Holding

The term "parenteral" has a wide meaning encompassing routes that bypass the alimentary canal, including vaginal administration, so the suppositories are covered by the notification and entitled to total exemption.

Summary

Mac Laboratories, a manufacturer of Kemicetine Vaginal Suppositories containing chloramphenicol, claimed exemption from excise duty under Notification No. 116/69‑CE (as amended) which exempts "chloramphenicol and its esters for oral and parenteral use". The department issued notices denying exemption, arguing that the suppositories were neither oral nor parenteral. The Customs, Excise and Gold (Control) Appellate Tribunal held that "parenteral" meant only injections and excluded vaginal administration. On appeal, the Supreme Court examined the meaning of "parenteral" in pharmacological and dictionary sources, concluding that it broadly covers any route that bypasses the alimentary canal, including intravaginal delivery that leads to systemic absorption. Consequently, the Court held that the suppositories fall within the notification and are entitled to total exemption. The appeal was allowed.

Issues considered

Whether Kemicetine Vaginal Suppositories containing chloramphenicol qualify as "chloramphenicol and its esters for oral and parenteral use" under Notification No. 116/69‑CE as amended.
How the term "parenteral" should be interpreted for the purpose of the exemption notification.
Whether the exemption under Central Excise Rules, 1944 applies to the product in question.

Legislation cited

Central Excise Rules, 1944s. Rule 8(1)
Central Excises and Salt Act, 1944

Subjects

central exciseexemptionparenteraloralchloramphenicolvaginal suppositoriespharmaceutical classificationinterpretation of notification

Judgment

MAC LABO RA TORIES (P) LTD. A
v.
COLLECTOR OF CENTRAL EXCISE, BOMBAY

NOVEMBER 22, 1994

[R.M. SAHAI AND N.P. SINGH, JJ.] B

Central Excise Rules, 1944-Rule 8 (1)-Notification No. l 16169-CE
dated 3.5.1969 as amended by Notification No. 106180-CE dated
19.6.1980-Word 'Parenteral use'-Meaning and scope-Whether
Kemicetine Vaginal Suppositories, a patent and proprietary medicine which C
contained antiniotic Chloramphenicol was 'Chloramphenicol and its esters
for oral and parenteral use',-Held, Yes, therefore, entitled for total.
exemption.

The appellant is a manufacturer of Kemicetine Vaginal Sup-
positories, a patent and proprietary medicine which contained the D
antiniotic chloramphenicol. These suppositories are introduced in the
vagina by hand. Its wax-like material containing antiniotic
chloramphenicol melts at the temperature of the vagina and the melted
medicine then gets absorbed into the system through the epitheliums or
mucous preparation lining the vagina. The administration of this
medicine is not against any topical or local infection but is directed at E
the internal infection of vagina resulting from the oral functional
system. By absorption into the system its effect is to remove the vaginal
infection. It is primarily used to cure vaginal discharge resulting from
oral functioning of the system. It acts as oral antibiotic.

The appellant was being granted exemption on the suppositories F
till notices were issued raising demand. The basis for the notices for
short levy of excise duty was that the medicine produced ·by the
appellant was neither for oral nor pa~enteral use. It was claimed that
'Kemicetine Vaginal Suppositories' were treated by the Drug Control
Authorities as life saving drug. And the produce was classified by the G
department for concessional rate of duty at 2-1/l % ad-valorem since it
was specified at serial No. 14 of the Schedule. But after the drug
became wholly exempt from duty the department erroneously bas
taken the view that the medicine which was in tablet form and was
meant for parenteral use was not entitled to exemption since it was not
administered through oral route. It was administered through oral H
621
622 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R

A route. It was claimed that the word 'parenteral' was very wide and it
could not be confined to use of injections only.

The Assistant Collector confirmed all five notices and the order
was maintained by the appellate authority. In further appeal, the
Customs, Excise and Gold (Control) Appellate Tribunal also held
B against the appellant, not agreeing with the claims of the appellant that
any medicine which is not administered through mouth would be
parenteral. The Tribunal found that 'parenteral' refers to introduction
of a medicine by route other than alimentary canal. It also held that
parenteral administration of medicine refers to method that involved
absorption into the body Iluids and system of the drug by active
c therapeutic effect. It further held that even though the Drug Control
Authority had classified the medicine other than parenteral it was
covered in the notification. However, it rejected the claim of the appel-
lant.

This appeal has been filed against tht order of the Tribunal. The
D
question for consideration is, whether Kemicetine Vaginal
Suppositories which contained the antiniotic chloramphenicol was
'chloramphenicol and its esters for oral and parenteral use within the
meaning of the Notification No. 116/69-CE dated 3.5.1969 as amended
by the Notification No. 106/80-CE dated 19.6.1980 issued in exercise of
E powers conferred by sub-rule (1) of rule 8 of Ce~tral Excise Rules,
1944.

Allowing the appeal, this Court

HELD 1.1 The ambit of the word 'parenteral' is very wide. Its use
F in the Notification No. 116/69-CE as amended by the Notification No.
106/80-CE dated 19.6.1980 issued in exercise of powers conferred by
sub-rule (1) of rule 8 of Central Excise Rules, 1944, has been in still
under sense. The use of the word 'oral' for 'enteral' and 'parenteral'
for injections in the Notification is not without purpose. Enteral
administration of medicine may be sublingual, that is, 'absorption of
G drugs by oral mucous membrane producing systemic effects' or oral,
one of the most popular routes of administering drugs in the form of
tablets, capsules, mixtures, powder, pills, emulsion or rectal of local or
topical, that is, the administration · of drugs for systemic actions
specially in vomiting, unconsciousness and when intestinal absorption is
H to be avoided. (630 E, 624 C, 630 E, F)
MAC LABO RATORIES v. COLLECTOR C. EXCISE 623

1.2 The Government even though it was aware of the word 'enter- A
al' decided to use the word 'oral' in the Notification obvinusly so that
there may not be any ambiguity. In technical sense sublingual
administration may be different from oral but in the common and
popular sense a medicine taken sublingually is as much oral as a tablet
or capsule or mixture taken by a patient. Similarly, the word
'parenteral' was technically understood for injections whether they are B
intra muscular, intravenous or intra-dermal. But in the larger sense it
has come to include even inhalers as, 'gaseous and volatile drugs may be
inhaled and absorbed through the pulmonary epitheliums and mucous
membranes of the respiratory tract.' This widening of the ambit of
word 'parenteral' was overlooked by the Tribunal. It was swayed by
hyper-technical use of the medicine. Even assuming that it was used to C
remove local infection or inflammation it could not be denied that it
entered the blood stream. It, therefore, satisfied the broad test of
entering the blood stream directly and by-passing the alimentary canal.
(630 G, H, 631 A, B)

1.3 The two words 'oral' and 'parenteral' in fact appear to have D
been used to extend the benefit to all the medicines produced by the use
of chloramphenicol. Reading the Notification narrow!y or technically
;tS has been done by the Tribunal, may result in denying the benefits to
those medicines which are produced by use of CAF but used locally.
There can be no rationale for it. The Notification the construction of
which is involved is an exemption notification. Therefore, the benefit of E
it is available only to those who fall under it. To that extent, the
notification has to be construed strictly. That is the medicine must be
for oral or enteral use. But once it is found that a medicine falls in the
category of parenteral medicine then the benefit cannot be denied
because it falls in category of those medicines which are applied locally.
Topical or medicines used for local absorption appeared to be included F
in the word 'parenteral'. In fact, there are only two classifications of
the medicines-one, which are known as enteral, that is, which passed
through alimentary canal and other parenteral which extends to all
other medicines which are not enteral. The subsequent classification of
the medicines used locally for convenience cannot take it away from the
main and the broader classification of it being parenteral. (631 C, D-E) G
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 958of1985.

From the Judgment and other dated 23rd Aug. 1984 of the Custom's
and Gold Control Appellate Tribunal, Delhi in Appeal No. ED (SR) A.No
969/83-II. H
624 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R

A Vimal Dave, Mrs. Neelam Kalra and Lakh Raj for the Appellant.

Gouri Shanker Murti, S.D. Sharma and V.K. Verma for the Respon-
dent.

The Judgment of the Court was delivered by
B R.M. SABAi, J. Whether Kemicetine Vaginal Suppositories (KVS), a
patent and proprietory medicine which contained the antiniotic
chloramphenicol (CAF) was 'chloramphenicol and its esters for oral and
parenteral use' with in the meaning of Notification No. 116/69 -CE dated
3.5.1969 as amended by tl:e Notification No. 106/80-CE dated 19.6.1980
c issued in exercise of powers conferred by sub-rule (1) of rule 8 of Central
Excise Rules, 1944 was answered against the appellant by Customs, Excise
and Gold (Control) Appellant Tribunal.

The appellant is a manufacturer ofKVS of two different strengths.viz.,
0.25 grams and 0.50 grams of chloramphenical antibiotic contents. These
suppositories are introduced in the Vagina by hand. Its wax like material
D
containing antiniotic chloramphenicol melts at the temperature of the
Vagina and the melted medicine then gets absorbed into the system through
the epitheliums or mucous preparation lining the Vagina. The adminis-
tration of this medicine is not against any topical or local infection but is
directed at the internal infection of Vagina resulting from the oral
E functional system. By absorption into the system its effect is to remove the
vaginal infection. It is primarily used to cure vaginal discharge resulting
from oral functioning of the system. It acts like oral antibiotic.

The appellant was being granted exemption on the suppositories by the
department till five notices were issued on 11th June 1980, 17th June 1980,
F 9th October 1980, 24th January 1981 and 8th May 1981 raising demand for
the period 1st September 1979 to 31st May 1980, 1st January 1979 to 31st
August 1979, 1st June 1980 to 31st August 1980, 1st September 1980 to
31st December 1980 and 1st January 1981to30th Appl 1981 respectively.
The basis for the notices for short levy was that the medicine produced by
the appellant was neither for oral nor parenteral use. In reply it was claimed
G that, Kemicetine Vaginal Suppositories were treated by the Drug Control
authorities as life saving drug. And the produce was classified by the
department for confessional rate of duty at 2-112% ad valorem since it was
specified at serial no. 14 of the Schedule. But after the drug became wholly
exempt from duty the department erroneously has taken the view thal the
medicine which was in tablet form and was. meant for parenteral use was
H not entitled to exemption since it was not administered through oral route. It
MAC LABORATORIES v. COLLECTOR C. EXCISE [SAHAI, J.] 625

was claimed that the word 'parenteral' was very wide and it could not be A
confined to use of injections only. The appellant objected to notices so far
they were for period beyond six months prior to the date of notice. The
Assistant Collector did not find any merit in the objection raised by the
appellant and confirmed all the five notices issued by the Superintendent,
Central Excise. The order was maintained by the appellate authority. In
further appeal to the Tribunal it was not disputed that the medicine B
manufactured by the appellant contained chloramphenicol. Nor there was
any dispute that in terms of pharmacology parenteral is understood to refer
to such medication as is applied in such a manner that it by-passes the ali-
mentary canal which has its opening point in the mouth and ends in the
anus. The dispute centered round whether use of suppositories through
vagina was parenteral use .. The Tribunal after examining affidavits filed on C
behalf of both the parties, the text books and various dictionaries and papers
on this subject found 'pru-enteral refers to introduction of a medicine by
route other than alimentary canal. The Tribunal further held that there were ·
three methods of administering drugs and medicines one by putting it in
mouth and swallowing it; second, by injecting either intramuscularly or
intravenously; and third by local application on surface of the body and its D
absorption. The Tribunal did not agree with the claim of the appellant that
any medicine which is not administered through mouth would be paren-
teral. The Tribunal found parenteral administration of medicine refers to
method thatinvolved absorption into the body fluids and system of the drug
by active therapeutic· effect. It further held that even through the Drug
Control Authority had classified the medicine other than parenteral it was E
covered in the Notification. However, it rejected the claim of appellant. But
it allowed the appeal in part and confined the demand notice to six months
before the date of notice.

Notification No.116/69-CE dated 3rd May 1969 was issued in exercise F
of powers conferred by sub-rule ( 1) of Rule 8 of the Central Excise Rules,
1944 exempting patent or propritory medicines falling under item 14 of the
1st Schedule of the Central Excises and Salt Act, 1944 (Act l of 1944) and
containing one or more oftlie ingredients specified in the Schedule annexed
from so such of the duty of excise livable thereon as was in excess of 2-
112% advalorem. In the Schedule serial no.14 read as under: G
"14. Chloramphenicol and its esters for oral and parenteral
use;"

On 19th June 1980 column 2 of the Schedule was amended and the
amended entry provided that in the said notification for the words and H
626 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R

A figures, 'that from so such of the duty of excise leviable thereon as is in
excess of 2-112% ad 'valorem the words, 'from the whole of the duty of
excise leviable thereon' shall be substituted. Therefore any patent or
proprietory medicine if it fell in item No.14 of the Schedule it became
wholly exempt from payment of duty.

B For exemption two conditions were required to be satisfied - one, that
the patent and proprietory medicine should have been produced out of one
or more ingredients specified in the Schedule and that it should have been
for oral and parenteral use. Since the ingredient used in production of KVS
was chloramphenicol it satisfied the first requirement as provided in the
notification of being a patent or a proprietory medicine in manufacture of
C which one of the ingredients as specified in the Schedule was used. But that
alone was not sufficient for exemption as it was further required to satisfy
that the medicine was for oral and parenteral use. The appellant did not
claim that KVS manufactured by it could be used orally. Therefore, the
only question that arises for consideration is whether it was· for parenteral
use or not.
D
In Pharmaceutical Handbook edited by A. Wade 'Parenteral' is defined
as,

"Not by way of the alimentary tract; administered by a route
other than that of the alimentary tract."
E The Faber Medicine Dictionary explains the word as,

"Outside the intestinal tract; relating to administration of a
substance by a way other than that of the alimentary. tract,
e.g. by subcutaneous, intramuscular or intravenous
injection."
F
In Black'~ Medical Dictionary by William A.R. Thomson the word is
defined as,
"administration of drugs by any route other than by the
mouth or by the bowel."
G Churchill Livingstone's Pocket Medical Dictionar1 de~med the word
as,
- "Not via the alimentary tract."
Lewis's Pharmacology by James Crossland explains 'parenteral
H administration' as under:
MAC LABORATORIES v. COLLECTOR C. EXCISE [SAHAI, J.] 627

"The tenn parenteral administration (par-beyond, enteral- A
intestinal) implies that the drug is given by a route which
takes it directly into the body fluids, by passing the
preliminary process of transport through the intestinal wall
or pulmonary alveoli which is necessary when drugs are
ingested, inhales or placed in the rectum. With all fonns of
parenteral administration, sterile precautions are necessary.'' B
In Remington's Pharmaceutical Sciences it is stated as under :

"The term parenteral (GK, para enter on= beside the intes-
tine) refers to the route of administration of drugs by
injection under or through one or more layers of skin or C
mucous membrane."

In the same chapter while discussing administration of parenteral
preparations it was observed,

"drugs can· be administered parenterally when they cannot D
be given orally because of the unconscious or unco-
operative state of the patient, or because of inactivation or
lack of absorption in the intestinal tract."

The author while discussing parenteral products has observed t'tat
parenteral preparations could be divided in three factors-one, drug pellet E
absorption; two solution absorption; and three, parenteral dispersion
absorption. It is explained in 'the Basis of Pharmacology, Second Ed. by
Avram Goldstein, Lewis Aronow and Summer M. Kalman' as under:

"The possible routes of drug entry into the body may be
divided into two classes - enteral and parenteral. In enteral F
administration the drug is placed directly in the
gastrointestinal tract by placing it under the tongue
(sub lingual), by swallowing it (oral), or by rectal
administration. In parenteral administration the
gestrontestinal tract is by-passed. There are many parenteral G
routes. The commonest are subcutaneous (s.c.),
intramuscular (i.m.), and intravascular: but drugs may also
be applied to the skin or injected intradermally, for local
effect or to be absorbed percutaneously: they may be
inhaled for direct action on the bronchial tree or to be
absorbed into blood at the alveoli: they may be injected into H
628 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R

A or near the spinal canal: they may be introduced
intravaginally".

[Emphasis supplied]

The Tribunal itself found that from the definitions in different
B dictionaries it was apparent that parenteral refers to introducl:ion of
medicines by route other than the alimentary tracts. It further observed,

"There can be no doubt whatever from these paragraphs
which have been relied upon the appellant that when speak
of vaginal drug delivery by which the drug is absorbed, the
c drug spoken of is a systemically active steroids hormone,
and is said to be effectively absorbed through the vaginal
mucosa: The drug being a hormone, its effects will depend
on its systematic absorption, although the administration of
the progesterone was by means of a suppository. This route
appears to have been explored because progesterone was
D found to be orally inactive. Even for the contraceptive, the
article described the advantage of the continuous infusion
when the vaginal route is used, as it can prevent the
possibility of systemic toxicity that can result from the
surging and ebbing plasma drug levels. The systemic
.E absorption and action of the drug is beyond doubt. In other
words, the paragraph describes a systemic drug
administration through the route of the vagina."

Yet it rejected the claim of the appellant as,

F "none of the authorities who have been presented before us
speak of the intravaginal route of administrations parenteral
except when the administration is meant to be a systemic
administration, the drug or medicine being systemically
absorbed, and penetrates into the body lymph blood or
tissues in a more or less complete manner. Whatever the
G area of application, the aim is the same - to cause the drug
to penetrate into the body system, thereto act and to be
physiologically taken up and become integral with the
system in such a manner that after a lapse of a period upon
the speed and degree of penetration/absorption, rejection
H whether voluntarily or involuntarily becomes impossible."
MAC LABORATORIES v. COLLECTOR C. EXCISE [SAHAI, J.] 629

The Tribunal did not disbelieve that suppositories were used even for A
curing typhoid. But it held that a close study of the material produced
before it indicated that CAF are used to treat,

"local infections and inflammations of female genital tract.
The absorption aimed at is clearly a local absorption of the
drug for the purpose of combating and eradicating B
trichomoniasis not only in the mucosa but also in the extra
vaginal lacunae to eradicate inflammation and infection;
and it needs to be understood that there is no need, for the
drug to operate effectively, to penetrate and be absorbed
systemically, because, as we have seen, the infections are
all local in the vulva, vagina and cervix region. The paper C
indeed does not suggest anywhere that one for the treatment
of these maladies, there is any need for systemic absorption
of the drug. The reason for this is obvious. The target areas
are all superficial - that is - not jnside the system but outside
the internal body system, although in a protected/covered
cavity or orifice. Mis Mac Laboratories have not shown any D
evidence to satisfy us and to convinc~ us that their
Kemicetine vaginal suppositories are parenteral in their
activity is to combat infecting organism which lie on the
surface of the body system itself."

Medicines used through vaginal route could, thus, be parenteral if its E
administration according to Tribunal was for systemic absorption. But since
KVS produced by the appellant was for local absorption it could not be held
to be parenteral. Whether it approach of the Tribunal is correct or not but
this appears to be certain that the word 'Parenteral' is wide enough as
bronchial inhalers have come to be included in it even though it is neither F
taken orally nor it is injected nor it is meant for local use. In Goodman and
Gilman's The Pharmacological Basis of Therapeutics, 'Topical
Application' extends to, drugs applied to the mucous membranes of the
conjunctival, nasopharynx, oropharynx, vagina, colon, urethra, and urinary
bladder primarily for their local effects. Occasionally, as in the application
of antidiuretic hormone to the nasal mucosa, systemic absorption is the G
goal. Absorption through mucous membranes occurs readily. Similarly
medicines taken through vaginal route meant for systemic absorption are
included in it. Therefore, the word 'parenteral' is not confined to the
injections. Yet the question is whether suppositories produced by the
appellant which on the finding of the Tribunal are used for local absorption
can be held to be included in it. The word 'parenteral' is not confined to H
630 SUPREME COURT REPORTS [1994] SUPP. S S.C.R ·

A injections. But does it include medicines used for local application. For
determining this it is necessary once again to understand the distinction
between 'enteral' and 'parenteral'. In other words what is the basis on
which this classification has been made. Each medicine whether it is taken
orally or injected in the body or applied locally enters the blood stream to
be effective and efficacious. In enteral administration 'the drugs are
B absorbed from the small intestine'. Whereas the medicine injected in the
body reaches in the blood stream directly. The medicine applied locally or
tropically too enters the blood stream through mucou~ membrane or skin.
The range of topical application is very wide. But the basic characteristic is
that the medicine applied through this method enters the blood stream
directly even though slowly. The basis characteristic of administration of
c drug parenterally is thus satisfied. That is why the parenteral is described by
various writers as every medicine which by-passes alimentary canal. Since
the medicine either injected by needle or applied locally enter the blood
stream directly it was classified as parenteral by Avram Goldstien extracted
earlier.

D Till now the discussion has been about understanding of the word in
Pharmacology;..But the Courts are concerned, primarily, how the
Notification granting exemption should be construed and what was the
intention in using the w~rd parenteral in the Notification. The exemption
claimed by the appellant was refused as the suppositories produced by the
appellant were for local absorption. It has been explained that the ambit of
E the word 'parenteral' is very wide. Its use in the Notification has been in
still wider sense. The use of the word 'oral' for 'enteral' and 'parenteral'
for injections in the Notification is not without purpose. Enteral
administration of medicine may be sublingual, that is, 'absorption of drugs
by oral mucous membrane producing systemic effects' or oral, 'one of the
most popular, routes of administering drugs in the form of tablets, capsules,
F
mixture, powder, pills, emulsions or rectal' or'local or topical, that is, the
administration of drug for systemic actions specially in vomiting,
unconsciousness and when intestinal absorption is to be avoided. The
Government even though it was aware of the word 'enteral' decided to use
the word 'oral' in the Notification obviously so that there may not be any
G ambiguity. In technical sense sublingual administration may be different
from oral but in the common and popular sense a medicine taken
sublingually is as much oral as a tablet or capsule or mixture taken by a
patient. Similarly the word 'parenteral' was technically understood for
injections whether they are intramuscular, intravenous or intra-dermal. But
in the larger sense it has come to include even inhalers as, gaseous and
H volatile drugs may be inhaled and absorbed through the pulmonary
MAC LABORATORIES v. COLLECTOR C. EXCISE [SAHAI, J.] 631

epitheliums and mucous membranes of the respiratory tract' (Goodman and A
Gilman). This widening of the ambit of word 'parenteral' was overlooked
by the Tribunal.It was swayed by hyper-technical use of the medicine. Even
assuming that it was used to remove local infection or inflammation it could
not be denied that it entered the blood stream. It, therefore, satisfied the
broad test of entering the blood stream directly and by-passing the
alimentary canal. The two words 'oral' and 'parenteral' in fact appear to B
have been used to extend the benefit to all the medicines produced by the
use of chloramphenicol. Reading the notification narrowly or technically as
has been done by the Tribunal, may result in denying the benefits to those
•
medicines which are produced by use of CAF but are used locally. There
can be no rationale for it. For instance a medicine produced for bilingual
use cannot be denied exemption because the word 'orally' is confined C
technically to tablets and mixtures. Similarly exempting tablets and
injections but excluding ointments would not be harmonious reading. It
would result in narrowing down and curtailment of the ambit of the·
notification. The Notification the construction of which is involved is an
exemption notification. Therefore, the benefit of it is available to only those
who fall under it. To that extent the Notification has to be construed strictly. D
That is the medicine must be for oral or parenteral use. But once it is found
that a medicine falls in the category of parenteral medicine then the benefit
cannot be ~enied because it falls in category of those medicines which are
applied locally. Topical or medicines used for local absorption appear to be
included in the word 'parenteral'. In fact the definitions which have been E
extracted earlier do support the claim of the appellant that there are only
two classifications of the medicines - one, which are known as enteral, that
is which passed through an alimentary canal and other parenteral which
extends to all other medicines which are not enteral. The subsequent classi-
fication of the medicines used locally for convenience cannot take it away
from the main and the broader classification of it being parenteral.
F
In the result this appeal succeeds and is allowed. The question raised
by the appellant is decided by saying that the suppositories produced by the
appellant were covered in the Notification No. I 06/80-CE dated 19th June
1980 and, therefore, were entitled for total exemption. There shall be no
order as to costs.
G
A.G. Appeal allowed.