1. The petitioners challenge, in this Writ Petition, the Orders dates 25th October, 1980 and 19th August, 1981 passed by the Central Board of Excise and Customs, as well as the show cause notices issued by the same Board on 25th February, 1981 and 20th March, 1981.
2. The first petitioner is a Company registered under the Companies Act of 1956 and the second petitioner is shareholder of the same Company. The first petitioner manufacturers strips of Surgical Dressings containing a pad medicated with Nitrofurozone (0.125%) called Handyplast. On 12th October, 1962, a Tariff Advice was issued by the Central Board of Excise and Customs clarifying that products similar to Handyplast were not classed under Item 14E. Petitioners started the manufacture of Handyplast and on account of the said Advice, no duty was levied on the said product. However, on 16th March, 1974, a show cause notice was issued to them by the Assistant Collector of Excise and Customs, whereby he proposed to classify Handyplast under Item 14E on analogy of Belladona plaster and required the petitioners to pay the differential duty under Rule 10A from 1967 onwards. The petitioners replied to the said show cause notice on 29th April, 1974 and ultimately, by his Order dated 16th September, 1974, the Assistant Collector withdrew the above-mentioned show cause notice. As a result, no duty was levied on the clearances of Handyplast up to 1st March, 1975 when the residuary Item No. 68 was added to the Excise Tariff. On 6th September, 1975, the Central Board of Excise and Customs issued a show cause notice under Section 35A of the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Act') proposing to review the aforesaid Order dated 16th September, 1974 passed by the Assistant Collector of Excise and Customs on the grounds that medicated dressing were to be classified under Item 14E as they had therapeutic properties. The petitioners replied to the said show cause notice on 6th November, 1975 contending that Handyplast are products similar to those commercially known as surgical dressings as per British Pharmaceutical Code, 1973 and they are not a drug or medicinal preparation. They further contended that the essential characteristics of Handyplast as a surgical dressing are not altered by the small percentage of nitrofurozone and that, in any case, the said product has no therapeutic properties. No action had been taken by the Central Board of Excise and Customs, for about five years, after the filing of the said reply, and during the said five years, all clearances of Handyplast were made classifying it according to the binding and operative order. According to the operative Order of the Assistant Collector duty was paid under Item 68, and the assessment were finalised on such basis. Ultimately, on 25th October, 1980, the Central Board of Excise and Customs made an order classifying Handyplast under Item 14E relying on a Tariff Advice dated 17-4-69 passed on technical reconsideration and on an alleged admission by the petitioners that Handyplast is a medicinal preparation having therapeutic properties. As a result of this Order, on 10th December, 1980, a classification list was filed by the petitioners classifying Handyplast under Item 14E and duty was paid on it under protest. Later on, on 25th February, 1981, the concerned authority issued a show cause-cum-demand notice under Section 11A claiming the duty of Rs. 6,51,737.90 allegedly short levied. The petitioners, being aggrieved, filed a Revision Application against the said show cause notice under Section 36 of the Act on 24th March, 1981. Again, on 20th April, 1981, another show cause notice was issued by the concerned authority demanding another amount of Rs. 26,399.75 allegedly short levied. Petitioners replied to the said show cause notices on 26th March, 1981 and 20th April, 1981 submitting that the same notices were premature, since the issue was still to be decided by the Government of India and in any case, the show cause notice dated 25th February, 1981 was time barred. Thereafter, on 25th July, 1981, the petitioners addressed a letter to the first respondent seeking stay of the Order dated 25th October, 1980 and pointing out that the Review proceeding had been time-barred under Section 35A(3)(b). However, no hearing was given to the petitioners on the stay application, but on 19th August, 1981, an ex-parte Order was made for the first clearances on furnishing full Bank Guarantees. The Order was passed by the Senior Technical Officer. Similarly, on 9th August, 1981, further ex-parte Order of stay of past clearances of furnishing full Bank Guarantee was passed by a subordinate officer. On account of all these facts, the petitioners filed the present Writ Petition in this Court challenging the aforesaid Orders and show cause notices.
3. The respondents filed their return, their case being, in short, that after all whatever is the technical meaning of the product Handyplast, the fact remains that the petitioners themselves had advertised that the said product is a medicated one and therefore, it was not open to them to challenge now that the same product is not falling under Item 14E of the Tariff.
4. The petition falls thus within a narrow compass and the short question that falls for the determination of the Court is whether the product Handyplast is a drug or a medicinal preparation falling under Item 14E of the First Schedule of the Tariff for purposes of duty.
5. Before addressing ourselves to this question, it is expedient to deal with the preliminary point raised by Mr. Patkar, learned counsel appearing for the respondents. He urged that this petition is premature, since there is an alternative remedy provided in the statute and since the petitioners, admittedly, had already availed themselves of such remedy by filing a Revision against the impugned Order dated 25th October, 1980. The learned counsel further contended that in the circumstances, this petition should not be entertained by this Court and should be summarily dismissed. It was, however, contended by Mr. Hidayatullah, learned counsel appearing for the petitioners, that there is no bar for the High Court exercising its writ jurisdiction even though there is an alternative remedy by way of appeal or revision provided in the statute. All depends, according to the learned counsel, on the facts and circumstances of each case and in this particular case, it happens that not only, after the petition was filed, Rule was issued but also the revision filed before the concerned authority is pending for a long period and even, no date was given for its hearing on merits. In these circumstances the remedy provided by the statute becomes inefficacious and therefore, it is proper for this Court to entertain and dispose of this petition on merits.
6. Undoubtedly, ordinarily the High Court will not act in the exercise of its writ jurisdiction when the statute provides an alternative remedy by way of appeal or revision to give redress to the grievances of a party. However, there is no bar for the High Court to exercise such jurisdiction and it is for the Court to exercise its discretion and to act in the exercise of such jurisdiction in a given case, if the circumstances so advise. In the case at hand as rightly pointed out by the learned counsel for the petitioners, the petition was admitted by the Court and Rule was issued. The circumstances that manifestly had weighted on the Court to issue the Rule are patent on record. In fact, the concerned authority had issued the show cause notice in 1975 and after reply was given by the petitioners, chose to remain silent for a long period of about give years and only in 1980 the impugned order was passed. Then, the petitioners filed their revision application and followed the same Revision Application with an application for stay of the impugned order. However, the concerned authority did not give any hearing to the petitioners on the said stay application and instead, made ex-parte orders of stay and, at the same time, demanded that the petitioners should give full Bank Guarantee for the levy demanded. The revision application filed by the petitioners was, therefore, pending for more than three years at the time of filing of the Writ Petition. In the circumstances, therefore, it becomes clear that, though the petitioners had availed themselves of the statutory remedy, the fact remains that the concerned authority had not expedited the matter as ought to have done and has not yet fixed a date for the hearing. In the meanwhile, the concerned authority went on issuing show cause notices and making demands for full Bank Guarantees in respect of the duty allegedly due by the petitioners. In these circumstances, the statutory remedy had not given any redress to the grievances of the petitioners and the facts are such that they cannot reasonably expect the revision filed by them to be disposed of in a short time. The very circumstances that instead of disposing the revision application, the concerned authority had been issuing fresh showcause notices, contribute to fortify the impression that the petitioners might have had that their revision will not be disposed of soon. In spite of these facts, the learned counsel for the respondents, relying in the decisions of the Supreme Court in the case of Smt. Ujjam Bai v. State of Uttar Pradesh and another AIR 1962 S.C. 1621 and of the Gujarat High Court in the case if Ambica Mata Yarn Mfg. Co., Baroda v. Superintendent of Central Excise, Range IV, Baroda and others 1982 E.L.T. 244, submitted that this Court should not entertain the present petition. In Ujjam Bai's case, the Supreme Court was dealing with a question of jurisdiction and not with the issue as to whether or not when an alternative remedy is provided by the statutes, the High Court can exercise its writ jurisdiction. Therefore, in our view, this authority of the Supreme Court is of no help to the respondents. In so far as the case of Ambica Mata, it is true that in the particular facts of the said case, the Gujarat High Court has held that when an alternative remedy exists, a petitioner should first exhaust such remedy before coming to the High Court to get redress under the writ jurisdiction. This authority of the Gujarat High Court holds good in the facts and circumstances of that case which are quite different from those in our case and, therefore, we feel that the said authority is not attracted to the facts and circumstances of the case before us. Being more pertinent, we may point out that the Supreme Court has held in the case of the Assistant Collector of Central Excise v. Jainson Hosiery Industries, : 1979(4)ELT511(SC) , that the High Court must have regard to the well established principles for the exercise of its writ jurisdiction and unless it is satisfied that the normal statutory remedy is likely to be too dilatory or difficult to give reasonably quick relief, it should be loath to act under Article 226 of the Constitution. We already observed that, in this particular case, the concerned authority had not disposed of the revision application filed by the petitioners for more than three years at the time of the filing of this Writ Petition. We also made reference to the fact that the concerned authority not only did not dispose of the said revision application, but went on issuing show-cause-cum-demand notices to the petitioners. In these circumstances, in our view, the statutory remedy availed by the petitioners appears to be unlikely to give a reasonably quick relief to them and becomes too dilatory. We may also refer to the case of L. Hirday Narain v. Income-tax Officer, Bareilly : 78ITR26(SC) wherein it has been observed that when an alternative remedy exists and the High Court entertains a petition and gives hearing on merits in spite of such alternative remedy having been availed of, the petition cannot be rejected on the ground that a statutory remedy was not availed of. In our case, the Writ Petition was duly admitted and Rule was issued. Hearing on merits was fixed and in these circumstances, it appears to us that the aforesaid ruling of the Supreme Court in the case of L. Hirday Narain squarely applies. Thus, in our view, the preliminary point raised by the learned counsel for the respondents is to be rejected.
7. Reverting now to the main question before us, namely whether the Leukoplast product is a drug or a medicinal preparation, falling under Item 14E of the First Schedule of the Act, it will be convenient to advert to the said Item. Item 14E of the First Schedule readers as under :-
'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.'
Explanation I to the said Item provides that patent or proprietary medicines means any drug or medicinal preparations, 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, etc.
A careful reading of the aforesaid explanation makes it clear that the main ingredient of the definition 'patent or proprietary medicines' is any drug or medicinal preparation. Therefore, it is necessary to find out what is the real meaning of a drug or a medicinal preparation. The learned counsel for the respondents, relying in the dictionary meaning of 'medicine', submitted that drug or medicinal preparation consists in anything that is used either for healing purposes or for prevention of ailments. It was, however, contended by the learned counsel for the petitioners that the dictionary meaning of a particular word is not relevant for the purpose of levying a duty as has been held by the Supreme Court in the case of Avadh Sugar Mills Ltd. v. The Sales Tax Officer, Sitapur and another, : 3SCR546 and in the case of Commissioner of Sales Tax, U.P. v. M/s. S. N. Brothers, Kanpur, : 2SCR852 . Undoubtedly, as held by the Supreme Court in the aforesaid cases, the dictionary meaning is not relevant for the classification of product for the purpose of levying duty. The meaning of the word is to be found in the context of the Entry itself and not in its dictionary meaning which sometimes is wide and covers things that are not at all envisaged for the purpose of the levy. Thus, we are unable to accept the submission of Mr. Patkar in this respect.
8. We already said that the main ingredient to classify a product as a patent or proprietary medicine is that the said product is a drug or medicinal preparation. A medicinal preparation as the expression itself implies is a preparation meant to heal or to cure an ailment suffered by a person or an animal. It implies or it connotes an idea of treatment and of giving relief for some sickness or ailment. It does not contemplate a thing that has no curative or healing properties. It is, therefore, necessary to see whether the Handyplast product has got any curative or healing qualities in order to make it fall under Item 14E of the First Schedule of the Act.
9. The learned counsel for the petitioners submitted that the product Handyplast does not have any medicinal qualities and does not constitute a drug or medicinal preparation within the meaning required to make it fall under Item 14E of the First Schedule. It is his case that the Handyplast is merely a strip surgical dressing which is used only for protecting or dressing small wounds, boils and like things. He submitted that the technical meaning of the said strip surgical dressing, as well as its meaning in the trade, is clearly that it is not a drug or medicinal preparation. He invited our attention to the definitions given to such dressings in the Pharmaceutical Codex incorporating the British Pharmaceutical Codex (11th Edition), at pages 891, 896 and 897. He also invited our attention to the affidavits along with the petition at Exhibits C, D and E. The said affidavits had been sworn by two Doctors an by one Chemist and they started that products like Handyplast are purely surgical strip dressings meant only for the protection and covering of wounds, boils and small bruises. It is also started in the said affidavits that the said products are not considered as a drug or medicinal preparation with any specific local or systematic effect. It is further stated in the affidavit (Exhibit E) which is an affidavit filed by a Chemist that tapes such as Handyplast are taken by the customers only for the purpose of dressing minor wounds or to cover or protect wounds, boils or bruises. It was, however, contended by Mr. Patkar that irrespective of the meanings and the observations made in the technical books on the subject, the fact remains that the petitioners themselves admit that their product Handyplast contains a medicated pad to the extent of 0.125% of Nitrofurozone. Therefore, according to the learned counsel, the petitioners admit that a medicine is utilised in the manufacture of the Handyplast and, as such, the said product squarely falls in the Item 14E of the First Schedule in view of the Explanation I. He further urged that the petitioners themselves had been advertising that the said product is a medicated product and helps to heal wounds, cuts, bites, sores and scrapes. Therefore, according to Mr. Patkar, it is clear that the petitioners, having admitted that the Handyplast contains medicine, had impliedly admitted that the said product constitutes a drug or medicinal preparation for the purposes of Item No. 14E of the First Schedule of the Act.
10. It is not denied by the petitioners and, on the contrary, it is their own case that the Handyplasts is a surgical dressing containing a pad, medicated to the extent of 0.125% of Nitrofurozone. Now, the question that arises is whether such percentage of Nitrofurozone that admitted is contained in the pad is sufficient to make the product a drug or medicinal preparation. In the Pharmaceutical Codex incorporating the British Pharmaceutical Codex, Eleventh Edition, under the heading 'surgical dressings', it is stated that surgical dressings are sub-divided into six main categories according to their uses, and these categories are further sub-divided into sections containing materials having a similar type of construction. Among the said six main categories. There is one in respect of wound dressings, and one of the sub-division of the wound dressing is in respect of Standard Dressings. Among the standard dressing, there are also some dressings which fall under the category of 'Elastic Adhesive Wound Dressing'. It is said that such elastic 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 unidirectionalacross 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 sterils. It is further said that such dressing are used as a protecting cover for small wounds. A sample of the Handyplast product manufactured by the petitioners had been produced by the learned counsel for the petitioners for our examination. We find that the said product squarely falls within the definition and description of 'Elastic Adhesive Wound Dressing' and therefore, we have no hesitation in holding that the Handyplast is nothing but an elastic adhesive wound dressing. Now, it is clear that such kind of elastic adhesive wound dressing are not used for purposes of healing wounds or for curative purposes, but they are used only as a protective covering for small wounds. Further, though the pad contained in the strip may be medicated with an antiseptic, the fact remains that such antiseptic is used not for healing or curative purposes but only for an antiseptic purpose, that is to say, to make the said pad sterile. In fact, the pad is not medicated, or may not be medicated, if the dressing is supplied sterlis.
11. The learned counsel for the petitioners furthers submitted that the quantity of the antiseptic used by the petitioners in the manufacture of Handyplast is negligible, being only 0.125%. This negligible quantity is insufficient to make the said dressing a drug or medicinal preparation. He submitted, taking support from the same Pharmaceutical Codex, that at least the medication should contain 1% of antiseptic or medicine to be medicinal preparation. He invited our attention to the Entry, at page 895, dealing with 'Framycetin Sulphate Guaze (Tulle) Dressing' (Soframycin Unitulle, Sofra-tulle). It is stated that the said kind of dressing contains 1% of framycetin sulphate and therefore, such a kind of dressing is a medicinal preparation. It is not denied by the learned counsel for the respondents that the technical data referred to and embodied in the aforesaid Pharmaceutical Codex is technically correct. It is further admitted that the said Pharmaceutical Codex is a standard book on the subject. In the circumstances, therefore, we have to accept the submission of Mr. Hidayatullah that technically too Handyplast does not constitute a drug or medicinal preparation.
12. It is true that relying in the advertisement of the product made by the petitioners, the learned counsel for the respondents submitted that the petitioners themselves consider Handyplast as a medicinal preparation or a drug. However, it may be pointed out that for the purposes of classification for levy, the advertisements are of no value or help. Advertisements are published by the manufacturers of a product in order to attract consumers and have nothing to do with the classification of the same product for levying of duty. This Court dealing with such contention has held, inter alia, in the case of Blue Star Ltd. v. Union of India and another, 1980 E.L.T. 280 that payment of duty under a particular Tariff Item must depend upon the facts of the case and not on the advertisement gimmick of the advertiser. The same view was also taken in Subbash Chandarnishat v. Union of Indian and another, 1979 E.L.T. 212, and by a Division Bench of the Kerala High Court in the case of The Deputy Commissioner of Agricultural Income-tax and Sales-tax (Law) Board of Revenue (Taxes), Ernakulam v. Union Carbide India Limited, Madras-2, 1976 Sales Tax Cases (Vol. 38) page 198. We do not see any reason whatsoever to depart from the view taken by this Court and by the Kerala High Court in the aforesaid cases. The learned counsel for the respondents had not, in fact, advanced any argument or any sound reason to make us hold a different opinion or at least consider it possible to take a different view. In any case, as we already observed, advertisement are made to attract the consumers and had nothing to do with the classification of product for the purposes of levying duty. Thus, the fact that the petitioners had stated in their advertisements that Leukoplast helps a wound is of no importance and does not advance in any manner the case of the respondents.
13. The learned counsel for the petitioners further contended that the Central Board of Revenue by its Advice No. C.B.R.D. DIS. 661-CUS. I/44, dated 19-8-1944 has classified imports of strip dressings, imported under the brand name 'Elastoplast', under Item 77(2) of the First Schedule of the Indian Tariff Act, 1934 and not under Item 28(A) of the First Schedule of the same Indian Tariff Act. The said item 77(2) was in respect of scientific and surgical instruments, apparatus and appliances and the Item 28A was in respect of patent or proprietary medicines. The explanation to the said Item was similar to the Explanation I to them 14E of the First Schedule of the Act. Thus, according to the learned counsel, under the cognate legislate of the Indian Act, the same central Board of Excise and Customs had not classified the strip 'surgical dressing' as a drug or a medicinal preparation. Further, the same Central Board had, by another Advice dated 12th October, 1962 made under the present Act, held that 'surgical dressings' do not fall under the definition of 'patentor proprietary medicines', as given in the Central Excise Tariff and therefore, they are not liable to duty under Item 14E of the Central Excises and Salt Act, 1944 (Exhibit F to the petition). We inquired from the learned counsel for the respondents what was the reason for changing the classification after these two Advices. In reply, he submitted that the impugned Order dated 25th October, 1980 was based on fresh technical advice tendered to the Board in the year 1969. We fail to understand, if this is the case, what caused the Board to remain inactive for such a long period of time, namely from 1969 to 1980, and how, only such a long period of time, had arrived at the conclusion that the strip 'surgical dressings' constitute a drug or medicinal preparation. What was the technical advice and what were the basis thereof were not disclosed at all by the learned counsel for the respondents and we are therefore unable to understand how the Central Board of Excises and Customs had changed their mind in 1980. Whether it was for a sound reason or arbitrarily is question that is thus left open. However, in view of the technical literature on the subject and also of the other evidence on record, namely of Dr. S.K. Salelkar and Dr. L. Menezes who stated in their affidavits (Exhibits C And D to the petition) that the Handyplast is not considered to be a drug or medicinal preparation and with a specific or local systemic effect, being purely surgical strip dressings meant only for the protection and covering of wounds, boils and small bruises, we find that the said product is understood both technically and in commerce and in the trade as a mere surgical dressing and not a drug or medicinal preparation. In the Commissioner of Sales Tax, Madhya Pradesh, Indore v. M/s. Jaswant Singh Charan Singh, : 2SCR720 it has been observed that :-
'A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art be presumed to have used an ordinary term......................'
The same view was reiterated by the Supreme Court in Union of India and others v. Gujarat Woollen Felt Mills : 1977(1)ELT24(SC) . It was observed in that case that the meaning of the product as commercially understood is the only meaning relevant for the purposes of Entries in the Tariff. In the case at hand, we already observed that technically the Handyplast does not constitute a drug or a medicinal preparation. We, further observed that it appears, also commercially, the product is not considered as a drug or medicinal preparation, for though affidavits had been filed by the petitioners to support this contention, the respondents confined themselves to oppose these submissions by saying that the affidavits filed by the petitioners in support of their claim did not disclose the correct position, without caring to file, at least, some affidavits to the contrary in order to show that what was sworn by Dr. Salelkar and Dr. Menezes and by the Chemist is not correct.
14. In this view of the matter, we have no doubt in holding that the Handyplast manufactured by the petitioners does not constitute a drug or medicinal preparation. Consequently, in our opinion, the said product does not fall within the purview of Item 14E of the First Schedule which deals with patent or proprietary medicines, that is, drugs or medicinal preparations.
15. The learned counsel for the petitioners further submitted that irrespective of this aspect of the case namely that Handyplast does not constitute a drug or medicinal preparation, the fact remains that the impugned order and the impugned show cause notice are time-barred under Section 35A(3)(b) of the Act. Since we have dealt with the petition on merits, we do not think it necessary to appreciate this technical aspect of the case and, therefore, we abstain to deal with it.
16. In the result, the petition succeeds and the rule made absolute in terms of prayers (a) and (b) of the petition. There will be no order as to costs.
17. The learned counsel for the respondents made an oral application for leave to appeal to the Supreme Court. Leave rejected, since in our view, there are no substantial questions of law of general importance and we have followed in our judgement the rulings of the Supreme Court itself.