Holding

The product does not fall within the meaning of 'patent or proprietary medicine' under Tariff Item 14‑E, and the appeal is dismissed without interference.

Summary

The Union of India appealed against a Bombay High Court decision that a strip of surgical dressing (trade‑name Handyplast) medicated with 0.125% nitrofurozone was not a "patent or proprietary medicine" under Tariff Item 14‑E of the Central Excise and Salt Act. The product consisted of a sterile elastic adhesive pad to which a small amount of nitrofurozone was added. The revenue argued that the nitrofurozone was intended for therapeutic treatment of wounds, making the product a medicinal preparation, while the respondent contended it merely protected wounds and had no curative effect. The Supreme Court held that the High Court’s reasoning – that a medicine must contain at least 1% nitrofurozone and that the drug was used to render the pad sterile – was unsustainable, but nevertheless found no basis to interfere, noting the small duty difference and the respondent’s continuous payment of duty. Consequently, the appeal was dismissed.

Issues considered

Whether a surgical dressing pad medicated with 0.125% nitrofurozone qualifies as a 'patent or proprietary medicine' under Explanation 1 of Tariff Item 14‑E of the Central Excise and Salt Act.
Whether the percentage of nitrofurozone present is determinative of the product’s classification as a medicinal preparation.
Whether the nitrofurozone is applied for therapeutic purposes or merely to preserve sterility.
Whether the appellate court should interfere with the High Court’s decision under Article 136 of the Constitution.

Legislation cited

Central Excise and Salt Act, 1944s. Explanation 1 of Tariff Item 14E, s. Section 11-A
Central Excise Tariff Act, 1985

Subjects

central excisetariff classificationpatent or proprietary medicinenitrofurozonesurgical dressingmedicinal preparationArticle 136appeal dismissed

Judgment

UNION OF INDIA AND ORS. A
v.
LEUKOPLAST PRIVATE LIMITED AND ORS.

JANUARY 25, 1994

[B.P. JEEVAN REDDY AND B.L. HANSARIA, JJ.) B

Central Excises and Salt Act, 1944: Tariff Item 14-E of the First
Schedul~Strips of surgical dressings-Containing pad medicated with·
Nitrofurozone in small quanti~Whether falls within the meaning 'patent or
proprietary medicine.' C
The respondent-Company was manufacturing and selling strips of
surgical dressings containing pads medicated with Nitrofurozone
(0.125%). Whether this product was a 'patent or proprietary medicine'
within the meaning of Tariff Item 14-E of the First Schedule to the Central
Excise and Salt Act was gone into by the High Court at the instance of the D
respondent. It was contended by the respondent that the product was used
merely for protecting a cut or wound from getting infected from dust and
other substances, thus enabling the body system to cure itself. It was
contended that product did not have any curative prj)perties.
E
The appellant contended that Nitrofurozone used in the strip, was
meant for curing/treating the wounds and, as claimed by the Respondent
itself in its advertisements, the product was a medical preparation.

The H!gh Court held that the said product was not a medical
preparation and did not fall under Tariff Item 14-E of the First Schedule F
to the Central Excises and Salt Act. Against the said judgment of the High
Court, appellant-Revenue preferred this appeal.

Dismissing the appeal, this Court

HELD: 1. The High Court was not correct in its reasoning that to G
call the product a medical preparation, Nitrofurozone must be atleast one
per cent and since the product contained only 0.125 per cent it was not a
medicine or medicinal preparation, in support of its reasoning, the High
Court has relied upon a statement under the heading 'Non-adherent
Wound-contact Dressings' Framycetin Sulphate Gauze (TULLE) H
343
344 SUPREME COURT REPORTS [1994) 1 S.C.R.

A Dressing' from a Text Book ''The Pharmaceutical Codex" - Eleventh Edi-
tion - 1979, prepared and published by the Department of Pharmaceutical
Sciences of the Pharmaceutical Society of Great Britain. A perusal of the
+
matter shows that the said requirement is in the case of a gauze an'd. not
in the case of dressing or pad like the respondent's product. There is no
other statencnt in the said CODEX, 'Ybich says that in the case of a
.B
dressing pad like the one concerned herein, Nitrofurozone or other drug
should ~e in a particular quantity. The said said reason given by the High
Court is, therefore, unsustainable. [346-H; 347-A-B]

2. Nitrofurozone is not apr>lied to render the pad sterile; the pad is ...,.....- -
C already rendered sterile and thereafter Nitrofurozone in the said small
quantity is added. Therefore it cannot be said that the said small quantity
of Nitrofurozone is applied to preserve the sterility. [347-C]

3. The High Court has traced the course of this litigation and the
inordinate delays in deciding the matter. The respondent has been paying
D duty all the while under T.I. 68 till the Central Excise Tariff Act, 1985 came
into force. The difference of duty is very small. Having regard to all these
-~
facts, no interference is called for under Article 136 of the Constitution of
India. [347-F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5449
E (NM) of 1993.

From the Judgment and Order dated 2.8.1984 of the Bombay High
Court in W.P. No. 174/B/1981.

Joseph Vellapalhtj, V.K. Verma, Dilip Tandon and C.V. Subba Rao
F
for the Appellants.

A. Hidayatullah, Ravinder Narain, Vikram Nankani, Ms. Amrita
Mitra and D.N. Mishra for the Respondents.

G The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. 1. The question in this appeal preferred by
the Union of India against the decision of the Bombay High Court is
whether the respondent's product. "Han<lyplast", is a 'patent or proprietary
medicine' w~thin the meaning of Tariff Item 14-E of the First Schedule to
H the Central Excise Act as it obtained at the relevant time. Tariff Item 14-E
U.0.1. v. LEUKOPLAST (P.) LID. [B.P. JEEVAN REDDY, J.] 345

read as follows: A
+ Item No. 14E - PATENT OR PROPRIETARY MEDICINES

Tariff Item No. Description of Goods Rate of Duty
14E PATENT OR PROPRIETARY 12.5 .Percent ad
MEDICINES not-containing Valorem B
alcohol, opium, Indian hemp or
other narcotic drugs other than
those medicines which are
exclusively Ayurvedic, Unani,
Sidha or Homeopathic. c

-, Explanation 1 - 'Patent or Proprietary Medicines' means any drug
or medicinal preparation, in whatever form, for use in the internal
or external treatment of, or for the prevention of ailments in human
beings or animals, which bears either on itself or on its container
or both, a name which is not specified in a monograph in a D
Pharmacopoeia. Formulary or other publications notified in this
behalf by the Central Government in the Official Gazette, or which
is a brand name, that is a name or a registered trade mark under
the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any
other mark such as a symbol, monogram, label, signature or in- E
vented words or any writing which is used in relation to that
medicine for the purpose of indicating or so as to indicate a
connection in the course of trade between medicine and some
person, having the right either as a proprietor or otherwise to use
•A the name or mark with or without any indication of the identity of
that person." F

Explanation II - (omited as unnecessary.)

,2. The respondent as is a company engaged in the manufacture of
strips of surgical dressings containing a pad medicated with nitrofurozone G
(0.125%) sold under the trade-name 'Handyplast'. A sample of the said
·product is placed before the Court as Exhibit- B. The following is the
general description of such products, as set out by the High Court:

"Such elastic adhesive wound dressing consists of a fabric pad,
comprising a piece of lint wrapped in muslin bandage, fixed to a H
346 SUPREME COURT REPORTS (1994] 1 S.C.R.

A rectangular piece of extension plaster so as to leave a margin of
adhesive surface surrounding the pad. The elasticity of the plaster
is unidirectional across the narrow width of the pad. The pad and
+
adhesive margin are covered with a protector, which is removed
before application. The pad is medicated with an antiseptic and
dyed yellow, if necessary, with a non-toxic dye; the antiseptic and
B dye may be omitted if the dressing is supplied sterile."
;
3. Both parties agree that the product in question accords with the
above description. The question is whether it is a 'patent or proprietary
medicine' within the meaning of Tariff Item 14-E. The Explanation defines
C the expression "patent or proprietary medicines" to mean inter alia
medicinal preparation, in whatever form for use in the external treatment
of, or for the prevention of ailments in human beings which bears either
on itself or on its container or both, a name which is not specified in a
monograph in a Pharmacopoeia." The respondent's case is that the said
D product is used merely for protecting a cut or a wound from getting
infected by dust and other substances, thus enabling the body system to
cure itself. According to the respondent, it's product does not cure nor
does it have any curative properties. On the other hand the case of
Revenue is that had the product been supplied in a mere sterile form, the
respondent's case could have been accepted but in this case the respondent
E adds a medicine namely Nitrofurozone after rendering the dressing sterile.
The Revenue's case is that the Nitrofurozone is meant for curing/treating
the cut or wound, as the case may be. In support of its case the Revenue
relies upon the very advertisements issued by the respondent saying that it
is a medicinal preparation.
F
4. The High Court has held in favour of the respondent mainly on
two grounds viz., (i) for the said product to become a medicinal prepara-
tion, the Nitrofurozone must be at least one per cent; since it is only 0.125
per cent in the case of Handyplast it can not be called a medicine or
G medicinal preparation; and (it) the said negligible amount of Nitrofurozone
is applied "for an antiseptic purpose, that is to say, to make the said pad
sterile." In support of the first proposition the High Court has relied upon
a statement under the heading 'Non-adherent Wound- contact Dressings:
FRAMYCETIN SULPHATE GAUZE (TULLE; DRESSING' from a
Text Book "The pharmaceutical CODEX - incorporating the British Phar-
H maceutical Codex" - Eleventh Edition - 1979, prepared and published by
U.0.1. v. LEUKOPLAST (P.) LTD. {B.P. JEEVAN REDDY, J.] 347

the Department of Pharmaceutical Sciences. The Pharmaceutical Society A
.+ of Great Britain, we have perused the saine and fmd that the said require-
ment is in the case of a gauze and not in the case of dressing of pad like
the respondent's product. There is no other statement in the said CODEX,
which says that in the case of a dressing pad like the one concerned herein,
Nitrofurozone or other drug should be in a particular quantity. The said B
reason given by the High Court is, therefore, unsustainable.

5. Coming to the other ground given by the High Court we find
ourselves equally unable to agree. The Nitrofurozone is not applied to
render the pad sterile; the pad is already rendered sterile and thereafter
Nitrofurozone in the said small quantity is added. Before us Shri Hidyatul- C
lah, learned counsel for the respondent, sought to contend that the said
small quantity of nitrofurozone is applied to preserve the sterility; but this is
not the ground assigned by the High Court, nor is any text book cited by
learned counsel to support his contention conclusively.

6. Even though we are not satisfied with the reasoning of the High D
Court, we are of the opinion that no interference is called for in the
__. particular facts and circumstances of the case. The relevant facts relating
to the dispute concerned herein have been stated in the opening para-
graphs of the Judgment of the High Court, which establish that the proviso
to Section 11-A may not be attracted to this case. The High Court has
E
traced the course of this litigation and the inordinate delays mdeciding the
matter. The Respondent has been paying duty all, the while under T.1.68
till the Central Excise Tariff Act, 1985 came into force. The difference of
duty is very small. Having regard to all the above facts, we do not think this
is a fit case for interfering under Article 136 of the Constitution.
F
The appeal is accordingly dismissed subject to the fmdings recorded
hereinbefore. No orders as to cost.

G.N. Appeal dismissed.