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Customs, Excise and Gold Tribunal - Delhi
Parke Davis (India) Ltd. vs Collector Of Central Excise on 5 August, 1983
Equivalent citations: 1984 (15) ELT 231 Tri Del

ORDER H.R. Syiem, Member (T)

1. This appeal dated 30-9-1979 is presented by M/s. Parke Davis (India) Limited of Bombay against an order of the Appellate Collector of Customs and Central Excise, Bombay No. 411/79 dated 1-5-1979.

2. This dispute can be stated very simply. The Central Excise authorities say that CAMOQUIN an anti-malarial should get the exemption of notification No. 116/69-C.E. as Amodiaquine. The Central Excise say that only Amodiaquine can be given the exemption and not camoquin because it (Camoquin) is Amodiaquine Hydrochloride. The Central Excise hold that the Amodiaquine in the Camoquin tablets are a hydrochloride salt of amodiaquine and not amodiaquine itself. The two are not synonymous. Parke Davis argue that the Government itself later amended the notification to read amodiaquine by hydrochloride instead of amodiaquine, an amendment which supported its claim that the two were alike. The Central Excise remained unmoved.

3. At the hearing on 26-7-1983, the learned counsel for Parke Davis supported by technical experts argued that amodiaquine hydrochloride is the form in which amodiaquine hydrochloride is administered. It is a specific for malaria. He quoted the British Pharmacopoeia and the U.S. Pharmacopoeia extensively as well as the Pharmacopoeia of India all of which show that amodiaquine tablets are made from amodiaquine hydrochloride or contain amodiaquine hydrochloride. Bentley and Driver's Textbook of Pharmaceutical Chemistry speaks of amcdiaquine and amodiaquine hydrochloride interchangeably and so does Remington's Pharmaceutical Sciences. Denial of the exemption to amodiaquine hydrochloride would make the exemption meaningless. The claim that amodiaquine hydrochloride is the same as amodiaquine is proved by the fact that the Govt. of India has given exemption to the former by removing the latter.

4. The learned counsel for the department argued against the appeal saying that amodiaquine hydrochloride is not amodiaquine. It is chemically different being a salt of the latter. An exemption notification has to be read strictly. The later amendment of the notification will not allow 'amodiaquine hydrochloride' to pass as amodiaquine before such amendment, because no amendment can have retrospective effect in the way the appellant desires.

5. Though we said at the beginning that the dispute could be sorted very simply, its solution is anything but simple. The Central Excise contention that amodiaquine hydrochloride is not the same thing as amodiaquine, is correct and needs no great knowledge of the subject. The action of denial of the exemption cannot be faulted on a strictly limited technical interpretation of nomenclatures.

6. Having said this, we must also say we cannot be insensitive to another technical aspect of the debate. While amodiaquine is the base and the active principle, it is the dihydrate form of it, such as amodiaquine hydro-chloride that is generally, or perhaps we can even say, always, administered. Amodiaquine is very similar to chloroquine in its anti-malarial action. Malaria is caused by the parasites plasmodium falciparum and plasmodium vivax. The parasite finds a host temporarily in the rector mosquito anophreles and later in the human being, specifically the blood crythrocytes. The anti-malarial must be able to eradicate the perasite from the blood as well as from the tissues. Amodiaquine is such substance, although, due to wide use, amodiaquine resistance has been reported.

7. Amodiaquine has been described by the Pharmacopoeia of India as contained in amodiaquine tablets of average weight as anhydrous amodiaquine hydrochloride C20H22ON3Cl2HCl-=C20H22ON3Cl 2HCl-The British Pharmacopoeia speaks of Amodiaquiene tablets as containing Amodiaquine Hydro-chloride. This Pharmacopoia describes Amodiaquine Hydrochloride as a dihydrate of 4-(7-Chlora-4-quinolylamino)-2-(diethylaminomethyl) phenol dihydrochloride and is used in preparation of amodiaquine tablets.

Preparation of amodiaquine has been described as condensation of 4,7-Dichloroquinoline with 2-(diethylamino) methyl-4-aminophenol, during which the free base is isolated and converted into the dihydrochloride.

8. There is little doubt in our mind that the amodiaquine active base is always administered as a hydrochloride. We are aware of no other form in which the substance is administered as an anti-malarial. [And amodiaquine is only one of several substances which are administered medically not in their base forms but in the form of citrates, sulphates, phosphates.] That amodiaquine cannot be formulated for any purpose, not even in partial formulation but was to be in the form of hydrochloride is an argument that has advanced by the appellant in proceedings below, but the department has done nothing to meet it.

9. It is uot correct to say that amodiaquine hydrochloride is the same thing as amodiaquine. But in the formulation amodiaquine hydrochloride, the hydrochloride in the molecule is non-active; only the amodiaquine has therapeutic capability. And, as we have discussed, amodiaquine is not known to be used medically except as a hydrochloride of the crystal. It is true that the notification refers to amodiaquine and this is not the same thing as amodiaquine hydrochloride. However, the amendment by the Government of India is a factor we can draw upon. If the Government wanted only amodiaquine to be exempted, it would not have put amodiaquine hydro-chloride in place of amodiaquine. By doing so, and by not leaving amodiaquine, where it was, amodiaquine loses the exemption it had been enjoying. This can be due only to one reason : that the Government of India known that giving exemption to amodiaquine as a medicine is worth nobody's while, but an exemption to amodiaquine hydrochloride is. The seeming withdrawal of exemption from amodiaquine hurts no one because no one can avail it in the circumstances the exemption was given.

10. Strict reading of an exemption notification is desirable of all who implement and interpret a taxation law, because by not doing so, one may confer an exemption on a commodity that does not qualify, there being others that do so. It would discriminate against the qualifying article of other non-qualifying articles are favoured in the same manner (as the qualifying ones). Thus, if an exemption confers a benefit on a machine made from aluminium-steel alloy, it would be wrong to exempt likewise, steel machines because then the alloy machines would be discriminated against. The exemption can and should be given to steel-aluminium machines only. If exemption is given to industrial sewing machine, one should not expand it to include domestic sewing machine, because the exemption can be given to industrial sewing machines alone.

11. In the case of notification 116/69-C.E., the exemption cannot be given to amodiaquine because, as they say in slang, "there are no takers". A patent and properietary medicine containing amodiaquine in the base crystal is not known. Only the dihydrate form, amodiaquine hydrochloride, is present to avail this exemption. We have seen that in its crystal base form, amodiaquine is not used medically. Then, the objectors can say, the exemption should not be given and if it (exemption) becomes a nullity, it cannot be helped. A new notification, or an amendment, can take care of the trouble and till then, no exemption to amodiaquine hydrochloride.

12. We are unble to agree. We have discussed that only amodiaquine hydrochloride can be medically administered. We are satisfied in our mind that an exemption to amodiaquine is an exemption to amodiaquine hydro-chloride. There is no extension of the terms of the exemption to encompass a stranger who is not entitled to it or one who is only partially entitled to it. We are of the view that amodiaquine hydrochloride is in every way entitled to the exemption, and are satisfied that this is the right view. We would be very loth otherwise to extend an exemption to a thing that does not fully fall in the category. We have seen the Government of India has removed amodiaquine from the list. What, then, is its fate ? The answer is that it makes no difference because it can still get the exemption in amodiaquine hydro-chloride.

13. We therefore direct that amodiaquine hydrochloride shall be given the exemption demanded by the appellant and that assessments of the disputed goods shall be done accordingly, and whatever action flows from this order shall be taken within 3 months.