M/S ASTRA PHARMACEUTICALS (P) LTD.versusCOLLECTOR OF CENTRAL EXCISE, CHANDIGARH

A                 MIS ASTRA PHARMACEUTICALS (P) LTD.
                                          v.
             COLLECTOR OF CENTRAL EXCISE, CHANDIGARH

                             DECEMBER 16, 1994

B                [R.M. SAHAI AND K.S. PARIPOORNAN, JJ.]

        Central Excises and Salt Act, 1944: Central Excise Tariff-Item 14E-
    Explanation I and II-Scope and interpretation of

         20% Dextrose Injections '-Cover carrying the name 'AP-Astra'-
C   Injections mentioned in Pharmacopoeia-Held injections were not patent
    and proprietary medicines dutiable under Tariff Item 14E-Mark 'AP-
    Astra' held only a monograph which identified the manufacturer-It did not
    establish any relationship between mark and medicine~Distinction
    between 'House Mark' and 'Product Mark' in respect of pharmaceutical
D   products discu~sed

       . The appellant was manufacturing 20% dextrose injections
    carrying the name 'AP-Astra'. It being one of the medicines specified in
    pharmacopoeia was wholly exempt from duty. Therefore, the appellant
    cleared their products without paying any duty since the date of
E
    manufacture in December, 1978 till 23rd January, 1982, when a show-         +
    cause notice was issued to it as to why dextrose manufactured by it may
    not be subjected to duty under Item No.14E of the Central Excise
    Tariff. The case of the Revenue Department was that though the
    injections were mentioned in phar~acopoeia the appellant was not
    entitled to exemption because on the cover it carried the name 'AP-
    Astra '.According to Department, since the medicine was described by
F
    a monogram and it established a relation between the manufacturer
    and the medicine, it was liable to duty under Explanation I to 'Item 14E.
    The Tribunal held that letters 'AP' did not constitute a monogram
    because the two letters are not interwoven but they being placed side by

G
    side in an artistic manner on the top it made the medicine
    manufactured by the appellant as a patent or proprietary medicine           •
    attracting central excise duty under tariff item 14E. Against the
    decision of the Tribunal, the appellant preferred an appeal to this
    Coµrt.

         Allowing the appeal and setting aside the· order of the Tribunal,
H   this Court
                                    692
            ASTRA PHARM. (P) LTD. v. COLL. OF CENT. EXC.           693

    HELD: 1. Dextrose injections manufactured by the appellant in the A
relevant years were not patent and proprietary medicines dutiable
under tariff item 14-E of the Schedule. [699 EJ

    2. A patent or proprietary medicine to attract levy under tariff
item 14E must either be a medicine which was not specified in a
Pharmacopoeia or other publication and carried on it or its container B
name of the produce by symbol or invented name etc. A medicine of
which the producer is the proprietor and it is known by its name would
be covered in this clause. The other class of patent or proprietary
medicines to which this tariff item applies are those medicines which
have a brand name or a registered trade mark under the Trade and
Merchandise Marks Act and carry such marks or symbol, monogram C
as to establish relation between medicine and producer or
manufacturer. That is, the writing or monogram on the medicine must
establish that it was the producer· or the manufacturer who was
proprietor of the medicine. [696 H, 697 A to BJ

    3. The first part of the Explanation to Tariff Item 14E widens the D
ambit of the entry by extending it to any drug or medicinal preparation
for use in internal or external administration for prevention of ailments
in human beings or_ animals. But then it narrows it by restricting the
applicability of the tariff item to only such medicines which bear either
on itself or on its container or both a name which is not specified in a
monograph in a Pharmacopoeia. This obviously is not applicable to the E
appellant as the injections manufactured by the appellant are specified
in a Pharmacopoeia. The other class of medicines to which this
Explanation applies are those which have a brand name that is a name
of a registered trade mark under the Trade and Merchandise Marks
Act. The medicine manufactured by the appellants is not registered F
under the Trade and Merchandise Marks Act. Therefore, it _would
attract levy only if its container or packing carried any distinctive
marks so as to establish the relation between the medicine and the
manufacturer. [697 F to HJ

    4. The identification of a medicine should not be equated with the G
produce mark. Identification is compulsory under the Drug Rules.
Technically it is known as 'house mark'. The 'AP' or 'Astra' on the
container or packing was used to project the image of manufacturer
generally. It did not establish any relationship between the mark and
the medicine. If the appellant instead of using Dextrose injections
would have described it as Astra injections or Astra Dextrose injections H
    694                  SUPREME COURT REPORTS            [1994) SUPP. 6 S.C.R

A   then it could be said that a relationship between the monograph and
    the medicine was established. In the case of appellant it was only a
    monograph to identify the manufacturer. (697 H, 698 A'to E]

         Mis Indo French Pharmaceutical Co., Madras v. Union of India and
    Ors., (1978) E.L.T. (J478); Union of India v. Indo-French Pharmaceutical
B   Company, (1983) E.L.T.725 (Mad.), approved.

        Ramsey Pharma Private Ltd v. Superintendent Central Excise,
    Allahabad and Ors_., (1983) E.L.T.78 (All), distinguished.

       Observations as to distinction between 'House Mark' and 'Product
C   Mark' .in Narayan's Book on Trade Marks and Passing-off, referred to.

        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3403 (NM)
    of 1987.

        From the Judgment and Order dated 29.9.87 of the Central Excise of
    the Customs and Gold (Control) appellate Tribunal, New Delhi in
D
    A.No.ED(SB) 1083of1988 C-Order No.751/87-C.

       V.J. Francis,V. Lakshmi Kumaran and V. Subramanium for the
    Appellant.

          N.K. Bajpai, S.D. Sharma and V.K. Verma for the Respondent.
E
          The Judgment of the Court was delivered by

        R.M. SARAI, J. This appeal under Section 35L of the Central Excises
    and Salt Act, 1944 ('Act' for short) raises two important questions of Jaw,
    one relating to construction of item no. 14E of the Central Excise Tariff
F   levying duty on Patent and Proprietary medicines and other the scope of
    proviso to Section 11 A of the Act.

         For purposes of duty patent and proprietary medicines were classified
    in relevant period in two broad categories- one, which were dutiable
    under tariff item 14E and other which fell under the residuary item 68. The
G   latter were wholly exempt from duty under Notification No. 55175 dated
    1.3.75. The appellant manufactured pharmacopoeial and non-
    pharmacopoeial medicines. One of the items manufactured by the appellant
    was 20% Dextrose injection. It is a trade name in the Indian
    pharmacopoeia. It being one of the medicines specified in pharmacopoeia it
    was wholly exempt from duty. An item which fell under tariff item 68 and
H
     ASTRA PHARM. (P) LTD. v. COLL. OF CENT. EXC. [R.M. SAHA!, J.]          695

     was wholly exempt from duty was further exempted from operation of rule A
     174 and no central excise licence to manufacture it was required to be taken
     out. The appellant, therefore, did not obtain any licence and cleared the
     Dextrose manufactured by it without paying any duty since the date of
     manufacture in December 1978 till 23rd January 1982 when notice was
     served on it for showing cause as to why Dextrose manufactured by it may
     not be subjected to duty under tariff item l4E as even though it was B
     pharmacopoeial product, yet the label used on the packing and the container
     bore a monogram which indicated a connection between the medicine and
     the appellant.

          To determine if the appellant was liable to pay duty on Dextrose
     injection manufactured by it, it will have to be examined if it fell under C
     tariff item l4E extracted bdow:

       Tariff Item No.         Description of Goods                Rate of duty

                                                      Basic      Special Excise
                                                                                   D
       l4E                     Patent or Proprietary   12-1/2%       10% of the
                               Medicines not contain- Adv.            basis duty
                               ing alcohol, opium,                  chargeable.
                               Indian Hemp or other
                               narcotic drugs or other
                               narcotics other than                                E
                               those medicines which are
                               exclusively ayurvedic,
                               unani, sidha or homoeopathic.

     Explanation: I
                                                                                   F
                      'Patent or Proprietary medicines' means any drug or
                      medicinal preparation, in whatever form, for use in the
                      internal or external treatment of, or for the prevention of
                      ailments in human beings or animals, which bears either on
..                    itself or on its container or both, a name which is not
                      specified in a monograph in a Pharmacopoeia Formulary or G
                      other Publications notified in this behalf by the Central
                      Government in the Official Gazette, or which is a brand
                      name, that 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 H
    696                  SUPREME COURT REPORTS              [1994] SUPP. 6 S.C.R

A                 that medicine for the purpose of indicating or so as to
                  indicate a connection in the course of trade between the
                  medicine and some person, having the right either as
                  proprietor or otherwise to use the name or mark with or
                  without any indication of the identity of that person.

B   Explanation : II

                  'Alcohol', 'Opium', 'Indian Hamp', 'Narcotic Drugs' and
                  'Narcotics' have the meanings respectively assigned to them
                  in Section 2 of the Medicinal and Tolet preparations (Excise
                  Duties) Act, 1955 (16of1955).
c                                                                                  •
          The entry is in two parts, one the main and other explanatory. The
     main part negatively excludes those medicines which contain any of the
     ingredients mentioned in it or are ayurvedic, unani,. sidha or homoeopathic
     medicines. The range of patent and proprietary medicines thus having been
    determined by the main part the explanation spells out the exact scope of
D   the entry by first widening its ambit by including any drug or medicinal
    preparation in whatever form and used for any ailment in human beings or
    animals then carves out an exception in favour of any pharmacopoeia!
    medicine or medicines which have been mentioned in a publication issued
    by the Central Government, but excludes again from it those medicines
    which even though mentioned in pharmacopoeia are identified by a
E   monograph or a symbol, signature or invented words so as to establish a
    relationship between the producer and the medicine. To put it simply, all
    those patent and proprietary medicines which are mentioned in pharmaco-
    poeia are excluded from the entry unless the manufacturer or producer by
    use of any distinctive mark establishes connection with the medicine. In
    other words, all those medicines which either bear a name which is not
F   specified in the Pharmacopoeia or which is a brand name and that brand
    name is used by any symbol, monogram or signature so as to establish a
    relationship between the medicine and the person manufacturing or selling
    it then such patent or proprietary medicine would be covered in it. The
    purpose appears to be that if a manufacturer manufactures medicines which
    were mentioned in Pharmacopoeia then it was not liable to pay any duty.
G   But if it produced a medicine which carries its own name which was not
    mentioned in the Pharmacopoeia, then it was liable to pay duty under this
    item. That is, a patent or proprietary medicine to attract levy under this
    tariff item must either be a medicine which was not specified in a
    Pharmacopoeia or the publication and carried on it or its container name of
    the produce by symbol or invented name etc. A medicine of which the
H   producer is the proprietor and it is know by its name would be covered in
ASTRA PHARM. (P) LTD. v. COLL. OF CENT. EXC. [R.M. SAHA!, J.]          697

this clause. The other class of patent or proprietary medicines to which this A
tariff item applies are those medicines which have a brand name or a
registered trade mark under the Trade and Merchandise Marks Act and
carry such marks or symbol, monogram as to establish relation between
medicine and producer or manufacturer. That is, the writing or monogram
on the medicine must establish that it was the producer or the manufacturer
who was proprietor of the medicine.                                           B
     This appeal is concerned with the latter clause i.e., the medicine
carrying brand name. The Explanation includes in its ambit all those
medicines which carry a brand name which is registered under the Trade
and Merchandise Act and the Manufacturer describes that medicine by any
symbol, monogram or label so as to establish a relationship between the C
manufacturer and the medicine then the medicine manufactured by him
could be included in the Explanation appended to Item 14E. The appellants
manufacture 20% Dextrose injections. It is not disputed that 20% Dextrose
injections are mentioned in Pharmacopoeia but the appellant has been
denied exemption as on the cover it carries the name 'AP-ASTRA.'
According to the Department, since the medicine is described by a D
monogram and it established a relation between the manufacturer and the
medicine, therefore, it was included in Explanation I to Item 14E. The
Tribunal found that letters 'AP.' do not constitute a morrogram because the
two letters are not interwoven but they being placed side by side in an
artistic manner on the top it made the medicine manufactured by the appel- E
!ant as a patent or proprietary medicine attracting central excise duty under
tariffitem 14E.

     As has been explained earlier the first part of the Explanation widens
the ambit of the entry by extending it to any drug or medicinal preparation
for use in internal or external administration for prevention of ailments in F
human beings or animals. But then it narrows it by restricting the
applicability of the tariff item to only such medicines which bear either on
itself or on its container or both a name which is not specified in a
monograph in a Pharmacopoeia. This obviously is not applicable to the
appellant as the injections manufactured by the appellant are specified in a
Pharmacopoeia. The other class of medicines to which this Explanation G
applies are those which have a brand name that is a name or a registered
trade mark under a Trade and Merchandise Marks Act. The medicine
manufactured by the appellants is not registered under the Trade and
Merchandise Marks Act. Therefore, it would attract levy only if its
container or packing carried any distinctive marks so as to establish the
relation between the medicine and the manufacturer. But the identification H
    698                  SUPREME COURT REPORTS               (1994] SUPP. 6 S.C.R

A   of a medicine should not be equated with the produce mark. Identification
    is compulsory under the Drug Rules. Technically, it is known as 'house
    mark'. In Narayan's Book on Trade Marks and Passing-Off, the distinction
    between 'house mark' and 'product mark' (brand name) is brought out
    thus,

B                 "677A. House mark and product mark (or brand name).

                  In the pharmaceutical business a distinction is made between
                  a house mark and a product mark. The former is used on all
                  the products of the manufacturer. It is usually a device in the
                  form of an emblem, word or both. For each product a
C                 separate mark known as a product mark or a brand name is
                  used which is invariably a word or a combination of a word
                  and letter or numeral by which the product is identified and
                  asked for. In respect of all products both the product inark
                  and house mark will appear side by side on all the labels,
                  cartons etc. Goods are ordered only by the product mark or
D                 brand name. The house mark serves as an emblem of the
                  manufacturer projecting the image of the manufacturer
                  generally."

         The 'AP' or 'Astra' on the container or packing was used to project the
    image of manufacturer generally. It did not establish any relationship
E   between the mark and the medicine. For instance, ifthe appellant instead of
    using· Dextrose injections would have described it as Astra injections or
    Astra Dextrose injections then it could be said that a relationship between
    the- monograph and the medicine was established. In the case- of appellant it
    was only a monograph to identify the manufacturer.

F       In Mis Indo French Pharmaceutical Co., Madras v. Union of India and
    others, (1978) E.L.T. (J 478) a learned Single Judge of the Madras High
    Court while construing tariff item 14E observed,

                  "a close reading of the Explanation however in my view
                  indicates that the marks, symbols, monogram, label, signature
G                 or other words which are used in the medicinal preparation or
                  its· container should be such as to indicate that the medicine is
                  a special preparation made by the manufacturer. The
                  connection between the medicine and the manufacturer
                  contemplated under the Explanation should be such as to
                  indicate that the manufacturer has a proprietary interest in the
H                 medicine."
    ASTRA PHARM. (P) LTD. v. COLL. OF CENT. EXC. [R.M. SAHA!, J.]           699

         This was approved by a Division Bench of the same High Court in A
    Union of India v. Jndo-French Pharmaceutical Company, (1983) E.L.T.
    725 Mad. Reliance was placed on Ramsey Pharma Private Ltd. v.
    Superintendent, Central Excise. Allahabad and Ors., (l 983) E.L.T. 78 All.
    for the Revenue and it was claimed that this decision was followed by the
    Tribunal and since it was based on correct interpretation of Explanation I
    the appellant was not entitled to any relief. It would be seen that in the B
    decision rendered by the Allahabad High Court it is not clear if the
    container bore the name of the medicine as well. What has been extracted in
    the judgment is that the medicine has been manufactured by Mis Ramsey
    Phanna Pvt. Ltd. As stated earlier if the container of the appellant would
    have stated that these were Astra Dextrose injections then it could be said
    that a relationship between the medicine and the manufacturer was C
    established. The ratio laid down by the Madras High Court is approved as
    correctly enunciating the scope of Explanation I. Since the appeal is being
    allowed on merits the question whether the Revenue was justified in
    reopening the case under proviso to Section I IA of the Act is rendered
    academic and is not necessary to be decided.
                                                                                   D
         In the result this appeal succeeds and is allowed. The order passed by
    the Tribunal is set aside and the question of law raised by the appellant is
    decided by saying that Dextrose injections manufactured by the appellant in
    the relevant years were not patent and proprietary medicines dutiable under
    tariff item 14E of the Schedule. There shall be no order as to costs.
                                                                                   E
    T.N.A.                                                     Appeal allowed.




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