ORDER
G.A. Brahma Deva, Member (J)
1. This is an appeal preferred against the Order-in-appeal No. AMP-628/B.III-279/87 dated 27-10-1987 passed by the Collector of Central Excise (Appeals), Bombay.
2. The appellants are engaged in the manufacture of Medicinal Products, namely, DAKTARIN GEL and GYNODAKTARIN GEL. They are prepared by using Miconazole Nitrate as an active ingredient which is the salt of the base chemical miconazole. They claimed exemption in respect of the above products in terms of exemption Notification No. 122/86 dated 1-3-1986. While claiming the exemption it was submitted on behalf of the appellants relying upon various affidavits and extracts from relevant Pharmacopoeias that whenever any medicine is prepared with Miconazole as one of the active ingredient which is usually used in its salt form miconazole nitrate. Miconazole nitrate is the only form in which miconazole can be administered to cure mycotic/fungal vulvo-vaginal infections. The exemption has been disallowed by the Assistant Collector on the ground that the product manufactured by M/s. Ethnor Ltd. contains miconazole 2% in its original form and not miconazole nitrate. There may be many products which may contain miconazole in its original form. Hence exemption cannot be given in terms of exemption notification as notification specifies miconazole and not miconazole nitrate since the exemption notification is to be interpreted as it is worded. The Collector in the impugned order has observed on inspection of the samples that it shows the presence of miconazole nitrate BP 2% ww in both medicines manufactured by M/s. Ethnor Ltd., and it is not miconazole as stated by the Assistant Collector. However, relying upon the technical literature BP 1980 Volume-1, EP 28th Edition with reference to miconazole injection, he observed that life-saving formulations contain miconazole as the active ingredient and not miconazole nitrate. Since miconazole and miconazole nitrate are not same the benefit meant for miconazole cannot be extended to the salt also. The benefit of Notification No. 122/86 would not be available to the appellants in respect of Daktarin Gel and Gynodaktarin Gel till the amending Notification No. 455/86 came into existence.
3. Shri R. Dada, learned counsel, appearing for the appellants, in support of the miscellaneous application, submitted that Collector in the impugned order relied upon the technical literature in the form of extract from British Pharmacopoeia 1980 Vol. 1, 28th Edition which referred to miconazole injection, which was not relied upon either in the Show Cause Notice or in the order passed by the Assistant Collector or in any evidence produced by the appellants. Since the Collector (Appeals) did not disclose this evidence to the appellants during the course of proceedings, they had no occasion to rebut it. Hence, they are filing the miscellaneous application for taking an affidavit of Dr. A.V. Dangi on record as an additional evidence to rebut new evidence. In the affidavit of A.V. Dangi it was stated that bulk drug miconazole is invariably used in the salt form miconazole nitrate in India. No manufacturer of pharmaceutical products in India ever manufactures any formulations containing miconazole in its base form. Miconazole nitrate is used for treatment of external fungal infection in India and is manufactured in preparation suitable for external use only like cream, ointment etc. There are no formulations in India which contain either Miconazole base or Miconazole Nitrate for external infection and are administered internally. While the U.S. Pharmacopoeia lays down specifications in respect of Miconazole injection, no one in India makes any injection preparation containing Miconazole in its base form. Since internal fungal infections cannot be cured by using topical or external preparations such as creams or ointments, injection is required to be used. Such incidents of internal fungal infection are low in India and hence, no injections are manufactured in India using Miconazole in its base form and miconazole injection specifications are not laid down in Indian Pharmacopoeia.
4. Shri Dada submitted that since no manufacturer was using miconazole as such in the preparations and no one was getting benefit of exemption in terms of Notification No. 122/86, this Notification was suitably amended by Notificaton No. 455/86 dated 21-11-1986 inserting that miconazole nitrate shall be substituted in place of miconazole. The intention of the Government of India was to grant exemption from the inception of the Notification, i.e., from 1-3-1986 in view of the fact that in the amended notification the expression used was not that the word ‘Miconazole’ be amended as miconazole nitrate but shall be substituted. This amended notification is clarificatory in nature as the same was clarified in the classification issued by the Ministry as per copy of the Ministry’s letter dated 25-11-1986 addressed to all Collectors, Central Excise. The clarification was issued not only on the representation and references have been received from the Industry but also from the Central Excise Collectorates since they felt the exemption notification as it then stood would not serve the purpose for which exemption was granted. Further it was stated that all provisional assessments may be finalised as per the guidelines specified in Notification No. 455/86. Shri Dada argued that there would be anomaly in granting exemption to the assessment which have not been finalised and not to grant the benefit to the assessment which have already been completed upto a particular period. Since the dispute with the benefit of exemption is pending before the Tribunal, exemption may be granted in view of the subsequent clarification issued by the Government of India. He said that similar question had come up before the Tribunal in the case of Parke Davis (India) Ltd., Bombay v. Collector of Central Excise, Bombay, reported in 1984 (15) E.L.T. 231 in which the Tribunal decided the issue in favour of the party and same ratio is clearly applicable to the facts of this case. In that case it was held that “while amodiaquine is the base and active principle having the therapeutic properties, it is always medically administered as per various pharmacopoeias, as an antimalarial drug in the form of amodiaquine hydrochloride tablets wherein the hydrochloride is non-active. There is no other form in which this substance is administered for the purpose. This gets substantiated also from the fact that the Government itself amended the said notification later to read as amodiaquine hydrochloride. Though an exemption notification is to be strictly construed yet if so construed, the said notification would be of no benefit to anyone as a patent and proprietary medicine containing amodiaquine in the base crystal. Therefore, exemption to amodiaquine is exemption to amodiaquine hydrochloride and consequently amodiaquine hydrochloride is entitled to exemption under Notification No. 116/69.” Further it was held in the case of Super Cassettes Industries Ltd. v. Collector of Customs, reported in 1992 (58) E.L.T. 105 that what was implicit in the original notification has been made explicit by the amending notification and, accordingly, amendment is only clarificatory in nature.
5. Shri Sharad Bansali, learned SDR for the Revenue submitted that miconazole nitrate is different and distinct from miconazole. They are neither synonymous nor interchangeable. Whether miconazole was used or not by the party in the preparation is not the criteria to avail exemption as the very item could be used in the medicine as can be seen in the literature and exemption Notification No. 122/86 exempts only miconazole but not miconazole nitrate. Hence the decision cited by the appellants in the case of Parke Davis (India) Ltd. (Supra) is not applicable. He said that intention is not important while interpreting the statute and exemption notifications are to be interpreted strictly as they are worded. In support of his contention he referred to the decision of the Supreme Court in the case of Oswal Agro Mills v. Collector of Central Excise, reported in 1993 (66) E.L.T. 37 (S.C.) wherein it was held “that there is neither intendment nor equity in a taxing statute. Nothing is implied. Neither can we insert nor anything can we delete but it should be interpreted and construed as per the words the legislature has chosen to employ in the Act or Rules.”
6. We have carefully considered the arguments advanced on both sides and perused the records including citations. It was submitted by the learned counsel for the appellants that the observation made by the Supreme Court in the case of Oswal Agro Mills that there is no intendment nor is to be added with reference to interpreting the tariff entry while dealing with the issue whether the soap “toilet” would fall within the meaning of the word ‘household’ in sub-item (1) of Item 15 of the Schedule. He pointed out that the Supreme Court made some observation in the very case how statute is to be interpreted if there is an ambiguity in the Legislation. The relevant observation as appeared in Paras 3 & 6 of the judgment are as follows :-
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In the instant case sufficient evidence was brought on record by the appellants to show that miconazole in the base form as such was not used in the prepara-tion by the manufacturers in India and this fact was not rebutted by the Department. This gets substantiated also from the fact that the Government of India itself amended the said notification later to read as “miconazole nitrate.” Though an exemption notification is to be strictly construed yet if so construed, the said Notification No. 122/86 would be of no benefit to any one as miconazole as such was not used in the medicinal preparation by any manufac-turer in India. The exemption to miconazole is exemption to miconazole nitrate and, accordingly, notification was suitably amended and in consequence miconazole nitrate is entitled to exemption under Notification No. 455/86. this context the clarification issued by the Ministry after amending the notifica-tion is relevant and the same is reproduced as under :-
“Copy of Ministry’s letter F. No. B. 27/43/86-TRU, dated 25th November, 1986 addressed to All Collectors of Central Excise.
…
Subject : Excise duty exemption of P or P formulations containing specified ingredients under Notification No. 122/86-CE dated 1-3-1986.
Representations and references have been received from the Industry as well as some of the Central Excise Collectorates stating that some of the ingredients of P or P formulations specified in Notification No. 122/86-C.E., dated 1-3-1986 are not therapeutically active and only the salt forms can be used for manufacturing P or P formulations as per various pharmacopoeia.
This matter has been examined in the Ministry. Necessary changes in Notification No. 122/86-C.E., dated 1-3-1986 have been made vide amending Notification No. 455/86-CE dated 21-11-1986 incorporating the salt forms of the ingredients specified in the pharmacopoeia. These changes relate to SI. Nos. 2, 5, 8, 9, 14, 16, 20, 21, 23, 24, 28, 33 and 41 of Annexure to Notification No. 122/86-CE. It has also been decided that except in the case of Diphenoxylate Hcl with Atropine Sulphate (Sl. No. 8) and salts of Oxytotracyclone (Sl. No. 20), the benefits of Notification No. 122/86-C.E. may be extended to P or P formulations containing the specified ingredients referred to in Sl. Nos. mentioned above even if such formulations contain ingredients in their salt forms as specified in Notification No. 455/86-C.E., dated 21-11-1986 and all provisional assessments may be finalised as per the above guidelines. The field formations and the industry may be suitably advised.
Kindly aknowledge receipt of this letter.”
In the amended notification since the expression used was ‘miconazole nitrate’ shall be substituted and in the subsequent clarification issued by the Government of India that provisional assessment may be finalised as per the guidelines of Notification No. 455/86, we are of the view that amended Notification No. 455/86 is clarificatory in nature and intention of the Govt. of India was to grant exemption from the inception of Notification No. 122/86, dated 1-3-1986. In the facts and circumstances of the case and taking into consideration of the nature of amending notification, we hold that Notification No. 455/86 is only clarificatory. Accordingly, the appellants are justified in claiming the exemption in respect of the product in question in terms of Notification No. 122/86 since its inception. In the view we have taken, we do not feel it necessary to go into other issues raised by both sides. Thus, the appeal is allowed.