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Trichem Laboratories Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(17)ELT185TriDel
AppellantTrichem Laboratories
RespondentCollector of Customs
Excerpt:
.....duty) by virtue of notification no. 55/75-c.e., maintaining that methyl dichloro acetate was drug intermediate as it is used in the manufacture of chloramphenicol, which is obtained by treating l base with methyl diehloro acetate. they were holders of certificate from the food and drug administration, bombay. their claim was rejected both by the assistant collector and by the appellate collector, although the latter held that methyl dichloro acetate was actually used in the synthesis of chloramphenicol. but he also held that such use did not make the drug a drug intermediate. he pronounced that there was a distinction between a raw material and an intermediate. a drug intermediate would be the penultimate product in the process of manufacture from which the drug would be obtained.....
Judgment:
1. This is an appeal of M/s. Trichem Laboratories against order-in-appeal No. S/49-1242/80R, dated 6-9-1980 passed by the Appellate Collector of Customs, Bombay. The importers M/s. Trichem Laboratories had imported methyl dichloro acetate ex. S.S. Canadian Express, bill of entry cash No. 2376, dated 14-5-1979. They claimed refund of the additional customs duty (countervailing duty) by virtue of Notification No. 55/75-C.E., maintaining that methyl dichloro acetate was drug intermediate as it is used in the manufacture of chloramphenicol, which is obtained by treating L Base with methyl diehloro acetate. They were holders of certificate from the Food and Drug Administration, Bombay. Their claim was rejected both by the Assistant Collector and by the Appellate Collector, although the latter held that methyl dichloro acetate was actually used in the synthesis of chloramphenicol. But he also held that such use did not make the drug a drug intermediate. He pronounced that there was a distinction between a raw material and an intermediate. A drug intermediate would be the penultimate product in the process of manufacture from which the drug would be obtained by simple process. He said that standard books of reference showed that methyl diehloro acetate was a general purpose organic intermediate used in various synthesis of organic chemicals and that the manufacturers have failed to demonstrate that the predominant use of the material was as an intermediate in the manufacture of drugs.

2. On the day of hearing on 10th February 1984, the importer was not represented. The Bench, therefore, decided to hear the Department so that the appeal could be decided on merits.

3. The learned counsel for the Department argued that methyl diehloro acetate was not a drug intermediate. He referred to Hawley's Condensed Chemical Dictionary, and to Fine Chemicals, Drugs and Pharmaceuticals by Small Business Publications. He quoted an order No. 619/80-C of the Tribunal in respect of M/s. Reine Chemicals, in which the Tribunal held that if actual use could be demonstrated, a substance should be assessed as a drug intermediate. There would, therefore, be no objection to clearance of the substance as drug intermediate if it is actually used as such.

4. This Tribunal has held in various orders that there was no such thing as a drug intermediate because all those substances which find such uses also find many more different uses. To demand predominant use is impracticable and would defeat the object of the exemption to drug intermediate because even if there was a substance which was used predominantly as a drug intermediate, there is no guarantee that the position would not change with the advance in science and technology.

We do not agree with the Appellate Collector's assessment that a drug intermediate should be the penultimate product in the process of manufacture from which the drug would be obtained by simple process.

This we consider would put too narrow a meaning to an expression that carries a wide description. We think that the proper thing is only to ensure that a substance, which enjoys the notification concession, should be used as an intermediate in the manufacture of a drug whatever the drug may be, and whatever the intermediate stage at which the substance enters the process by which the finished drug is made. To put a narrow interpretation on the expression is to shut our eyes to science and technology, and their ever widening scope because what is a finished article today can become a raw material for another product tomorrow and so on; one cannot visualize the end of the process. With better techniques and/or different procedures, processes can change not only the products and the raw materials and the system of production itself.

5. We accordingly allow the appeal and direct that relief be given without unnecessary delay. The Customs can make enquiries if they wish to satisfy themselves that the substance was indeed used as a drug in termediate as the factory is licensed for the manufacturing of drugs by the State government.


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