JUDGMENT

R.M. SAHAI, J.- This appeal under Section 35-L of the Central Excises and Salt Act, 1944 (Act for short) raises two important questions of law, one relating to construction of Item 14-E of the Central Excise Tariff levying duty on patent and proprietary medicines and other the scope of proviso to Section 11-A of the Act.

2. For purposes of duty, patent and proprietary medicines were classified in relevant period in two broad categories - one, which were dutiable under Tariff Item 14-E and other which fell under the Residuary Item 68. The latter were wholly exempt from duty under Notification No. 55/75 dated 1-3-1975. The appellant manufactured pharmacopoeial and non-pharmacopoeial medicines. One of the items manufactured by the appellant was 20% Dextrose injection. It is a trade name in the Indian pharmacopoeia. It being one of the medicines specified in pharmacopoeia it was wholly exempt from duty. An item which fell under Tariff Item 68 and was wholly exempt from duty was further exempted from operation of Rule 174 and no Central Excise licence to manufacture it was required to be taken out. The appellant, therefore, did not obtain any licence and cleared the Dextrose manufactured by it without paying any duty since the date of manufacture in December 1978 till 23rd January, 1982 when notice was served on it for showing cause as to why Dextrose manufactured by it may not be subjected to duty under Tariff Item 14-E as even though it was pharmacopoeial product, yet the label used on the packing and the container bore a monogram which indicated a connection between the medicine and the appellant.

3. To determine if the appellant was liable to pay duty on Dextrose injection manufactured by it, it will have to be examined if it fell under Tariff Item 14-E extracted below :

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Tariff Item No.

Description of Goods

Rate of duty Basic Special Excise

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14-E

Patent or Proprietary Medicines not containing alcohol, opium, Indian hemp or other narcotic drugs or other narcotics other than those medicines which are exclusively Ayurvedic, Unani, Sidha or Homeopathic.

12

adv.

1/2

10% of the basic duty Chargeable.

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Explanation I.- "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 monogram in a 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 trademark under the Trade and Merchandise Marks Act, 1958 (43 of 1958) or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person, having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person.

Explanation II,- Alcohol, Opium, "Indian Hemp", "Narcotic Drugs" and Narcotics have the meanings respectively assigned to them in Section 2 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955).

The entry is in two parts, one the main and other explanatory. The main part negatively excludes those medicines which contain any of the ingredients mentioned in it or are Ayurvedic, Unani, Sidha or Homeopathic medicines. The range of patent and proprietary medicines thus having been determined by the main part the explanation spells out the exact scope of the entry by first widening its ambit by including any drug or medicinal preparation in