Case: Union of India and Others Vs. Leukoplast Private Limited and Others

2. The respondent is a company engaged in the manufacture of strips of surgical dressings containing a pad medicated with Nitrofurozone (0.125%) sold under the trade name "Handyplast". A sample of the said product is placed before the Court as Exh. B. The following is the general description of such products, as set out by the Highelastic adhesive wound dressing consists of a fabric pad, comprising a piece of lint wrapped in muslin bandage, fixed to 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 dye may be omitted if the dressing is supplied sterile."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 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 respondents case is that the said product is used merely for protecting a cut for a wound from getting infected by dust and other substances, thus enabling the body system to cure itself. According to the respondent its 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 respondents case could have been accepted but in this case the respondent adds a medicine namely Nitrofurozone after rendering the dressing sterile. The Revenues 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 preparation4. The High Court has held in favour of the respondent mainly on two grounds, viz., (i) for the said product to become a medicinal preparation, the Nitrofurozone must be at least one per cent.; since it is only 0.125 per cent. in the case of Handyplast it cannot be called a medicine or medicinal preparation and (ii) the said negligible amount of Nitrofurozone is applied "for an antiseptic purpose, that is to say, to make the said paid sterile". In support of the first proposition the High Court has relied upon a statement under the heading "Non-adherent Wound-contact Dressings : FRAMYCETIN SULPLHATE GAUZE (TULLE) DRESSING" from a textbook The Pharmaceutical Codex - incorporating the British Pharmaceutical Codex, Eleventh Edn., 1979 prepared and published by the Department of Pharmaceutical Sciences, The Pharmaceutical Society of Great Britain.

Reasoning:
We have perused the same and find that the said requirement is in the case of a gauze and not in the case of dressing or pad like the respondents 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 reason given by the High Court is, therefore, unsustainable5. 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 Hidayatullah, 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 textbook cited by learned counsel to support his contention conclusively6. Even though we are not satisfied with the reasoning of the High 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 paragraphs 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 traced the course of this litigation and the inordinate delays in deciding the matter. The respondent has been paying duty all the while under T-1.68 tillthe 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