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MAC Laboratories Vs. C.C.E [1994] INSC 598 (22 November 1994)

Sahai, R.M. (J) Sahai, R.M. (J) Singh N.P. (J)

CITATION: 1995 AIR 510 1995 SCC (2) 56 JT 1994 (7) 494 1994 SCALE (4)1018

ACT:

HEAD NOTE:

The Judgment of the Court was delivered by R.M. SAHAI, J.-Whether Kemicetine Vaginal Suppositories (KVS), a patent and proprietary medicine which contained the antiniotic chloramphenicol (CAF) was "chloramphenicol and its esters for oral and parenteral use" within the meaning of the Notification No. 116/69-CE dated 3-5-1969 as amended by the Notification No. 106/80-CE dated 19-6-1980 issued in exercise of powers conferred by sub-rule (1) of Rule 8 of Central Excise Rules, 1944 was answered against the appellant by Customs, Excise and Gold (Control) Appellate Tribunal.

2.The appellant is a manufacturer of KVS of two different strengths viz., 0.25 grams and 0.50 grams of chloramphenicol antiniotic contents. These suppositories are introduced in the vagina by hand. Its wax-like material containing antiniotic chloramphenicol melts at the temperature of the vagina and the melted medicine then gets absorbed into the system through the epithelium or mucous preparation lining the vagina. The administration of this medicine is not against any topical or local infection but is directed at the internal infection of vagina resulting from the oral functional system. By absorption into the system its effect is to remove the vaginal infection. It is primarily used to cure vaginal discharge resulting from oral functioning of the system. It acts like oral antibiotic.

3.The appellant was being granted exemption on the suppositories by the department till five notices were issued on 11-6-1980, 17-6-1980, 9-10-1980, 24-1-1981 and 8-5-1981 raising demand for the period 1-9-1979 to 31-5- 1980, 1-1-1979 to 31-8-1979, 1-6-1980 to 31-8-1980, 1-9-1980 to 31-12-1980 and 1-1-1981 to 30-4-1981 respectively. The basis for the notices for short levy was that the medicine produced by the appellant was neither for oral nor parenteral use. In reply it was claimed that, "Kemicetine Vaginal Suppositories" were treated by the Drug Control Authorities as lifesaving drugs. And the produce was classified by the department for concessional rate of duty at 2 1/2% ad valorem since it was specified at Serial No. 14 of the Schedule. But after the drug became wholly exempt from duty the department erroneously has taken the view that the medicine which was in tablet form and was meant for parenteral use was not entitled to exemption since it was not administered through oral route. It was claimed that the word 'parenteral' was very wide and it could not be confined to use of injections only. The appellant objected to notices so far they were for period beyond six months prior to the date of notice. The Assistant Collector did not find any merit in the objection raised by the appellant and confirmed all the five notices issued by the Superintendent, Central Excise. The order was maintained by the appellate authority. In further appeal to the Tribunal it was not disputed that the medicine manufactured by the appellant contained chloramphenicol. Nor there was any dispute that in terms of pharmacology 59 parenteral is understood to refer to such medication as is applied in such a manner that it bypasses the alimentary canal which has its opening point in the mouth and ends in the anus. The dispute centred round whether use of suppositories through vagina was parenteral use. The Tribunal after examining affidavits filed on behalf of both the parties, the textbooks and various dictionaries and papers on this subject found that 'parenteral' refers to introduction of a medicine by route other than alimentary canal. The Tribunal further held that there were three methods of administering drugs and medicines - one, by putting it in mouth and swallowing it; second, by injecting either intramuscularly or intravenously; and third by local application on surface of the body and its absorption. The Tribunal did not agree with the claim of the appellant that any medicine which is not administered through mouth would be parenteral. The Tribunal found parenteral administration of medicine refers to method that involved absorption into the body fluids and system of the drug by active therapeutic effect. It further held that even though the Drug Control Authority had classified the medicine other than parenteral it was covered in the Notification. However, it rejected the claim of appellant. But it allowed the appeal in part and confined the demand notice to six months before the date of notice.

4. Notification No. 116/69-CE dated 3-5-1969 was issued in exercise of powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 exempting patent or proprietary medicines falling under Item 14 of the 1st Schedule of the Central Excises and Salt Act, 1944 (Act 1 of 1944) and containing one or more of the ingredients specified in the Schedule annexed from so much of the duty of excise leviable thereon as was in excess of 2 1/2% ad valorem. In the Schedule Serial No. 14 read as under:

"14. Chloramphenicol and its esters for oral and parenteral use;"On 19-6-1980 column 2 of the Schedule was amended and the amended entry provided that in the said notification for the words and figures, "that from so much of the duty of excise leviable thereon as is in excess of two and half per cent ad valorem", the words, "from the whole of the duty of excise leviable thereon" shall be substituted. Therefore any patent or proprietary medicine if it fell in Item No. 14 of the Schedule became wholly exempt from payment of duty.

5. For exemption two conditions were required to be satisfied - one, that the patent and proprietary medicine should have been produced out of one or more ingredients specified in the Schedule and that it should have been for oral and parenteral use. Since the ingredient used in production of KVS was chloramphenicol it satisfied the first requirement as provided in the notification of being a patent or a proprietary medicine in manufacture of which one of the ingredients as specified in the Schedule was used.

But that alone was not sufficient for exemption as it was further required to satisfy that the medicine was for oral and parenteral use. The appellant did not claim that KVS manufactured by it could be used orally. Therefore, the only 60 question that arises for consideration is whether it was for parenteral use or not.

6.In Pharmaceutical Handbook edited by A. Wade 'parenteral' is definedas:

"Not by way of the alimentary tract; administered by a route other than that of the alimentary tract." The Faber Medical Dictionary explains the word as:

"Outside the intestinal tract; Relating to administration of a substance by a way other than that of the alimentary tract, e.g. by subcutaneous, intramuscular or intravenous injection." In Black's Medical Dictionary by William A.R. Thomson the word is defined as "administration of drugs by any route other than by the mouth or by the bowel." Churchill Livingstone's Pocket Medical Dictionary defines the word as:

"Not via the alimentary tract." Lewis's Pharmacology by James Crossland explains "parenteral administration" as under:

"The term parenteral administration (par- beyond, enteral-intestinal) implies that the drug is given by a route which takes it directly into the body fluids, by passing the preliminary process of transport through the intestinal wall or pulmonary alveoli which is necessary when drugs are ingested, inhaled or placed in the rectum. With all forms of parenteral administration, sterile precautions are necessary." (emphasis supplied) In Remington 's Pharmaceutical Sciences it is stated as under:

"The term parenteral (Gk: para enter on - beside the intestine) refers to the route of administration of drugs by injection under-or through one or more layers of skin or mucous membrane." In the same chapter while discussing administration of parenteral preparations it was observed "drugs can be administered parenterally when they cannot be given orally because of the unconscious or uncooperative state of the patient, or because of inactivation or lack of absorption in the intestinal tract." The author while discussing parenteral products has observed that parenteral preparations could be divided in three factors - one, drug pellet absorption; two, solution absorption; and three, parenteral dispersion absorption. It is explained in The Basis of Pharmacology, Second Edn., by Avram Goldstein, Lewis Aronow and Summer M. Kalman as under:

"The possible routes of drug entry into the body may be divided into two classes - enteral and parenteral. In enteral administration the drug is placed directly in the gastrointestinal tract by placing it under the tongue (sublingual), by swallowing it (oral), or by rectal administration. In parenteral administration the gastrointestinal tract is bypassed. There are many parenteral routes.

The commonest are subcutaneous (s.c.), intramuscular (i.m.), and intravascular: but drugs may also be applied to 61 the skin or injected intradermally, for local effect or to be absorbed percutaneously: they may be inhaled for direct action on the bronchial tree or to be absorbed into blood at the alveoli: they may be injected into or near the spinal canal: they may be introduced intravaginally".

(emphasis supplied)

7. The Tribunal itself found that from the definitions in different dictionaries it was apparent that parenteral refers to introduction of medicines by route other than the alimentary tract. It further observed:

"There can be no doubt whatever from these paragraphs which have been relied upon by the appellants that when speak of vaginal drug delivery by which the drug is absorbed, the drug spoken of is a systemically active steroid hormone, and is said to be effectively absorbed through the vaginal mucosa. The drug being a hormone, its effects will depend on its systemic absorption, although the administration of the progesterone was by means of a suppository. This route appears to have been explored because progesterone was found to be orally inactive. Even for the contraceptive, the article described the advantage of the continuous infusion when the vaginal route is used, as it can prevent the possibility of systemic toxicity that can result from the surging and ebbing plasma drug levels. The systemic absorption and action of the drug is beyond doubt. In other words, the paragraph describes a systemic drug administration through the route of the vagina." Yet it rejected the claim of the appellant as "none of the authorities who have been presented before us speak of the intravaginal route of administration as parenteral except when the administration is meant to be a systemic administration, the drug or medicine being systemically absorbed, and penetrates into the body lymph, blood or tissues in a more or less complete manner. Whatever the area of application, the aim is the same - to cause the drug to penetrate into the body system, thereto act and to be physiologically taken up and become integral with the system in such a manner that after a lapse of a period upon the speed and degree of penetration/absorption, rejection whether voluntarily or involuntarily becomes impossible."

8. The Tribunal did not disbelieve that suppositories were used even for curing typhoid. But it held that a close study of the material produced before it indicated that CAF are used to treat "local infections and inflammations of female genital tract. The absorption aimed at is clearly a local absorption of the drug for the purpose of combating and eradicating trichomoniasis not only in the mucosa but also in the extravaginal lacunae to eradicate inflammation and infection; and it needs to be understood that there is no need, for the drug to operate effectively, to penetrate and be absorbed systemically, because, as we have seen, the infections are all local in the vulva, vagina and cervix region. The paper indeed does not suggest anywhere that for 62 the treatment of these maladies, there is any need for systemic absorption of the drug. The reason for this is obvious. The target areas are all superficial - that is - not inside the system but outside the internal body system, although in a protected/covered cavity or orifice. M/s Mac Laboratories have not shown any evidence to satisfy us and to convince us that their kemicetine vaginal suppositories are parenteral in their activity to combat infecting organism which lie on the surface of the body system itself."

9. Medicines used through vaginal route could, thus, be parenteral if its administration according to Tribunal was for systemic absorption. But since KVS produced by the appellant was for local absorption it could not be held to be parenteral. Whether the approach of the Tribunal is correct or not but this appears to be certain that the word 'parenteral' is wide enough as bronchial inhalers have come to be included in it even though it is neither taken orally nor it is injected nor it is meant for local use. In Goodman and Gilman's The Pharmacological Basis of Therapeutics, "topical application" extends to "drugs applied to the mucous membranes of the conjunctiva, nasopharynx, oropharynx, vagina, colon, urethra, and urinary bladder primarily for their local effects. Occasionally, as in the application of antidiuretic hormone to the nasal mucosa, systemic absorption 'Is the goal. Absorption through mucous membranes occurs readily." Similarly medicines taken through vaginal route meant for systemic absorption are included in it. Therefore, the word 'parenteral' is not confined to the injections. Yet the question is whether suppositories produced by the appellant which on the finding of the Tribunal are used for local absorption can be held to be included in it. The word 'parenteral' is not confined to injections. But does it include medicines used for local application. For determining this it is necessary once again to understand the distinction between 'enteral' and 1 parenteral'. In other words what is the basis on which this classification has been made. Each medicine whether it is taken orally or injected in the body or applied locally enters the bloodstream to be effective and efficacious. In enteral administration, "the drugs are absorbed from the small intestine", whereas the medicine injected in the body reaches in the bloodstream directly. The medicine applied locally or topically too enters the bloodstream through mucous membrane or skin. The range of topical application is very wide. But the basic characteristic is that the medicine applied through this method enters the bloodstream directly even though slowly. The basic characteristic of administration of drug parenterally is thus satisfied. That is why 'parenteral' is described by various writers as every medicine which bypasses alimentary canal. Since the medicine either injected by needle or applied locally enters the bloodstream directly it was classified as parenteral by Avram Goldstein extracted earlier.

10.Till now the discussion has been about understanding of the word in Pharmacology. But the courts are concerned, primarily, about how the notification granting exemption should be construed and what was the intention in using the word parenteral in the Notification. The exemption 63 claimed by the appellant was refused as the suppositories produced by the appellant were for local absorption. It has been explained that the ambit of the word 'parenteral' is very wide. Its use in the Notification has been in still wider sense. The use of the word 'oral' for 'enteral' and 'parenteral' for injections in the Notification is not without purpose. Enteral administration of medicine may be sublingual, that is, "absorption of drugs by oral mucous membrane producing systemic effects" or oral "one of the most popular routes of administering drugs in the form of tablets, capsules, mixture, powder, pills, emulsions or rectal" of local or topical, that is, the administration of drug for systemic actions specially in vomiting, unconsciousness and when intestinal absorption is to be avoided. The Government even though it was aware of the word 'enteral' decided to use the word 'oral' in the Notification obviously so that there may not be any ambiguity. In technical sense sublingual administration may be different from oral but in the common and popular sense a medicine taken sublingually is as much oral as a tablet or capsule or mixture taken by a patient. Similarly the word 'parenteral' was technically understood for injections whether they are intramuscular, intravenous or intradermal.

But in the larger sense it has come to include even inhalers as, "gaseous and volatile drugs may be inhaled and absorbed through the pulmonary epithelium and mucous membranes of the respiratory tract" (Goodman and Gilman). This widening of the ambit of word 'parenteral' was overlooked by the Tribunal. It was swayed by hypertechnical use of the medicine. Even assuming that it was used to remove local infection or inflammation it could not be denied that it entered the bloodstream. It, therefore, satisfied the broad test of entering the bloodstream directly and bypassing the alimentary canal. The two words 'oral' and 'parenteral' in fact appear to have been used to extend the benefit to all the medicines produced by the use of chloramphenicol.

Reading the Notification narrowly or technically as has been done by the Tribunal, may result in denying the benefits to those medicines which are produced by use of CAF but are used locally. There can be no rationale for it. For instance a medicine produced for bilingual use cannot be denied exemption because the word 'orally' is confined technically to tablets and mixtures. Similarly exempting tablets and injections but excluding ointments would not be harmonious reading. It would result in narrowing down and curtailment of the ambit of the Notification. The Notification the construction of which is involved is an exemption notification. Therefore, the benefit of it is available to only those who fall under it. To that extent the Notification has to be construed strictly. That is the medicine must be for oral or parenteral use. But once it is found that a medicine falls in the category of parenteral medicine then the benefit cannot be denied because it falls in category of those medicines which are applied locally.

Topical medicines used for local absorption appear to be included in the word 'parenteral'. In fact the definitions which have been extracted earlier do support the claim of the appellant that there are only two classifications of the medicines - one, which are known as enteral, that is which passed 64 through an alimentary canal and other parenteral which extends to all other medicines which are not enteral. The subsequent classification of the medicines used locally for convenience cannot take it away from the main and the broader classification of it being parenteral.

11.In the result this appeal succeeds and is allowed. The question raised by the appellant is decided by saying that the suppositories produced by the appellant were covered in the Notification No. 106/80-CE dated 19-6-1980 and, therefore, were entitled for total exemption. There shall be no order as to costs.

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