Customs, Excise and Gold Tribunal - Mumbai
Burroughs Wellcome (I) Ltd. And Pfizer ... vs Commissioner Of Central Excise And ... on 20 June, 2007
Equivalent citations: 2007(120)ECC262, 2007ECR262(TRI.-MUMBAI), 2007(216)ELT522(TRI-MUMBAI)
ORDER Chittaranjan Satapathy, Member (T)
1. Heard both sides.
2. The first appeal filed by M/s. Burroughs Wellcome (I) Ltd. has come to the Tribunal for decision on a remand from the Hon'ble Supreme Court. The second appeal filed by M/s. Pfizer Ltd. was earlier heard by another Bench but has been re-listed by Registry for fresh hearing by fresh Bench along with the first appeal, as the same issue is involved in both the appeals.
3. M/s. Burroughs Wellcome (I) Ltd. have imported Polymyxin B Sulphate and used the same in the manufacture of Neosporin, admittedly using some other ingredients. M/s. Pfizer Ltd. have imported Cefoperazone Sodium and have used the same for manufacturing Cefoperazone Sodium Injections. The issue relates to grant of exemption under Notification 11/97 for one period and thereafter under Notifications 23/98 and 16/2000 during the subsequent periods. For convenience, we reproduce the relevant portion of Notification 11/97 under entry 43 to the table annexed:
Sr. No. Chapter or heading No. or subheading No. Description of goods Standard Rate Additional duty Rate Condition No. 43
28. 29, 30 or 38 The Following goods.
(A) The life saving drugs or medicines (including diagnostic test kits) specified in List 2.
Nil Nil
-
(B) Bulk drugs used in the manufacture of life saving drugs or medicines at (A) above.
Nil
-
-
(C) Other life saving drugs or medicines Nil Nil 7
4. The appellants claim exemption under serial No. 43(B) for bulk drugs used in the manufacture of life saving drugs or medicine at serial No. 43(A). The life saving drugs under serial No. 43(A) were specified in List 2. The said List 2 specifies both the impugned drugs imported by the appellants. However, while it also specifies the end-product manufactured by Pfizer, the end-product manufactured by Burroughs is not specified therein.
5. Both sides agree that for availing the benefit under serial No. 43(B), the procedure prescribed under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996, is to be followed in view of the conditions specified in the notification as well as in Rule 2(1A) at the material time. In the case of Burroughs, the exemption has been denied because the end-product is not listed as a life saving drug. In the case of Pfizer, the exemption has been allowed under serial No. 43(B).
6. Pfizer have claimed beneficial exemption under serial No. 43(A) at the stage of original adjudication whereas Burroughs have claimed the exemption under 43(A) at the second appeal stage before the Tribunal.
7. The Tribunal in its order dated 8.1.2001 had allowed Burroughs exemption under serial No. 43(A) which has since been set aside by the Hon'ble Supreme Court, resulting in the present proceedings on remand.
8. Shri V. Sridharan, learned Advocate appearing for Burroughs, states that the exemption under serial No. 43(A) is more beneficial as it exempts basic customs duty as well as additional customs duty and no procedure is required to be followed subsequent to import. This being a more beneficial exemption, according to him, there is no bar to claiming the same at any stage of the proceedings. In this connection, he cites a recent decision of the Hon'ble Supreme Court in the case of Share Medical Care v. UOI . He also states that even though the appellants had claimed the impugned goods to be bulk drugs, these do not cease to become life saving drugs as under the Drugs (Prices Control) Order, 1987, the 'drugs' include 'bulk drugs'. He also submits that the coverage under serial No. 43(A) includes formulations as well as bulk drugs, since Chapters 28, 29, 30 and 38 have been listed in the relevant exemption notification.
9. Shri R.G. Sheth, learned Advocate appearing for Pfizer, also makes a similar claim that the appellants are entitled to a more beneficial exemption, while fairly stating that initially they had not claimed the exemption under serial No. 43(A) but were prompted to claim the same in view of the Tribunal's earlier order dated 8.1.2001 in the case of Burroughs Wellcome (I) Ltd.
10. Shri K.M. Mondal, learned Consultant appearing for the department in the case of Burroughs, states that the appellants had all along claimed the impugned goods to be bulk drugs and they cannot change the stand at the second appellate stage to claim the exemption meant for life saving drugs. In this connection, he cites the following decisions of the Supreme Court:
(1) Prince Khadi Wollen Handloom Prod. Coop. Indl. Society v. CCE , (2) Warner Hindustan Ltd. v. CCE, Hyderabad , (3) Commissioner v. J.L. Morison (India) Ltd. , (4) Commissioner v. Commercial Body Builders 2003 (151) ELT A288 (SC), and (5) CC, Mumbai v. Toyo Engineering India Ltd. .
11. Shri Uma Shankar, learned DR appearing for the department in the case of Pfizer, also states that the life saving drug should be in a form ready to use and bulk drugs cannot be considered as life saving drugs to merit exemption under serial No. 43(A).
12. After hearing both sides and perusal of the case records as well as the case law (cited supra), we find that the appellants in both the cases had initially claimed the benefit of exemption under serial No. 43(B) of Notification 11/97 and its successor notifications which are similarly worded. The exemption under serial No. 43(B) is clearly subject to application of the relevant rules cited above for ensuring that the imported drugs are used in the manufacture of life saving drugs. Under the said serial No. 43(B), only the basic customs duty is exempted and additional customs duty is chargeable. As such, the benefit under serial No. 43(B) is restricted to exemption from basic customs duty as well as there is a procedural requirement. On the other hand, exemption under serial No. 43(A) does not require any procedure to be followed apart from granting exemption both from basic customs duty and additional customs duty. Since serial No. 43(A) is more beneficial, we are of the view that the appellants can not be precluded from claiming the same at a later stage, even if they had not claimed the same at the initial stage as in the case of Burroughs. We have already noted that in the case of Pfizer, the claim was made even at the original stage. The case law in Share Medical (cited supra) clearly allows an appellant to claim another exemption when he is found not entitled to another exemption. Shri Mondal's contention that such claims are required to be made before the original authority cannot be brushed aside, particularly when some appellants have not claimed an exemption earlier if grant of such an exemption requires verification at the original stage, which has not been done. However, in the instant case, we find that the phrase "life saving drugs" has not been defined either in the notification or in the Drugs (Prices Control) Order. Moreover, "drugs" have been defined to include "bulk drugs". As such life saving drugs can also include "bulk drugs'". Accordingly, we are of the view that even though the appellants had earlier claimed exemption for the impugned goods stating these to be bulk drugs, they cannot be precluded from claiming the exemption for life saving drugs in respect of the very same impugned goods as no further verification is required to be made at the original stage. Moreover, we also find that both the impugned goods are specifically listed in List 2 annexed to the notification as required under serial No. 43(A). Such specific inclusion does not require any further verification to be done at the original level.
13. We also find that by not defining the life saving drugs in the relevant notifications, the intention of the government is to give as a wider coverage to the term as possible and the same is borne out in the Budget Circular for the year 1995 which, in paragraph 23.1, says that life saving drugs are being exempted under the generic description and without any reference to forms.
14. In view of our findings as above, we hold that the impugned goods in respect of both the appellants being specified in List 2 to the relevant notifications, are entitled to exemption from basic and additional customs duty under serial No. 43(A) under Notification 11/97 and under similar provisions in the successor notifications during the relevant time. Accordingly, we set aside the impugned orders and allow both the appeals.
(Pronounced in court)