item 15A of the Tariff, where silicon is mentioned as covered F
by it. It cannot be denied that the medicinal products as described in Item
21 of the annexed Schedule to the notification are comprehensive enough
to cover products having silicone as its content as well as those having no
such content. Here the intention of the Central Government will have to
be discerned as to what it intended to derive when exempting all bulk drugs
etc. when covered under Item 68. The object is not far to seek. It was G
thought. that such of those chemicals, biological or plant products which
had gained recognition by Pharmacopoeia! standards and were capable of
..... use for diagnosis, treatment, mitigation or prevention of diseases in human
beings and animals and used as such as an ingredient in any formulation
should be exempt from the payment of excise duty, because of its benefi- H
640 SUPREME COURT REPORTS (1994] 3 S.C.R.

A cient use to human and animal life, but only if duty thereon was leviable 'J '"!
under residuary Item 68. Support though was sought by Mr. Ganesh from '
~
a decision of a learned Single Judge of the Bombay High Court in Rakesh
Enteiprises and Anr. v. Union of India and Anr., (1986) 25 Excise Law J
Times 906 Bombay, wherein was put to use Pharmacopoeia of various
r
'
countries to determine that phenol was a drug, or in any event a drug •'
B
intermediate, so as to fall in the residuary Item 68 attracting the concerned
tc
exemption notification of an identical value. It appears to us that the
conclusion of the learned Single judge in the given situation might have '·> •
been possible in the facts and circumstances but not as a general rule that
whatever is put to medicinal use automatically takes it out from industrial
c use. The products of the appellants as specifically classified in the lists and
described as such separately are not noticed and classified as such in the
Pharmacopoeia as drugs by themselves or drugs intermediate. Rather the
products of the appellant are found by expert opinion to be Silicones in
the primary form, of the grades specified. There is thus no basis herein to
distinguish Silicone as industrially used or medicinally used.
D
'
It has already been take note of that the manufacture and production
of all goods in India attract excise duty. Those may be goods specified or
<
•
goods not specified elsewhere. When specific goods are made exempt from
payment of excise duty by a notification under Rule 8 and falling under a
•'
E particular Item, it presupposes that they are exempt from payment of excise
duty under that them. Those goods may be falling under any of the Items
1 to 67, or instead in the residuary Item 68 attracting ad-va/orem duty as
due thereon, Those goods are exempt from.payment of excise duty because '

of the language of the notification binding it to a particular Item and not
universally. It is the clarity of (he language which governs the issue, not
F
involving any purposive approach. Interpreted in this manner, the benefit
of the notifications, in our view, was rightly denied to the appellant.
• •
'
'
For the view above taken, we do not consider it necessary ta· go into r
the question as to whether Silicone as a product would fall under Item 15A t
G only if it is resinous in character or containing elasticity on the supposed t
similarity ofltem 15A of the excise tariff with Entry in heading No. 39.01)06
in the Customs Tariff or to go into the supposed identity of the two tariffs
on this aspect. We also do not feel obliged to comment upon a string of
"'"-...-
decisions of the Tribunal cited at the bar relating to silicone oil or products
H thereof in the context of its industrial use merely because present is a case
t.

HICO PRODUCTS LTD. v. COLLECTOR OF CENTRAL EXCISE [PUNCHHI, l.]641

...
'
to contrast medicinal use of silicone. We do not further feel obliged to A
discuss the illustrative case law cited at the bar regarding competing entries
in the Excise tariff relating to a specific item and the residuary item, We
are equally not obliged to go into the question of discrimination as raised
by learned counsel for the appellant raising the plea that within the
Department some regional Collectorates had taken the view as
propounded by the appellant All these aspects have been rendered B
academic because of the manner in which we have interpreted the scope
and importance of the notifications and their applications.

For the afore-going reasons, we dismiss this appeal, affirming the
judgment and order of the Tribunal, No costs,
c
v.s.s. Appeal dismissed.

,

I
,