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Indian Drugs and Pharmaceuticals Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1989)(43)ELT505TriDel
AppellantIndian Drugs and Pharmaceuticals
RespondentCollector of Customs
Excerpt:
.....principal or main use of the goods alone should decide whether the goods preserved to be called drug intermediates. he also said that the tax authorities had no right to inquire how the importer intends to use the goods.3. the learned counsel tor the department said that the adipic acid is used only in the manufacture of nylon or polyurethane foams. it has not been shown to be used as a drug intermediate. the action of the appellate collector is, therefore, correct and does not call for interference.4. we are unable to agree with the department because adipic acid is used in the manufacture of drugs. the chemical scheme for the manufacturing of piperazine adipate is shown here - 5. the adipic acid itself takes part in forming the salt, the adipate.piperazine is administered always as.....
Judgment:
1. This is an appeal filed by M/s. The Indian Drugs & Pharmaceuticals Ltd., Gurgaon against order No. S. 49-688/81 R dated 14-4-81 passed by the Appellate Collector of Customs, Bombay.

2. It is argued by the appellants that the goods imported by them - adipic acid had been used in the manufacture of drugs. They had used this in the manufacture of piperazine adipate. The Appellate Collector has dismissed their appeal only on the ground that the principal or main use of the goods alone should decide whether the goods preserved to be called drug intermediates. He also said that the tax authorities had no right to inquire how the importer intends to use the goods.

3. The learned counsel tor the department said that the adipic acid is used only in the manufacture of nylon or polyurethane foams. It has not been shown to be used as a drug intermediate. The action of the Appellate Collector is, therefore, correct and does not call for interference.

4. We are unable to agree with the department because adipic acid is used in the manufacture of drugs. The chemical scheme for the manufacturing of piperazine adipate is shown here - 5. The adipic acid itself takes part in forming the salt, the adipate.

Piperazine is administered always as a salt, piperazine adipate, piperazine citrate; these are anthelmintics. It is, therefore, not clear to us how it is held that adipic acid is not used as a drug intermediate. It appears that the department went merely with the fact that the preponderant use of the substance was not in the drug industry. The Assistant Collector held that only exclusive use or at least major use as a drug intermediate would entitle a chemical to exemption under notification No. 55/75-C.E.6. We are not aware of any chemical that has its use or major use or preponderant use or principal use as a drug intermediate. In fact, all the chemicals used as drug intermediates in the drug industry have more uses elsewhere than in the drug industry. There is no chemical which is used only as a drug intermediate. And one must not overlook the fact that science and technology is for ever discovering new uses and new methods of utilising chemicals. There is no benefit in a dogmatic approach in subject like this: We are certain that if exclusive use or principal use is to be the test no chemicals will ever be given the exemption. We are satisfied that the adipic acid imported by the Indian Drugs & Pharmaceuticals is used as drug intermediate. The custom house can inquire and satisfy itself that this consignment was indeed used in the manufacture of drugs and medicines and not diverted to the production of, say, nylon or plasticizers or lubricants or adhesives. The appeal is allowed. Refund should be given within three months.


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