APHALI PHARMACEUTICALS LTD.versusSTATE OF MAHARASHTRA & ORS.

              APHALI PHARMACEUTICALS LTD.                                   A
                           v.
              STATE OF MAHARASHTRA & ORS.

                       SEPTEMBER 19, 1989

                [G.L. OZA AND K.N. SAIKIA, }J.]                             B

      Medicinal and Toilet Preparations (Excise Duties) Act 1955-
Amendment Act 19 of 1961-Finance Act 1962-Section 18 thereof-
Levy of excise duty on the product "Ashvagandharist" manufactured by
the appellant-Whether permissible under the schedule to the Act as
amended-Effect and Interpretation of Explanation I added to the
Schedule of the Act by Finance Act 1962-Circular dated May 31, 1962
                                                                            c
issued by the Government of Maharashtra-Whether in conformity with
the provisions of the Act and Explanation I of the Schedule.

      Medicinal and Toilet Preparation (Excise Duties) Rules 1956-
Rules 64 to 66 whether consistent with the schedule and the circular        D
dated 31.5. 1962.

      The appellant is a company having its registered office at
Ahmednagar in Maharashtra. It carries on business as manufacturers
of Ayurvedic preparations including "Asvas" and "Aristhas ". At the
material time the appellant was manufacturing and selling an                E
Ayurvedic product "Ashvagandharist" which is a medicinal prepara·
tion containing self-generated alcohol but not capable of being con·
sumed as ordinary alcoholic beverages.

      Medicinal and Toilet Preparations (Excise Duties) Act 1955 came
into force on 1.4. 1957. The schedule to the said Act contained two items   F
specifying "medicinal and toilet preparations containing alcohol"
which are prepared by distillation or to which alcohol has been added
and which are capable of being consumed as ordinary "alcoholic bever-
age" and "medicinal and toilet preparations not otherwise specified
containing alcohol" as the commodities excisable under the provisions
of the Act. The said "Ashvagandharist'" was treated and accepted by         G
the Excise .Authorities as being exempt from the payment of excise duty
upon the basis and footing that the same was an Ayurvedic preparation
containing self-generated alcohol which was not capable of being con-
sumed as ordinary alcoholic beverage and which fell under item 2(i) of
the schedule in respect of which, the rate of excise duty prescribed in
the schedule was "Nil".                                                     H
                                   129
     130         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

         The Act was amended by Amendment Act 19 of 1961 whereby
A concept of "patent and proprietary" medicine was introduced in the
  schedule. The Amendment Act, by an Explanation introduced in the
  schedule the definition of "patent and proprietary" medicine contained
  in the Drugs Act 1940. Despite the said amendment in the schedule the
  appellants' product continued to be treated as exempt from the liability
B to"pay excise duty on the ground that it was covered under item 2(i) of
  the schedule which item was re-numbered as item 3(i) of the schedule.
  Thereafter by section 18 of the Finance Act 1962, the Act was further
  amended by substitution of Explanation I to the schedule of the Act. By
  the said explanation, a "patent and proprietary" medicine was defined
  as a medicinal preparation of the description and the type specified in
  the Explanation. The said Explanation was given retrospective effect
c from April 23, 1962. In pursuance of the said Explanation I brought by
   the Finance Act, Director of Prohibition and Central Excise, Govt. of
   Maharashtra, Bombay issued a circular dated May 31, 1962, which
   inter alia directed that the medicinal preparations containing self-
   generated alcohol but not capable of being consumed as alcoholic bever-
D age were to be treated as products falling under Item No. I and not Item
   3 of the schedule. As a result of that circular, the Respondents levied
   excise duty on the appellants' product amounting to Rs.2,18,282.16p.
   and realized the same from the appellant. The appellant paid the
   amount "under pr9test".

El          With a view to recover the aforesaid amount, which according to
     the appellant, was illegally recovered by the Respondents, the appellant
     filed a suit, being special suit No. 23 of 1965 in the Court of Civil Judge
     Sr. Division, Ahmednagar.

            The Civil Judge by his order dated 27.3.69 decreed the appellant-
F    plaintiff's suit with interest at 6% per annum from the date of the suit
     till realisation.

           The Respondents appealed to the High Court against the Order of
     the Civil Judge and the High Court allowed the appeal, reversed the
     Judgment and decree passed b.r the Civil Judge and dismissed the
o    appellant's suit. Hence this appeal by the plaintiff-appellant by special
     leave.

           Allowing the appeal, this Court,

           HELD: From Explanation I of the Schedule of the Act as sub-
H stituted by Act S of 1964 it is clear that patent or proprietary medicine
           A. PHARMACEUTICALS v. STATE OF MAHARASHTRA                 131

 means any medicinal preparation which is not specified in a monograph
                                                                             A
'in a Pharmacopoeia, Formulary or other publications notified in this
 behalf by the Central Government in the Official_ Gazette. [144C]

      To be a patent medicine one would be required to have a patent.
A patented article means an article in respect of which a patent is in
force. [1440]                                                                B

     A patent medicine will, therefore, mean medicine in respect of
which a patent is in force. [144E]

       Patent means a grant of some privilege, property, or authority,
made by the Government or sovereign of a country to one or more
individuals. A proprietor is one who has the legal right or exclusive
                                                                             c
title to anything. It is synonymous with owner. A person entitled to
a trade mark or a design under the Acts for the registration or
patenting of trade mark or design is called a proprietor of the trade
mark or design. [144E-F]
                                                                             D
      A Schedule in an Act of Parliament is a mere-question of drafting ..
It is the legislative intent that is material. An Expl_anation to the
Schedule amounts to an Explanation in the Act itself. [147F]

      The Schedule may be used in construing provisions in the body of
t_he A<t. It js as much an Act of the Legislature as the Act itself and it   E
must be ~ead together with the Act for all purposes of construction.
Expressions in the Schedule c1c1nnot control or prevail against express
enactment and in case of any inconsistency between the schedule and the
enactment, the enactment is to prevail and if any part of the, schedule
cannot be made to correspond it must yield to the Act. [147H; 148A-B]
                                                                             F
       An explanation is different in nature form a proviso, for a
proviso excepts, excludes or restricts while an explanation explains
or clarifies. Such explanation or clarification may be in respect of
matt~rs whose meaning is implicit and not explicit in the main section
itself. l149F]
                                                                             G
      Bihta Marketing Union v. Bank of Bihar, AIR 1967 SC 389:
[1967] 1 SCR 848; State of Bombay v. United Motors, AIR 1953 SC
252:-(1953] SCR 1069;-Collector of Customs v. G. Dass & Co., AIR
1966 SC 1577; Burmah Shell Oil Ltd. v. Commercial Tax Officer, AIR
1961 SC 315: [1961] 1 SCR 902; Dattatraya Govind Mahajan v. State of
Maharashtra, AIR 1977 SC 915 (928): [1977] 2 SCR 790 and Hiralal             H
    132         SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

A Ratanlalv.StateofU.P., [i973] iSCC2!6.

          Ex praecedentibus et consequentibus optima fit interpretatio. The
    best interpretation is made from the context. lnjustum est nisi tota lege
    inspecta, de una aliqua ejus particula proposita judicare Ve/ respon-
    dere. It is unjust to decide or respond as to any particular part of
B   a law without examining the whole of the law. lnterpretare et con-
    cordare leges ligibus, est optimus interpretendi modus. To interpret
    and in such a way as to harmonize laws with laws, is the best mode of
    interpretation. [ISIG-H]

         Jura eodem modo distituentur quo constitutuntur. Laws are ab-
    rogated by the same means (authority) by which they are made. [152A]
c
          Every word in a Statute is to be given a meaning. A construction
    which would leave without effect any part of the language of a statute
    will normally be rejected. Every clause of a statute is to be construed
    with reference to the context and other clauses of the Act so as to make,
D   as far as possible, a consistent enactment of the whole'statute. [1528]

          A specific provision to include Ayurvedic preparations containing
    self-generated alcohol which are not capable of being consumed as or-
    dinary alcoholic beverages was necessary. Thal having not been done
    by the Explanation itself, it was not permissible to include it by the
E   Circular. The Explanation I could not have been in conflict with the
    provisions of the Act and the Circular could not have been in conflict
    with the Explaruition, the Schedule, the Rules and the Act. ll52E-F)

          The Court set· aside the order of the High Court and restored that
    of the Civil Jndge decreeing the suit. [152G]
F
          Inland Revenue Commissioners v. Gittus, [1920) I KB 563;
    Baidyanath Ayurved Bhawan Pvt. Ltd. v. The Excise Commissioner,
    U.P., [1971] 2 SCR 590; Mohan/al Magan/al Bhavsar v. Union of
    India, [1986] l SCC 122; Commissioner of Sales Tax v. The Modi Sugar
    Mills Ltd., [1961] 2 SCR !89 and Cape Brandy Syndicate v. Commis-
G   sioners of Inland Revenue, [192i] I KB 64, referred to.

         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1845
    (N) of 1974.

       From the Judgment and Decree dated 6/7 .3.1974 of the Bombay
H High Court in First Appeal No. 586 of .1969.
        A. PHARMACEUTICALS v. STATE OF MAHARASHTRA[SAIKIA, J.]          133
I        S.K. Dholakia and H.S. Parihar for the Appellant.
                                                                               A
         A.K. Ganguli, A.M. Khanwilkar, A. Subba Rao, C.V. Subba
    Rao and A.S. Bhasme for the Respondents.

         The Judgment of the Court was delivered by
                                                                               B
          SAIKIA, J, This plaintiff's appeal by special leave is from the
    Appellate Judgment and Decree of the High Court of Judicature at
    Bombay reversing those of the trial court and dismissing plaintiff's
    special suit.

           The appellant is a Limited Company registered under the Com-
    panies Act having its registered office sit_uate at Ahmednagar within      c
    the ·State of Maharashtra. The appellant carries on business, inter
    alia, as manufacturers of Ayurvedic preparations including "Asavas",
    "Aristhas". At all times material to this appeal, the appellant was
    manufacturing and selling an Ayurvedic product called "Ashvagandh-
    aarist" which is a medicinal preparation containing self-generated al-     D
    cohol but not capable of being consumed as ordinary alcoholic
    beverage,

          Under the provisions of the Medicinal and Toilet Preparations
    (Excise Duties) Act, 1955, hereinafter referred to as "the Act", which
    came into force on 1st April, 1957, excise duties were levied on medi-     E
    cinal and toilet preparations specified in the Schedule to the Act,
    hereinafter .referred to as "the Schedule". The Act, as originally stood
     in 1955, inter alia, contained two items in the Schedule respeciively
    specifying "medicinal and toilet preparations.containing alcohol which
    are prepared by distillation or to which alcohol has been added and
    which are capable of being consumed as ordinary "alcoholic beverage"       F
    and "medicinal and toilet preparations not otherwise specified con-
    taining alcohol", being the commodities excisable under the provisions
    of the Act. The said "Ashvagandhaarist'' was treated and accepted by
    tile Excise Authorities as being exempt from the payment of any excise
    duty upon the basis and the footing that the same was an Ayurvedic
    preparation containing self-generated alcohol which was not capable        G
    of being consumed as ordinary alcoholic beverage, and which fell
    under item 2(i) of the S~hedule in respect of which the rate of excise
    duty postulated in the Schedule was "Nil".

        The Act was amended by the Amendment Act 19 of 1961. The
    amendment, inter alia, introduced the concept of "patent and pro·          H
     134         SUPREME COURT REPORTS              [1989] Supp. 1 S.C.R.

     prietary medicine" in the Schedule. The amendment Act, however, by
     an Explanation, introduced in the Schedule the definition of the
     "patent and proprietary medicine" contained in the Drugs Act, 1940.
     Even after the introduction of the said amendment, the appellant's
     aforesaid product continued to be treated as exempt from the liability
     to pay any excise duty on the self-same ground, namely, that it was
B
      covered under item 2(i) of the Schedule which item 2(i) was re-
     -numbered as item 3(i) of the Schedule as amended by the Amendment
      Act of 1961.

            By Section 18 of the Finance Act, 1962, the Act was further
      amended by substitution of an Explanation No. 1 to the Schedule of
c     the Act. By virtue of and under the said Explanation, a patent and
    , proprietary medicine was defined as a medicinal preparation of the
      description and the type specified in the Explanation. The Explanation
      which was brought in by the Finance Act was given retrospective effect
      from April 23, 1962.
D
           In purported pursuance of the said Explanation and/or upon the
     basis thereof, a circular dated May 31, 1962 was issued by the then
     Director of Prohibition and Central Excise, Government of Maharash-
     tra, Bombay which, inter alia, directed that the medicinal preparations
     containing self-generated alcohol but not capable of being consumed
E    as alcoholic beverage Were to be treated as products falling under item
     1 and not item 3 of the Schedule. consequent thereupon, the respon-
     dents levied and recovered from the appellant diverse sums aggregat-
     ing to Rs.2,18,282.16 being the alleged amount of the excise duty
     payable in respect of the product "Ashvagandharist". The amounts
     were paid by the appellant "under protest".
f
           With a view to enforcing their rights in respect thereof and/or
     recovering the said amount illegally recovered by the respondents, on
     July 14, 1965, the appellant filed a suit, being Special Suit No. 23 of
     1965 in the Court of Civil Judge, Senior Division, Ahmednagar.
0
        On March 4, 1966, the respondent No. 4 filed its written state-
  ment and similarly on the 4th April, 1966 the respondent Nos. 1 to 3
  filed written statements. In'the written statements, filed on behalf of
  the respondents it was, inter alia, contended that the said product of
  the appellant was "the unrestricted ayurvedic preparations" manu-
H factured by the plaintiff (appellant) labelled and marked by the
    A. PHARMACEUTICALS v. STATE OF MAHARASHTRA[SAiKIA, J.]        135

plaintiff (appellant) under their brand name and trade mark. This, A
therefore, fell within "the scope of patent or proprietary medicine .as
given in Explanation 1 below the Schedule annexed to the Act, as
inser.ted from April 23, 1962 by Finance Act (No. 2) 1962.

     By his Judgment and Decree dated March 27, 1969, the learned B
Civil Judge was pleased to decree the appellant's suit for
Rs.2,22,582.07 together with future interest at 6 per cent per annum
from the date of the suit till realisation.

     Aggrieved by the Judgment and Order dated March 27, ·1969 ,the
respondents (being the defendants therein) preferred ·an appeal to C
the High Court of Judicature at Bombay, whicli was registered as First
Appeal No. 586 of 1969. The said appeal was heard by the High Court
alongwith other appeals being First Appeals Nos. 136 of 1968 and 93
of 1970 as also suits being Suit Nos. 230 of 1965 and 319 of 1965.
The appeals and the suits were heard together having regard to the
common questions of law involved therein. By .its judgment and decree D
the High Court was pleased to allow the said first appeal of the respon-
dents, reversing the judgment .and decree of the Trial Court and to
dismiss the appellant's special suit. Hence this appeal by special leave.

      Mr. S.K. Dholakia, the learned counsel for the appellant E
submits, inter alia, that the findings of the High Court are repugnant to
the relevant provisions of the Act and/or the rules framed thereunder
and/or the scheme, intendments and purposes thereof. It is con.tended
that the appellant's product "Ashvagandhaarist" fell squarely within
item 3(i) of the Schedule and as such wholly exempt from the payment
of excise duty; that in view of the admitted position that until 1962   r
"Ashvagandhaarist" was exempt from the payment of excise duty as
being a commodity falling under item No. 2(i) of the Schedule, simply
by reason of t.he Explanation which was introduced in ·the Act by the
Finance Act of 1962, as the explanation could never be considered to
be or, in any event, in the scheme of the provision of the Act, was not a
substantive provision of the Act and the explanation was not intended G
to and it did not seek to. disturb the enumeration of the categories or
the respective fields assigned to the various items of the schedule in
existence prior thereto. It is submitted that item 3 of the amended
Schedule was a specific item and enumerated categories of Ayurvedic
medicinal preparations covered thereby arid that being so, all
commodities answering description set out therein· fell within the H
    136         SUPREME COURT REPORTS               [ 1989) Supp. 1 S.C.R.

A ambit thereof and was excluded from the purview of the other items
   contained in the said schedule and that the express language of item
   3(i), namely, of "Ayurvedic preparations containing self-generated
   alcohol which were not capable of being consumed as ordinary
   alcoholic beverages" were exempted and that the appellant's product
   "'Ashvagandhaarist" was admittedly and obviously an Ayurvedic pre-
8 paration· containing self-generated alcohol which was not capable of
   being consumed as ordinary alcoholic beverage and as such it could not
   be made excisable on the ground that it fell within any other item of
   the schedule but it constituted residuary clause of the schedule in so
   far as the medicinal and toilet preparations containing alcohol were
   concerned. Counsel further submits that the expression "not otherwise
   specified" occurring in item 3 of the schedule did not restrict the scope
c of the enumerated categories under item 3 but was merely a marginal
   note showing that the said item 3 was residuary item and comprised of
   three sub-groups of commodities speficied therein; and that item No. l
   was not a specified item. Mr. Dholakia further submits that the
   interpretation that "ashvagandhaarist" fell within item No. I rendered
O the provisions of item No. 3 wholly nugatory inasmuch as if an
   Ayurvedic preparation containing self-generated alcohol but incapable
   of being used as ordinary alcohoHc .beverage, is treated as falling
   under item 1 there would be no Ayurvedic medicine which would
   factually fall under item 3 of the schedule and that the Explanation
   newly introduced by the Finance Act, 1962 could not add to, amend or
   alter or vary the classification of the goods existing prior thereto
   as covered by the various items of the said schedule; nor could it
   otherwise nullify or add to, amend or alter or vary the substantive
  ·provisions of the schedule and it could not be considered to be a
   substantive provision of the Act nor could it be allowed to abrogate
   the substantive provisions of the Act. In other words, the submission
F  is that in view of the fact that the product of the appellant was exempt
   from payment of duty because the duty against item No . .3(i) in the
   amended Schedule of 1961 was mentioned to be 'nil' the High Court
   ought to have held that the said legal and factual position could not
   be transformed to the detriment of the appellant by shifting the said
   commodity from the field covered by item 3(i) to that covered by
G item 1 of the Act merely on the basis of the Explanation which was
   introduced by the Finance Act of 1962. Counsel argues that this was
   more ·,so because "ashvagandhaarist" was not a name within the con-
   templation of the explanation but. was merely a descriptive appellation
   of the medicine manufactured and sold by the appellant and it being
   a standard preparation according to the Ayurvedic system could be
H manufactured by any one conversant with the said system, and it did
     A. PHARMACEUTICALS v. STATE OF MAHARASHTRA[SAIKIA, J .1 137

not have a brand name in the hands of the appellant and the High             A
Court's inttirpretation that a mere d,escription is a name is inconsistent
with the scheme of the definition of "pate!)! and proprietary
medicines" in the Explanation. This was the reason, it is argued, why
Asavas and Aristhas were expressiy made non-dutiable a.fter 25.9.6'1
by subsequent amendment by the Government.                                   B

      Mr. A.K. Ganguli, learned counsel appearing for the respon-
dents, demurring, submits that there can be no doubt that "Asavas"
and "Aristhas" fall under ·item l of the schedule to the Act as sub-
stituted by Finance Act 2 of 1962 and nence taxable at 10% ad valorem;
and those being Ayurvedic preparations are specified preparations and c
they could never fall under item 3 or any part thereof which deals with
medicinal preparations not otherwise specified containing alcohol.
Item 1, Mr. Ganguli submits, specifically.describes that medicinal and
toilet- preparation which has alcoholic contents .and which alcohol
comes to be present in those medicines by use of one of the two
methods described in that item. First of such methods contemplates D
alcohol contents in the medicine which is prepared by distillation
and the second method is addition of alcohol to the medicine. The
medicinal preparation which is prepared by distillation and which
contains alcohol and other medicinal preparations to which alcohol
is added fall in eategory l and such medicines would cover medicinal
preparations belonging either to Allopathic or Ayurvedic system or E
any other system of medicines. For every system of medicines, counsel
argues, item No. l is not general item but it is a specific item in the
sense it covers only those medicines which are.prepared by distillation
and contain alcohol a~ others tci which alcohol has been added.
According to counsel, such medicines belonging'!o any system whether
indigenous or foreign are covered by item 1 and would be taxable as F
per that item and the disputed goods are undoubtedly medicinal pre-
parations and they are also patent and proprietary medicines in view
of the Explanation 1 and these Ayurvedic preparations are medicinal
preparations being patent or proprietary medicines containing alcohol
which are not capable of being consumed as alcoholic beverages and as
such they squarely fall under item 1 of the Schedule, and the main Act G
and the Explanation is a self-contained provision which eliminates the
reference either to Drugs Act or to the Rules made under the Act; and
one has to read only the provision of the Schedule as a whole including
the Explanation, and their meaning being simple and plain, they must
be given their full effect.
                                                                        H
     138          SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

           To appreciate the rival contentions we can appropriately refer to
~ the provisions and the Schedule of the Act arid the legislative changes
   thereof. The Act was meant to provide for the levy and collection of
   duty of.excise on medicinal and toilet preparations containing alcohol,
   opium, Indian hemp or other narcotic drug or narcotic. The statement
    of objects and reasons as notified in Gazette oflndia of 16.9.1954, Part
8 II; S. 2, Ext., page 596 said that by virtue of entry 40 in List II in
   .the. Seventh Schedule to the Government of India Act, 1935, medicinal
    and toilet preparations containing alcohol, etc., were subjected to
    Provincial excise duties. In order to secure uniformity the entry
  ,relating to excise duty on medicinal,,and toilet preparations containing
  ·alcohol, etc. were transferred under the Constitution from the State
   list to, the Union List. The Act was intended to implement this pro-
C vision in the Constitution and proposed uniform rates of excise duty
    and a uniform procedure· for the collection thereof. The Act came in
   force on 1.4.57.

            The Act in Section 2(a) defined "alcohol" to mean "ethyl
D    alcohol of any strength and purity having the chem_ical composition
     C2H,0H"; and it defined "medicinal preparation" in Section 2(g) to
     include "all drugs which are a remedy or prescription prepared for
     internal or external use of human i:Jeings or animals and all substances
     intended to be used for or in the ireatment, mitigation or prevention of
     disease in human beings or animals". It did not define "drug". The
E    Drugs Act, 1940, as it was substituted by the Drugs (Amendment)
     Act, 1955 ( 16.4.55) had defined "drug" in Section 2(b) to include
     "(i) ·all medicines for internal or external use of human beings or
     animals and all substances intended to be used for or in the diagnosis,
     treatment, mitigation· or prevention of disease in human beings or
     animals other than medicines and substances exclusively used or
F    prepared for use in accordance with the Ayurvedic or Unani systems of
     medicine; and (ii) such substances (other than food) intended to affect
     the structure or any function of the human body or intended to be used
     for the destruction of vermins or insects which cause disease in human
     beings or animals, as may .be specified from time to time by the Central
     Government by notification in the Official Gazette."
G                   ,                                    (Emphasis supplied)

            Section 3(i) of the Act provides that "there shall be levied duties
    , of excise, at the rates specified in the Schedule, on all dutiable goods
      manufactured in India."

H           The original Schedule to the Act in 1955 read:
     A. PHARMACEUTICALSv. STATEOFMAHARASHTRA(SAIKIA,J.] 139

                         THE SCHEDULE
                                                                      A
                            (See section 3)


Item Description of dutiable                    Rate of
No. goods.                                      duty.                 B

1.   Medicinal and toilet preparations,        Rupees seventeen
     containing alcohol, which are prepared    and annas eight
     by distillation or to which alcohol       per gallon of the
     has been added, and which are capable     strength of London
     of being consumed as ordinary alcoholic   proof spirit.
     beverages.                                                       c
2.   Medicinal and toilet preparations not
     otherwise specified containing alcohol
     (i) Ayurvedic preparations containing     Nil
     self-generated alcohol, which are                               D
     not capable of being consumed as
     ordinary alcoholic beverages.
     {ii) Ayurvedic preparations containing    Rupees three per
     self-generated alcohol, which are         gallon.
     capable of being consumed as
     ordinary alcoholic beverages.                                   E
     (iii) All others.                         Rupees five per
                                               gallon ofthe
                                               strength of
                                               London proof
                                               spirit
                                                                     F
3.   Medical and toilet preparations,          Nil
     not containing alcohol, but containing
     opium, Indian hemp, or other
     n)iicotic drug or narcOtic.

It would thus be c)ear tl)at medicinal and toilet preparations were G
classified into those which were capable of being eonsumed as ordinary
alcoholic beverages and those which were not capable of being con-
sumed as ordinary alcoholic beverages. Again, medicinal and toilet
preparations containing alcohol prepared by distillation or adding
alcohol is differentiated from medicinal and toilet preparations 'not .
D.therwise specified containing alcohol'. Further, under this 'not H
    140         SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

A   otherwise specified' category Ayurvedic preparations have been clas-
    sified into three groups, namely, Ayurvedic preparations containing
    self-generated alcohol not capable of being consumed as ordinary
    alcoholic beverages, those capable of being consumed as ordinary
    alcoholic beverages; and others. These three divisions were not drugs
    as defined in Drugs Act then. The first category of Ayurvedic prepara-
B   lions had not been subjected to duty while the other two categories
    had been.

           Admittedly, under the above Schedule the product of the appel-
    lant 'ashvagandhaarist' was not dutiable which meant that it was inc-
    luded in item 2(i). It would also be clear that 'Ayurvedic preparations
    containing self-generated alcohol which were capable of being con-
c   sumed as ordinary alcoholic beverages' were dutiable at the rate of
    Rupees 3 per gallon and the third category of others was also dutiable
    at the rate of Rupees 5 per gallon on the strength of London proof
    spirit. Alcohol and self-generated alcohol were treated differently.

D         The Schedule was amended by the Amending Act No. 19 of 1961
    and the amended Schedule stood as follows:

    Item No. Description of dutiable goods              Rate of duty

    !.       Medicinal preparations, being patent       Ten percent
E            or proprietary medicines, contain-         ad valorem.
             ing alcohol and which are not
             capable of being consumed as
             ordinary alcoholic beverages.

    2.       Medicinal preparations, containing          Rupees three and
p            alcohol, which are prepared by              eighty five naye
             distillation or to which alcohol            paise per litre
             has been added, and which are               of the strength
             capable of being consumed as ordi-          of London proof
             nary alcoholic beverages.                   spirit.

G 3.         Medicinal preparations not otherwise
             specified containing alcohol-

              (i) Ayurvedic preparations containing      Nil
              self-generated alcohol which are
              not capable of being consumed as
H             ordinary alcoholic beverages.
    A. PHARMACEUTICALS v. STATEOFMAHARASHTRA[SAIKIA, J.] 141


         (ii) Ayurvedic preparations, contain-        Thirty eight          A
         ing self-generated alcohol, which            naye paise per
         are capable of being consumed as             litre.
         ordinary alcoholic beverages.
         (iii) Ail others.                            Rupee one and
                                                      ten naye paise
                                                      per litre of          B
                                                      the strength
                                                      of London proof
                                                      spirit.

      Explanation I: "Patent or proprietary medicines" has the same
                     meaning as in clause (h) of Section 3 of the Drugs     C
                     Act, 1940 (23 of 1940).

The statement of objects and reasons of the Amendment Bill, as
published in Gazette of India, 8.3.1961, Pt. JI, S. 2, Ext., page 106,
said:
                                                                            D
           "Consequent on the decision to adopt metric units from the
           1st April, 1961, in the sale of alcohol and collection of duty
           thereon, it is proposed to provide for the levy and collec-
           tion of excise duty on medicinal and toilet preparations in
           terms of metric units.
                                                                            E


                 Under·existing item 2(ii) of the Schedule to the Act,
           Ayurvedic preparations containing self-generated alcohol
           which are .capable of being consumed as ordinary alcoholic
           beverages are subjected to duty at the rate of Rs.3 per gal-     F
           Ion. However, by virtue of the provision contained in sec-
           tion 19(2)(xix) of the Act, read with Rule 8 of the Medi-
           cinal and Toilet Preparations (Excise Duties) Rules 1956,
           the rate of duty with respect to such preparations has been
           reduced to Rs.1.75 per gallon with effect from the 10th
           September, 1960, and it is this reduced rate that is, pro-       G
           posed to be expressed in terms of metric units in the Bill."

      It would thus be clear that the main purpose was the levy and
collection of excise duty on medicinal and toilet preparations in terms
of metric unit. while there was reference to them existing item 2(ii) of
the Schedule of the Act, namely, Ayurvedic preparations containing          H
    142         SUPREME COURT REPORTS               [1989) Supp. 1 S.C.R.

A   self-generated alcohol which were capable of being consumed as ordi-
    nary alcoholic beverages the duty whereof was reduced to Rs. I. 75 per
    gallon from Rs.3 per gallon, there was no mention that item No. 2(i) of
    the Schedule, namely, Ayurvedic preparations containing self-genera-
    ted alcohol which were not capable of being consumed as ordinary
    alcoholic beverages was subjected to tax. The statement of object and
a   reasons was silent about item No. 2(i).

         In the amended Schedule we find that item 1 for the first time
   mentioned medicinal preparations being patent or proprietary
   medicines, containing alcohol and which are not capable of being con~
   sumed as ordinary alcoholic beverages and the earlier item No. 1 has
   been re-numbered as item No. 2 and the earlier item No. 2(i), (ii) and
C (iii) remained as they were as 3(i), 3(ii) and 3(iii). As regards levy of
   duty item 2(i) of the old Schedule was kept duty free in item 3(i) of the
   Schedule. Thus, there has been no fresh charging of duty on what was
   2(i) and is now 3(i) under which category the appellant's produ~t 'ash-
   vagandhaarist' was exempted from duty before the' amendment of the
I) Schedule. There is, therefore, no .doubt that item 1 & 2(i) remained
   mutually exclusive or in other words, they would not be overlapping.
   Item 1 in the amended Schedule deals with medicinal preparations
   being patent or proprietary medicines and not medicinal preparations
   'not otherwise specified.'

E          The Explanation I says that patent or proprietary medicines has
    the same meaning as in clause (h) of Section 3 of the Drugs Act, 1940.
    The High Court has found that re-numbered definition 3(h) was earlier
    3( d) and read as follows:

                "3(d) 'Patent or proprietary medicine' means a drug which.
f               is a remedy or prescription prepared for internal or ex-
                ternal use of human beings or animals, and which is not for
                the time being recognised by the Permanent Commission
                on Biological Standardisation of the Wrold Health Organi-
                sation or in the latest edition of the British Pharmacopoeia
                or the British Pharmaceutical Codex or any other Phar-
G               macopoeia authorised in this behalf by the Central Govern-
                ment after consultation with the Board."

  Thus, patent or proprietary medicines meant a drug which was defined
  in the Drugs Act and not in the Act. The High Court rightly held that
  Ayurvedic medicine was not a drug11t_all. The definition of drug expre-
H ssly excluded them. So the definition of patent or proprietary medicine
    A. PHARMACEUTICALS v. STAIE OFMAHARASHTRA[SAIKIA. J.] 143

was exclusive of Ayurvedic medicinal preparations, those being             A
excluded from the definition of drug. The definition ·of patent and
proprietary medicines till then did not apply to Ayurvedic prepara-
tions. This position continued indeed till the amendment of Drugs Act
by the Drugs and Cosmetics (Amendment) Act, 1964. Several amend"
ments were effected by that Amendment Act of 1964. Section 33A and
Chapter TV A were inserted. Section 33A said that Chapter IV was not       B
to apply to Ayurvedic (including Siddha) or Unani drugs. "Save as
otherwise provided in this Act, nothing contained.in this Chapter shall
apply to Ayurvedic (including Siddha) or Unani drugs". Chapter IVA
made provisions relating to Ayurvedic (including Siddha) and Unani
drugs: This shows that prior to this amendment of 1964 Ayurvedic
preparations were expressly not drugs under the Drugs Act.
                                                                           c
      The Drugs and Cosmetics Act in the amendment First Schedule
after the amendment Act of 1964 included Ayurvedic (including
Siddha) and Unani system drugs prepared under Section 3(a) which
contains the definition: "Ayurvedic (including Siddha) or Unani drugs
includes all medicines intended for internal or external use of human      D
beings or animals and all substances intended to be used for or in the
diagnosis, treatment, mitigation or prevention of disease in human
beings and animals, mentioned and process and manufacture exclu-
sively in accordance with the formula prescribed in the authoritative
book on Ayurvedic (Siddha) Unani system of medicines specified in
the first schedule." This definition was also inserted by Drugs and        E
Cosmetics (Amendment) Act, 1964 (13 of 1964) Section 2(a)(i) with
effect from 15. 9. 1964.

      The same exclusion, remained in the related Central Acts. For
example, the Drugs Control Act, 1950 (Act 26 of 1950) replaced the
Drugs Control Ordinance, 1949 (6 of 1949) which was promulgated on         F
3.10.1949 in order to ensure that certain essential imported drugs and
medicines were sold in the reasonable price in the Chief Commis-
sioner's provinces. Similar ordinances were issued by all the provinces.
The necessity for continuing price control of these essential drugs con-
tinued. That was an Act to provide for the control of sale, supply and
distribution of drugs. Drug meant any drug as defined in clause (b) of     G
Section 3 of Drugs Ad, 1940, in respect of which a declaration had
been made under Section 3 which defined drug. It may be noted that
Pharmacopoeia authorised for the purpose of Section 3(h) of the
Drugs Act, 1940, were: The Indian Pharmacopoeia, the Pharma-
copoeia of the United States, the National formulary of the United
States, the Intl'rnational Pharmacopoeia and the State Pharmacopoeia       H
    144         SUPREME COURT REPORTS              [1989] Supp. 1 S.C.R.

A of the Union of SoyjeJ Socialist Republics, vide .S.O. 701 Gazette of
  India, 1961, Pt. II, S. 3(ii), p. 725. There was thus no Ayurvedic
  Pharmacopoeia prescribed for the purpose of that Act. Phar-
  macopoeia is a book containing the list of drugs with directions for use.
  The fact that no Ayurvedic Pharmacopoeia had been notified at the
  relevant time was because Ayurvedic preparations were not drugs for
B the purpose of Drugs Act and, for that matter, of Medicinal and Toilet
  Preparations (Excise Duties) Act, at the relevant time. It could be for
  this reason that in the original Schedule the expression medicinal and
  toilet preparations 'not otherwise specified' was used and Ayurvedic
  preparations of different categories were put under item 2. In the
  Schedule as amended by the 1962 Act, this expression continued in
C item 3, The same definition of 'drug' also continued in the Drugs Act.

        From the Explanation I of the Schedule of the Act as substituted
  by Act 5 of 1964 also it is clear that patent or proprietary medicine
  means any medicinal preparation which is not specified in a mono-
  graph in a Pharmacopoeia, Formulary or other publications notified in
D this behalf by the Central Government in the Official Gazette.

         To be a patent medicine one would be required to have a patent.
  A patented article means an article in respect of which a patent is in
  force. "Patent" means a patent granted under the Indian Patent and
  Designs Act, 1911, and now the Patent Act, 1970. A patent medicine
E will, therefore, mean medicine in respect of which a patent is in force.
  "Proprietary" means of a proprietor, that is, holding proprietary
  rights. Patent means a grant of some privilege, property, or authority,
  made by the Government. or sovereign of a country to one or more
  individua!S. A proprietor is one who has the legal right or exclusive
  title to anything. It is synonymous with owner. A person entitled to a
F trade mark or a- design under the acts for the registration or patenting
  of trade mark or design is called a proprietor of the trade mark or
  design. Under the Trade and Merchandise Marks Act, 1958, "trade
          I
    mark" means:

                "(i) in relation to Chapter X (other than section 81), a
G               registrered trade mark or a mark used in relation to goods
                for the purpose of indicating or so as to indicate a con-
                nection in the course of trade between the goods and some
                person having the right as proprietor to use the mark; and

                (ii) in relation to the other provisions of this Act, a mark
H               used or rroposed to be used in relation to goods for the
     A. PHARMACEUTICALSv. STATEOFMAHARASHTRA(SAIKIA,J.]                  145

            purpose of indicating or so as to indicate ·a connection in
                                                                                 A
            the course of trade between the goods and some person
            having the right, either as proprietor or as registered user,
            to use the mark whether with or without any indication of
            the identity of that person, and includes a certification
            trade mark registered as such under the provisions of
            Chap. VIII."                                                         B

As defined ins. 2(a), registered proprietor in relation to a trade-mark
means a person for a time being entered in the register as proprietor of
the trade-mark. A registered trade-mark means a trade-mark which is
actually on the register.

      By s. 18 of the Finance (No. 2) Act, 1962, the Schedule to the
                                                                                 c
Act was further amended substituting the Explanation 1 by the
following:

             "Explanation 1: "Patent or proprietary medicines" means
             any medicinal preparation which bears· either on itself or on       D
             its container or both a name which is noi specified in a
             monograph in a Pharmacopoeia, Formulary or other Publi-
             cations notified in this behalf by the Centrl Government in
             the Official Gazette, or which is a brand name, that is a
             name or     aregistered trade mark under the Trade and
             Merchandise Mark Act, 1958 (43 of 1958), or any other               E
             mark such as a symbol, monogram, label, signature or
             invented words or any writing which is used .in relation to
             that medicinal preparation for the purpose of indicating or
             so as to indicate a connection in the course of trady bet-
             ween as preparation and some person having the right
             either as proprietor or otherwise to use the name or mark           F
             with or without any indication of the identity of that
             person.''

This amendment of the Explanation came into force in June, 1962 with
retrospective effect from 23rd April, 1962.
                                                                                 G
       The Director of Prohibition and Excise, for Maharashtra State,
 Bombay, thereafter issued the circular tla.ted 31.5.1962 (Ext. 44). It
 said that_thep~t_e11t or proprietary medicines as definec! in clai1se_ (d) of
-s. 3-oJ t)le Drugs Act of 1940 (23 of 1940) and falling under items No. -1
 a11_d_No. 4 of the ;\ct as substiiutecfby the Ame-ndment-Act, 1961°\vere,
 prior to 2_3rd April, 1962, subject to levy of duty at 10 per cent ad           H
    146         SUPREME COURT REPORTS               [1989) Supp. 1 S.C.R.

    valorem by virtue of the Explanation 1 below the Schedule to the Act
A
    which has now been deleted from 23rd April, 1962. According t() new
    definition of 'Patent and Proprietary Medicines' as given in the new
    Explanation as amended by Finance (No. 2) Act, 1962 medicinal pre-
    parations containing alcohol, opium, Indian hemp or other narcotic
    drugs or narcotic falling under item 3(i), 3(iii) and 3(v) of the said
B   Schedule, were with effect from 23rd April, 1962 liable to duty not
    under the said items but under item No. 1 or item No. 4 of the said
    Schedule at 10 per cent ad valorem, if such preparations are "patent or
    proprietary medicines" as defined in the Explanation. Excise duty on
    all 'patent or proprietary medicinal preparations' (Alopathic, Ayur-
    vedic, Unani and Homoeopathic preparations) containing alcohol,
    opium, Indian hemp or other narcotic drug or narcotic, which fall
c   within the purview of the new definition of 'patent or proprietary
    medicines' given in the Explanation, should therefore, be recovered at
    the rate of 10 per cent ad valorem from the holders of the licences
    granted under the said Act and the rules thereunder in accordance
    with the iI:tstructions contained in their Circular No. DQ 64-31/61
D   dated 22nd July, 1961. A note receive.ct from the Government of India,
    explaining the scope of the new definition of 'patent or proprietary
    medicines' was also enclosed along with the circular.

          It is in evidence in the instant case that two bottles containing
    Asavas were produced in the Court as Exhibit 42/l and Exhibit 42/2.
E Both the bottles contained the same kind of Asavas. The ingredients of
    the two were the same and the preparation of the two was also the
    same. When the Asavas were sold during the period beginning from
  . June, 1962 to February, 1964, no excise duty was levied because on the
    label there was no trade mark of patent and proprietary right printed.
    If the Asavas were sold in the bottle having a label with no trade mark
F as at Exhibit 42/l, no duty was recovered from the plaintiff. These
    Asavas were supplied to Employees' State Insurance as per their
    tender without the trade mark on the label to see that the plaintiff-
    company were not taxed the excise duty which would have been
    charged had they put the patent mark on the label. But in order to
    fight for blemish of cheating, the plaintiff thought it necessary to have
G the trade mark on such bottles without any difference. As soon as the
    goods were sought to be sold in the above manner the excise duty was
    levied and was sought to be recovered from the plaintiff's fund. No
    excise duty was recovered after February, 1964 even though Asavas
    were sold with their trade mark. It is also in evidence that there were
    two sub-groups in the group of Asavas and Aristhas known as
H 'restricted' and 'unrestricted'. Restricted means preparations which
     A. PHARMACEUTICALSv. STATEOFMAHARASHTRA[SAIKIA,J.]                147

could be used as alcoholic beverages. In this case the period from
                                                                              A
26.7.62 to 29.2.64 is alone material inasmuch as by the Finance Act of
1964 with reference to item No. 1, the Ayurvedic and Unani medicines
containing self-generated alcohol and which were not capable of being
consumed as ordinary alcoholic beverages were exempted from the
levy of excise duty. In other words, the position prior to Finance Act
of 1962 was continued and thereafter the medicinal preparations,              B
namely, Asavas and Aristhas ceased to be taxed from 1964.

      It would be noted that the Explanation itself did not specifically
mention "Allopathic, Ayurvedic, Unani and Homoeopathic prepara-
tions" as was done in the Director's Circular. On a comparison of the
earlier Explanation and the substituted Explanation one would notice
that earlier "patent and proprietary medicines" meant a drug. In the          c
substituted Explanation it means any medicinal preparation. How-
ever, it can not be lost sight of that the words "medicinal preparation"
as continued to be defined in s. 2(g) of the Act "includes all drugs
which are a remedy or prescription prepared for internal or external
use of human beings or animals and all substances intended to be used         D
for or in treatment, mitigation or prevention of diseases in human
beings or animals." We have already noticed that the Drugs Act con-
tinued to exclude Ayurvedic preparations till its amendment in 1964. It
has been stated that even after amendment of the Schedule after 1961
amendment the appellant's product was exempted from duty, till the
Director's Circular disturbed the position.                                   E

     This brings us to the question of interpretation of the Act and the
Schedule with the Explanation, in view of the submission that the
Explanation could not have rendered item 3(i) of the Schedule
redundant. Was there any change of intention of the Legislature in this
regard?                                                                       F

      A Schedule in an Act of Parliament is a mere question of draft-
ing. It is the legislative intent that is material. An Explanation to the
Schedule amounts to an Explanation in the Act itself. As we read in
Halsbury's Laws of England, Third Edition, Vol. 36, para 551: "To
simplify the presentation of statutes, it is the practice for their subject   G
matter to be divided, where appropriate, between sections and
schedules, the former setting out matters of principle, and introducing
the latter, and the latter containing all matters of detail. Thisis purely
a matter of arrangement, and a schedule is as much a part of the
statute, and as much an enactment, as is the section by which it is
introduced." The schedule may be used in construing provisions in the         H
    148         SUPREME COURT REPORTS               [1989) Supp. 1 S.C.R.

  body of the Act. It is as much an act of Legislature as the Act itself and
A
  it must be read together with the Act for all purposes of construction.
  Expressions in the Schedule cannot control or prevail against the
  express enactment and in case of any inconsistency between the
  schedule and the enactment the enactment is to prevail and if any part
  of the schedule cannot be made to correspond it must yield to the Act.
B Lord Sterndale, in Inland Revenue Commissioners v. Gittus, [1920) l
  K.B. 563, said:

                "It seems to me there are two principles of rules of
                interpretation which ought to be applied to the combina-
                tion of Act and Schedule. If the Act says that the Schedule
                is to be l\Sed for a certain purpose and the heading of the
c               part of the Schedule in question shows that it is prima facie
                at any rate devoted to that purpose, then you must read the
                Act and the Schedule as though the Schedule were operat-
                ing for the purpose, and if you can satisfy the language of
                the section wiihout extending it beyond that purpose you
D               ought to do it. But if in spite of that you find in the·
                language of the Schedule words and terms that go clearly
                outside that purpose, then you must give effect to them'and
                you must not consider them as limited by the heading of
                that part of the Schedule or by the purpose mentioned in
                the Act for which the Schedule is prima facie to be used.
E               You cannot refuse to give effect to clear words simply
                because prima facie they seem to be limited by the heading
                of the Schedule and the definition of the purpose of the
                Schedule contained in the Act."

          The above observaticn was not disapproved in appeal ( 1921) 2
F   A.C. 81. However, the baccic principle is that in case of a conflict
    between the body of the Act and the Schedule, the former prevails. In
    the instant case we do not find any such conflict.

        An Explanation, as was found in Bihta Marketing Union v. Bank
  of Bihar, AIR 1967 SC 389: (1967) 1 SCR 848, may only explain and
G may not expand or add to the scope of the original section. In State of
  Bombay v. United Motors, AIR 1953 SC 252: ( 1953) SCR 1069 ,it was
  found that an Explanation could introduce, a finction or settle a matter
  of controversy. Explanation may not be made to operate as "excep-
  tion" or "proviso". The construction of an Explanation, as was held in
  Collector of Customs v. G. Dass & Co., AIR 1966 SC 1577, must
H deJJend upon its terms an<! no theory of its purpose can be entertained
     A. PHARMACEUTICALS v. STATE OFMAHARASHTRA[SAIKIA, J.I 149

 unless it is to be inferred from the language used. It was said in
                                                                              A
 Burmah Sh!!ll Oil Ltd. v. Commercial Tax Officer, AIR 1961 SC 315:
 (1961) 1 SCR 902, that the explanation was meant to explain the
Article and must be interpreted according to its own tenor and it was
 an error to explain the Explanation with the aid of the Article to which
it was annexed. We have to remember what was held in Dattatraya
 Govind Mahajan v. State of Maharashtra, AIR 1977 SC 915 (928):               B
 (1977) 2 SCR 790, that mere description of a certain provision, such as
 "Explanation" is not decisive of its true meaning. It is true that the
 orthodox function of an explanation. is to explain the meaning and
 effect of the main provision to which it is an explanation and to clear
 up any doubt or ambiguity in it, but ultimately it is the intention of the
 legislature which is paramount and mere use of a label cannot control
·or deflect such intention. State of Bombay v. United Motors, (supra)         c
laid down that the interpretation must obviously depend upon the
 words used 'therein, but this must be borne in mind that when t.he
 provision is capable of two interpretations, that should be adopted
 which fits the description. An explanation is different in nature from a
 proviso for a proviso excepts, excludes or restricts while an explana-       D
 tion explains or clarifies. Such explanation or clarification may be in
 respect of matters whose meaning is implicit and not explicit in the
 main section itself. In Hiralal Ratanlal v. State of U.P., [1973] l sec
 216 (225), it was ruled that if on a true reading of an Explanation it
 appears-that it has widened the scope of the main section, effect be
 given to legislative intent notwithstanding the fact that the Legislature    E
 named that provision as an Explanation. In all these matters courts
 have to find out the true intention of the Legislature. In D. G. Mahajan
 v. State of Maharashtra, (supra) xx this Court said that legislature has
 different ways of expressing itself and in the last analysis the words
 used alone are repository of legislative intent and that if necessary an
 Explanation must be construed according to its plain language and 'not       F
on any a priori consideration'.

      Applying the above principles we do not find any difference
between the Schedule and the Explanation I; the latter has not
amended the Schedule by either deleting item 3(i) or by adding or
including Ayurvedic preparations in item 1. No change of legislative          G
intent is indicated.

      In the Medicinal and Toilet Preparations (Excise Duties) Rules,
1956 Section C Medicinal and Toilet preparations, Allopathic prepara-
tions, Homoeopathic preparations and Ayurvedic preparations are
dealt with separately. So far as Ayurvedic preparations are concerned,        H
    150         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

  Rule 64 dealing with types of preparations said: "Asavas and Aristhas
A
  are the principal types of Ayurvedic preparations in which alcoholic
  content is self-generated and not added as such." Rule 65 on
  Pharmacopoeia for Ayurvedic preparations said: "Until a standard
  Ayurvedic pharmacopoeia has been evolved by the Central Govern-
  ment, the pharmacopoeias that are in vogue in the various States shall
B be recognised as standard Ayurvedic pharmacopoeias." Rule 66 clas-
  sified the preparations containing self-generated alcohol for purposes
  of levy of duty. It said: "No duty shall be levied on Ayurvectic prepara-
  tions containing self-generated alcohol in which the alcohol content
  does not exceed 2 per cent. Where the percentage of proof spirit is in
  excess of 2 per cent, duty will be leviable under item 2(ii) or 2(i) of the
C Schedule to Act the according as the preparations are capable of being
  consumed as ordinary alcoholic beverage or not." Thus Ayurvedic
  preparations containing self-generated alcohol which are not capable
  of being used as alcoholic beverages fall under original 2(i) and now
  3(i).

D         The above Rules, which have not been shown to have been
    amended clearly say that where the percentage of proof spirit is in
    excess of 2% the preparation would be dutiable under item 2 which
    became item No. 3 in the amended Schedule. This Rule is consistent
    with the Schedule but is wholly inconsistent with the Director's
    circular.
E
        Mr. Ganguli relies on (1971) 2 SCR 590: (1971) I SCC 4
  Baidyanath Ayurved Bhawan Pvt. Ltd. v. The Excise Commissioner of
  U.P., The question there was whether medicinal preparation contain-
  ing tincture, spirit etc. was dutiable. The tincture and spirit in their
  turn contained alcohol. It was contended that alcohol was not directly
F added but was component of the tincture or spirit. It was, however
  conceded that the preparations were medicinal preparations and that
  tincture was a component of that preparation and alcohol was a com-
  ponent of tincture. Therefore, this Court held that it was difficult to
  see how it could be urged that the preparation did not contain alcohol.
  All that the plain language of the provision required was that the
G preparation should contain alcohol. The question wheth,er Ayurvedic
  preparation was a drug to be included in the definition of medicinal
  preparation was not involved. Whether self-generated alcohol was to
  be treated differently was also not there.

        In Mohan/al Magan/al Bhavsar v. Union of India, [1986] 1 SCC
H 122 it was held that before a medicinal preparation can fall under Item
           A. PHARMACEUTICALS v. STATE OF MAHARASHTRA!SAJKIA, J.l 151

      1 of the Schedule three conditions ar.e required to be satisfied: ( l) the
                                                                                   A
      preparation must ba a patent or proprietary medicine; (2) it must
      contain alcohol; and (3) it must not be capable of being consumed as
      an ordinary alcoholic beverage. The fact that ointments and liniments
      were medicinal preparations containing alcohol in semi-liquid form did
      not make any difference. However it was not in dispute that the arti-
      cles were medicinal preparations for the purposes of the Act and that        B
      they were patent and proprietary medicines. In the instant case the
      question is whether Ayurvedic preparations, in view of the definition
      of medicinal preparations in the .Act, could be regarded as drugs and
~.-
      could be dutiable under Hem 3 and not ltem 1. In Commissioner of
      Sales Tax v. The Modi Sugar Mills Ltd., [ 1961] 2 SCR 189 it was held
      that a taxing statute must be interpreted in the light of what is clearly
      expressed therein and nothing can be implied nor can provisions be
                                                                                   c
      imported into them so as to supply an assumed deficiency. In
      Baidyanath Ayurved Bhawan (supra) this Court quoted the observa-
      tion of Rowlatt, J. in Cape Brandy Syndicate v. Commissioners of
      Inland Revenue, [1921] l K.B. 64 that "in a taxing Act one has to look
      at what is clearly said. There is no room for any intendment. There _is      D
      no equity about a tax. There is no presumption as to tax. Nothing is
      to be read in, nothing is to be implied. One can only look fairly at the
      language used." The question in the instant case, however, is whether
      the appellant's product being an Ayurvedic preparation could be a
      drug for being included in the definition of medicinal preparation for
      the purpose of the Act. This question was not raised in the above            E
      cases.

            As Mr. Dholakia points out, the Circular would render item 3(i)
      of the Schedule wholly redundant. It has been the consistent policy of
      legislature to exempt item 3(i) hitherto 2(i), from duty. The legislature
      has not in any way changed it. The Explanation has not in any way            F
      altered the classification in the Schedule. The substituted Explanation
      no doubt stressed on patents and trade marks. But it has not expressly
      envisaged in item I, patented trade marked Ayurvedic preparations
      contrary to the classification in the Schedule. Ex praecedentibus et
      consequentibus optima fit intefpretatio. The best interpretation is made
      from the context. /njustum est nisi tota lege inspecta, de una aliqua ejus   G
      particula proposita judicare Ve/ respondere. It is unjust to decide or
      respond as to any particular part of a Jaw without examining the whole
      of the law. lnterpretare et concordare leges legibus, est optimus inter-
      pretendi modus. To interpret and in such a way as to harmonize laws
      with laws, is the best mode of interpretation. In the instant case the
      Director's Circular is not in harmony with item 3(i) or with the classifi-   H
    152        SUPREME COURT REPORTS              [ 1989] Supp. 1 S.C.R.

A cation of Ayurvedic preparations in separate item 3. It would bot be in
  conformity with definition of 'medicinal preparation' ins. 2(g) of the
  Act. Jura eodem modo distitucntur quo constitutuntur. Laws are
  abrogated by the same means (authority) by which they are made. The
  Director's Circular is not shown to have been a piece of delegated
B legislation. The Explanation on its tenor does not amend the
  Schedule. No part of a Statute is to be taken as superfluous or
  redundant. Every word in a Statute is to be given a meaning. A con-
  struction which would leave without effect any part of the language of
  a statute will normally be rejected. Every clause of a statute is to be
  construed with reference to the context and other clauses of the Act so
  as to make, as far as possible, a consistent enactment of the whole
C Statute.

         The High Court accepted the submission that it provided a self-
  c.ontained definition of 'patent and proprietary medicines' for the
  purpose of the main Act and severed the connection between the
D provisions of the Drugs Act as was contemplated in earlier Explana-
  tion I, and consequently one need not look to the Drugs Act at all for
  its interpretation and the Schedule was thence to be interpreted as if
  existed along with that self-containing definition in Explanation I. In
  doing so, the position that "Patent and Proprietary medicines" means
  "any medicinal preparation" which very "Medicinal preparation"
E includes all drugs which are a remedy or prescription etc. as defined in
  s. 2(g) of the Act. So a reference to the Drugs Act was still necessary.
  No doubt this is an inclusive definition. To enlarge its denotation a
  specific provision to include Ayurvedic preparations containing self-
  generated alcohol which are not capable of being consumed as or-
  dinary alcoholic beverages was necessary. That having not been done
F by the Explanation itself, it was not permissible to include it by the
  Circular. The Explanation I could not have been in conflict with the
  provisions of the Act and the Circular could not .have been in conflict
  with the Explanation, the Schedule, the Rules and the Act.

        In the result, we set aside the judgment and decree of the High
  Court and restore those of the Civil Judge decreeing the suit. We leave
G the parties to bear their own costs.

    Y.Lal                                                Appeal allowed.