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Aravind Chemical Industries Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(18)ELT386TriDel
AppellantAravind Chemical Industries
RespondentCollector of Customs
Excerpt:
.....from additional (countervailing) duty in terms of central excise notification no. 55/75 as a drug intermediate. this claim was not accepted by the lower authorities and hence the present appeal.3. shri s.n. chari submitted on behalf of the appellants that the imported substance was used by them in the manufacture of isonicotinic acid which was a drug intermediate. this intermediate was sold by them to m/s. pfizers india ltd., a drug manufacturer, who in turn used the intermediate in the manufacture of isonicotinic acid hydrazide (inh)-an anti-t.b. drug. it could thus be seen that gamma picoline was a drug intermediate. in support of his contentions shri chari relied upon the certificate dated 27-12-1979 issued by the drug contoller and food (health) authority, government of andhra.....
Judgment:
1. The captioned appeal was initially filed as a Revision Application to the Central Government which, under Section 131-B of the Customs Act, 1962, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.

2. The simple question involved in the present dispute is whether the chemical Gamma Picoline imported by the appellants for the manufacture of Isonicotinic Acid was eligible for the benefit of exemption from additional (countervailing) duty in terms of Central Excise Notification No. 55/75 as a drug intermediate. This claim was not accepted by the lower authorities and hence the present appeal.

3. Shri S.N. Chari submitted on behalf of the appellants that the imported substance was used by them in the manufacture of Isonicotinic Acid which was a drug intermediate. This intermediate was sold by them to M/s. Pfizers India Ltd., a drug manufacturer, who in turn used the intermediate in the manufacture of Isonicotinic acid hydrazide (INH)-an anti-T.B. drug. It could thus be seen that Gamma Picoline was a drug intermediate. In support of his contentions Shri Chari relied upon the Certificate dated 27-12-1979 issued by the Drug Contoller and Food (Health) Authority, Government of Andhra Pradesh, to the effect that Gamma Picoline is used as a drug intermediate in the maufacture of Isonicotinic Acid. Reference was also made to an announcement made in the Parliament by the Minister for Petroleum, Chemicals and Fertilizers, Government of India, on 29-3-1978, in para 67 of which "Picolines" is referred to as a critical drug intermediate.

4. On behalf of the Respondent, Shri Tayal defended the impugned order and submitted that, while Isonictinic Acid could be considered as a drug intermediate since it was directly used in the manufacture of anti-T.B. drug, the same could not be said about Gamma Picoline.

5. We have considered the submissions before us. The Condensed Chemical Dictionary by G. Hawley, shows the uses of Gamma Picoline as "solvent in synthesis Pharmaceuticals, resins, dyestuffs, rubber accelerators, pesticides, and water-proofing agents; laboratory reagent; making isoniazid; catalyst; curing agent". It is thus clear that gamma picoline is a versatile chemical having multifarious uses.

6. Isoniazid (isonicotine hydrazide) is a drug used in treatment of tubercular meninitis. (See British Pharmacopia, 1980, volume 1, p.

244). While it is ture the Gamma Picoline is not the immediate precursor of I.N.H. (the anti-T.B. drug), it does not necessarily follow that it is not a drug intermediate. We have shown in our Order No. C-550 to 552/1983 dated 30-11-1983 in Appeals No. CD(SB) (T)A.350/8O-C, 689/80-G and 690/80-C-M/s. Fairdeal Corporation (Pvt.) Ltd.v. Collector of Customs, Bombay,- 1984 (16) E.L.T. 368 (Tribunal) how imprecise or vague the term "drug intermediate" is. We find that, in the present case, two governmental authorities concerned with the drug industry, viz. the Drugs Controller and Food (Health) Authority, Government of Andhra Pradesh and the Minsitry of Petroleum, Chemicals and Fertilizers, Government of India, understand "Picolines" (which includes Gamma Picoline) as a drug intermediate. The concept of predominant or main use of a chemical as a drug intermediate is not, in our opinion, relevant for the purpose of Notification No. 55/75-C.E.The question is whether the chemical finds use as a drug intermediate.

Based on the material on record, we have no hesitation in holding that in the present case Gamma Picoline qualifies for that description.

7. During the course of the hearing, the authorised representative of the appellants offered to produce evidence to show that the Isonicotinic Acid manufactured by them was sold to M/s. Pfizers India Ltd. who, in turn, used the goods for manufacture of INH, the anti-T.B.drug.

8. Having regard of the foregoing discussions, we hold that the subject goods were eligible for duty concession in terms of Notification No.55/75-C.E. as a drug intermediate, and the appellants to the consequential relief. The Customs authorities may, if they so wish, satisfy themselves that isonicotinic acid manufactured out of Gamma Picoline did ultimately find its use in the manufacture of INH, anti-T.B. drug. All action consequent to this order shall be completed within 4 months from the date of receipt of this order.


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