ORDER
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 pharmacopocial 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-l~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 should have the right or proprietorship over the mark. In the appellants case it is the undisputed position that the ‘monogram’ is not registered under any Act like Trade & Merchandise Act, 1958 or Patents Act, 1970. It has no proprietorship over the mark and has no right over the same. In the absence of such right merely because the appellants use two letters in an artistic and sematical fashion on the labels would not fasten liability under the item on the appellants. The Revenue was all along aware of the manufacturing activity of the appellants and therefore shorter period of six months and not the longer period of five years would apply for demand of duty.
7. Elaborating his arguments Shri Chandrasekharan submitted that the definition of patent and proprietary medicine has three parts which should be read conjunctively and not disjunctively. It should be read harmoniously. Shri Chandrasekharan submitted that if a manufacturer manufactures a medicine finding place in the specified pharmacopoeia then he cannot be said to have the proprietary right over the medicine. It is only when he manufactures a medicine not specified in the pharmacopoeia that he could be said to possess such a right. Such was not the case in the case of the appellants as Dextrose finds place in pharmacopoeia. He submitted that while the process is patented, the product Dextrose is not. patented under Indian Patents Act. He referred to Drugs & Cosmetics Act 1940, Section 3H for the definition of Patent & Proprietary medicine. Shri Chandrasekharan referred to dictionary meaning of ‘monogram’. According to which it would mean two or more letters interwoven. He submitted that in the instant case the letters A.P. were not interwoven but separate. Shri Chandrasekharan during arguments referred to the following decisions’ :
M/s. Indo French Pharmaceutical Co. Madras v. Union of India and Ors. 1978 ELT 3 478.
Union of India v. Indo French Pharmaceutical Co. 1983 ELT 725 (Mad.) – This decision upheld the Single Bench decision of Madras High Court supra.
In Re : Standard Pharmaceuticals Ltd. 1982 ELT 765 (G.O.I.)
State of Madras v. M/s. Gannon Dunkerley & Co. AIR 1958 SC 560.
8. Shri M. Chandrasekharan in all fairness also drew attention of the Bench to two contrary decisions on the point :
Ramsey Pharma Private Ltd. v. Superintendent, Central Excise Allahabad and Ors. (1983 ELT 78 Alld.)
Lubri-chem Industries Pvt. Ltd. Bombay v. Collector of Central Excise, Bombay 1983 ELT 2408 (CEGAT).
9. Shri Shishir Kumar controverting Shri Chandrasekharan’s contention submitted that looking to the label used by the appellants the medicine Dextrose I.P. fell in the third category of the Explanation (this would be referred to later). He relied on the Allahabad High Court decision in Ramsey Pharma Pvt. Ltd. (1983 ELT 78) and the Tribunal decision 1983 ELT 2408 (Cegat) already referred to by Shri Chandrasekharan. He submitted that the monogram was sufficiently prominent. The label and the monogram or mark on the same indicated the connection, in the course of trade, between the appellants and the medicine. About the ‘right’ part of the Explanation he submitted that this need not be exclusive; it could be non-exclusive right. About limitation he submitted that the appellants admittedly had not filed any declaration under Notification No. 111/78-C.E. The appellants had never brought to the notice of the Department that they were using a monogram nor had they tried to ascertain with diligence from the Department whether their medicines were excisable. During Inspector’s visit to the appellants factory referred to by Shri Chandrasekharan this aspect of the matter was not in issue and therefore on that oasis the appellants could not claim “hat a shorter period of limitation would apply.
10. In rejoinder Shri Chandrasekharan submitted that the Revenue wanted to seek indirectly what it could not achieve directly. He also submitted that in order to fasten liability under Explanation to the item, the “right” be it exclusive or non-exclusive, should be enforceable in a Court of Law.
11. Before dealing with the arguments advanced by the parties and the decisions relied on it would be useful to reproduce Explanation I to Tariff Item 14E which is a definition of Patent or Proprietary medicines for the purpose of Central Excise Tariff.
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 monograph 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 trade mark under the Trade and Merchandise Marks Act, 1958 (*3 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.
A sample label of the appellants and the product has been placed on the file. The letters A P do not constitute a monogram because the two letters are not interwoven but there can be no doubt that the two letters are placed side by side in an artistic fashion in the manner shown on the top inside what is a near one cm. square. The two letters are printed in red with the word Astra written underneath. From the precedents on the point to which both the parties have made references a decision of the case on first principles does not appear necessary. It is also common ground that the name of the medicine in question finds place in Indian Pharmacopoeia and the same appears on the label. The question to be seen is whether in this background the label with letters A P printed in an artistic fashion would make the medicine in question a Patent or Proprietary medicine.
12. Shri Chandrasekharan has no doubt referred to Cannon Dunkerley & Co’s case AIR 1958 SC 560 dealing with rules of interpretation but as there are direct High Court decisions on the point recourse to this decision for deciding the issue does not appear strictly necessary.
13. In para 7 and 8 above Shri Chandrasekharan himself has referred to decisions in favour of the appellants and in favour of Revenge. The decision in favour of the appellants is the Single Judge decision of Madras High Court in M/s. Indo French Pharmaceutical Co.’s case 1978 ELT 1978. It was upheld in appeal by Division Bench of the same High Court in 1983 ELT 725 (Mad.). There is also a Govt. of India decision in 1982 FLT 765 in appellants favour.
14. As against the above, the decision in Ramsey Pharma Private Ltd. 1983 ELT 78 Allahabad is against the appellants. The Tribunal decision in 1983 ELT 2408 (Cegat) is also against the appellants. The Tribunal sitting in Delhi is thus faced with two High Court decisions – one of Madras High Court and the other of Allahabad High Court. While the Tribunal has equal respect for both the High Courts, it is difficult for it to follow simultaneously both the decisions with respect to the same product and only one decision would have to be preferred to the other. The question is which of the two High Court decisions should be preferred. The decision of Ramsey Pharma Private Ltd. case 1983 ELT 78 Allahabad is more ,to the point with the case in hand. In this decision the Hon’ble High Court was concerned with a medicine whose name was, as in this case, contained in an Indian Pharmacopoeia. It had no brand name and the manufacturer had not got any trade mark registered under the Trade and Merchandise Act, 1958 in respect of the medicine. The issue was whether the labels on the bottles of the medicines and the cardboard cartons in which the bottles were packed bore any mark such as a symbol, monogram, invented words or writing indicating a connection in the course of trade between those medicines and the person having either as proprietor or otherwise the right to use such name or mark. The main discussion of this issue is to be found in paras 8 to 12 of the decision. In the decision no monogram was involved but calligraphic letters as in the present case as seen from the label produced were involved. The High Court also referred to requirement of Rule 88 of Drugs and Cosmetic Rules. After referring to the arguments advanced by the parties the High Court recorded its finding as under :
“12. Thus the calligraphic types used for the name ‘Ramsey’ as distinct from the ordinary block letters used for the remaining portion of the name and address of the manufacturer, together with the geometrical design of the circle in which the word ‘Ramsey’ is printed both vertically and horizontally, constitutes a distinctive design so as to distinguish the medicines manufactured by the petitioner from the medicines manufactured by others. We are unable to accept the contention of Sri Kacker that in order to attract the Explanation to Item 14E of the First Schedule the distinctiveness must be only in regard to the name of the medicine and not the name of the manufacturer. The relevant portion of the Explanation reads :
“… 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.”
According to the explanation it is sufficient if the mark used in relation to the medicine indicates a connection in the course of trade between such medicine and the manufacturer having a right to use such mark.
Thus we are unable to accept the first ground urged by Sri Kacker, namely that the medicinal preparation in question are not liable to excise duty.”
15. Shri Chandrasekharan, learned Advocate for the appellants has no doubt argued that the decision does not deal with or discuss that part of the Explanation which deals with ‘some person having the right either as proprietor or otherwise to use the name or mark’ and, therefore, may be ignored in preference to Madras High Court decision. This argument cannot be accepted because the fact of the brand name or trade mark not having been registered is recited in para 8 of the order and in spite of this the Hon’ble High Court recorded the above finding. The decision of the Hon’ble High Court cannot be ignored on the ground urged by Shri M. Chandrasekharan.
16. There is another reason why the Tribunal should follow the Allahabad High Court decision. In Lubri-Chem Industries Pvt. Ltd.’s case (1983 ELT 2408 Cegat) Tribunal took a decision which was in conformity with the Allahabad High Court decision though it did not in terms refer to the Allahabad High Court decision. Shri M. Chandrasekharan has no doubt assailed this decision on the ground that it had not noticed in terms the Allahabad High Court decision or the contrary Madras High Court decision. He also submitted that these decisions were taken in absence of the manufacturer without any arguments. The fact, however, remains that the decision is in conformity with the Allahabad High Court decision though it does not in terms refer to the same. Tribunal having once taken a view in conformity with Allahabad High Court decision, it would not be prudent for this Bench to reverse that view and follow Madras High Court decision in preference to Allahabad High Court decision.
17. Examined in the light of the Allabad High Court decision, the two calligraphic letters A P with name Astra written below inside a near square of one cm. would make the medicine a patent or proprietary medicine attracting Central Excise duty. We find accordingly.
18. As for Shri Chandrasekharan’s plea that the show cause notice; referred to ‘monograph’ and not ‘monogram’, the substance of the allegation against the appellants was that the medicine was patent or proprietary medicine on the allegation set out in the show cause notice. The show cause notice substantially gives notice to the appellants of the charge that they had to meet. The appellants have fully understood the allegation that they had to meet and have not been misled in any way. On that account the demand raised against the appellants cannot be quashed or set aside.
19. As for the plea of limitation, it is admitted position that the appellants had not filed any declaration in terms of Notification No. 111/78-C.E. which was necessary for them to do in order to claim exemption from licensing control. Merely because Central Excise officers were generally visiting the appellants factory would not mean that they had knowledge of the medicines and labels manufactured by the appellants. In absence of anything to show that the labels had been specifically brought to the notice of the Central Excise officers visiting the appellants factory on the basis of their general visit to the appellants factory the appellants cannot be granted the benefit of shorter limitation of six months in view of the fact that the appellants had not filed the required declaration claiming exemption from licensing control. In our view the material on record is not sufficient to impute knowledge to the Central Excise authorities of the appellants manufacturing activity of the medicine in question. Appellants claim in respect of shorter limitation of six months being applied against them is hereby rejected.
20. As a result, the appeal fails and is hereby dismissed.