S.D. Jha, Vice President (J)

1. The main question for decision in this appeal is whether the appellants manufacture Dextrose I.P. in view of the label and what is called a monogram on the same merits classification as patent and proprietary medicine under the erstwhile Tariff Item 14E of the Central Excise Tariff as claimed by the Revenue or T.I. 68 as claimed by the appellants manufacturer. Allied question is whether demand of duty against the appellants should be for the longer period of five years or shorter period of six months preceding the date of show cause notice.

2. There is no dispute that Dextrose I.P. is a pharmacopoeial medicine mentioned in Pharmacopoeia of India page 162 which is a specified pharmacopoeia under Notification No. 47/63 dated 1-3-1963.

3. The present proceedings against the appellants are the outcome of a visit by Central Excise officers (Preventive) Patiala Division to the appellants factory on 23-1-1982. The appellants are engaged in the manufacture of medicines. On examining the labels used for Dextrose I.P. Central Excise authorities were, prima facie, of opinion that in view of the label used on the packing and container of the medicine the medicine would merit classification as patent and proprietary medicine under T.I. 14E. The appellants had not filed any declaration claiming exemption from licencing in terms of Notification No. 111/78 dated 9-5-1978 nor had obtained a licence for manufacture of such medicine. After usual investigation show cause notice was served on the appellants calling upon them why for breach of certain rules specified in the show cause notice penalty be not imposed against them and central excise duty amount Rs. 6,50,439/- for the period 1978-79 to 23-1-1982 be not realised from them. The appellants through their counsel Shri A.K.S. Bedi filed reply dated 20-4-1982 to the show cause notice mainly contending that the proposed action was based on misconstruction and wrong interpretation of Explanation to Tariff Item 14E. Dextrose I.P. found place in Pharmacopoeia of India. Being a pharmacopoeial medicine it would not fall under T.I. 14E. The monogram on the label was not registered under Trade Merchandise Act, 1958 or any other Act in favour of the appellants and the appellants had no right in respect of so-called monogram, in view of this the medicine would not merit classification under T.I. 14E.

4. There is no dispute that if the medicine Dextrose I.P. be held not classifiable under T.I. 14E but T.I. 68 the appellants would be eligible to benefit of exemption under Notification No. 71/78 as amended by Notification No. 80/80 dated 19-6-1980 and demand of duty would not survive.

5. The Collector of Central Excise after following usual procedure held that in view of the monogram on the label which established a connection between the appellants manufacturer and the medicine, the medicine would merit classification as patent and proprietary medicine under T.I. 14E. He accepted the appellants claim with respect to a small quantity value Rs. 2,532.60 not being includible for raising demand of duty against the appellants. He also accepted the appellants claim for abatement of duty element in determining the demand of duty from the appellants. He did not impose penalty against the appellants and directed the Assistant Collector of Central Excise to work out the duty demand against the appellants in the light of these directions. Aggrieved with this order the appellants have filed appeal to the Tribunal.

6. At the hearing of the appeal Shri M. Chandrasekharan, learned Advocate for the appellants advanced the following proposition :

The show cause notice alleges that the manufacturer uses a monogram and not monograph. On a proper interpretation of the word 'monogram' and the examination of the label in question it would be established that the letters do not constitute a 'monogram'. Under Explanation to Tariff Item in order to incur liability under the item a manufacturer shou