Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Gufic Private Ltd. on 10 August, 1988
Equivalent citations: 1989(21)ECR73(TRI.-DELHI), 1990(45)ELT280(TRI-DEL)
ORDER
G. Sankaran, Senior Vice-President
1. Both these appeals involve a common issue and are, therefore, disposed of by this common order.
2. The common issue involved is whether the consignments of Propylene Glycol USP imported by M/s. Gufic Private Ltd., Bombay (the appellants in Appeal No. C/2809/87-C and the respondents in Appeal No. C/1323/86-C) were eligible for exemption from additional duty of customs in terms of Central Excise Notification No. 234/82, dated 1-11-1982.
3. In the matter covered by Appeal No. C/1323/86-C the Collector (Appeals) found in favour of the importing company and in the other Appeal No. C/2809/87-C, another Collector (Appeals) found against them. The Collector and the Importer respectively being aggrieved by these orders have filed the present appeals.
4. We have heard Shri R.G. Sheth, Advocate, for M/s. Gufic Private Ltd., and Shri C.V. Durghayya, DR, for the Collector.
5. Central Excise Notification No. 234/82, dated 1-11-1982 exempts from the whole of duty of excise leviable on inter alia -
"All bulk drugs, medicines and drug-intermediates not elsewhere specified."
For the purpose of the notification, the term "bulk drugs" has been defined as follows:
"Explanation. - In this notification "bulk drugs" means any chemical or biological or plant product, conforming to pharmacopoeial standards, used for the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals, and used as such or as an ingredient in any formulation."
6. The Collector (Appeals) in one case has taken the view that though the importer had produced an end-use certificate from the Food and Drug Control Authority stating that they had consumed propylene glycol USP under reference as drug intermediate for manufacture of a drug formulation, the benefit of the notification would not be available since propylene glycol USP has not been shown to have therapeutic value or prophylatic properties and that, therefore, it did not fit into the definition of bulk drugs. In the other appeal, however, the Collector (Appeals) relied on the certificate issued by the Drugs Control Authorities and extended the benefit of notification, subject to the condition that the importers produced evidence before the lower authority that the imported goods were used as such.
7. The contention for the importer is that Propylene Glycol USP, as could be seen from the pharmacopoeial literature placed in the record, conforms to the definition of bulk drugs, whereas the contention for the Department is that it does not have any therapeutic value or prophylatic properties as such, that it is merely a solvent and that, therefore, the benefit of the notification would not be applicable.
8. We have carefully considered the submissions of both sides. There is no dispute about the fact that the goods imported conform to the U.S. Pharmacopoeial Standards (USP). There is also no dispute that the goods are for manufacture of Oxytetracycline injection. The book "Remington's Pharmaceutical Sciences" 15th Edition at page 1252 has a section entitled "Pharmaceutical Solvents". One of the solvents listed in the section is "Propylene Glycol USP" and its uses are described as solvent, preservative, and humectant. The book "Extra Pharmacopoeia Martindale", 27th Edition, at page 629-630 describes propylene glycol, its properties, uses etc. It states that the substance is used as a solvent in the extraction of crude drugs and in the preparation of solutions of alkaloids, volatile oils, steroids, and dyes. It is a useful vehicle for anti-histamines, barbiturates, some vitamins, paracetamol, and other substances which are insufficiently soluble in water or unstable in aqueous solution.
9. There is no dispute about the fact that the importers are using propylene glycol as a solvent. The question in these appeals would, therefore, be whether propylene glycol used as a solvent in the formulation of Oxytetracycline injection would fall within the definition of bulk drugs in Notification No. 234/82. This definition requires that for a substance to be called bulk drug, it should be -
(a) a chemical or biological or plant product, conforming to pharmacopoeial standards;
(b) used for the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals; and
(c) used as such or as an ingredient in any formulation.
The imported substance admittedly conforms to the condition at (a) above. In so far as conditions (b) and (c) are concerned, while the Revenue contends that the substance itself must be used for the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals or it must be used as an active ingredient in any formulation, the importer contends that even if it is used as a solvent in the formulation of a drug preparation, the conditions should be deemed to have been complied with.
10. In considering this problem we have referred to, in addition to the books cited for the assessee, The Pharmaceutical Codex incorporating the British Pharmaceutical Codex (XIth Edition). At page 756 of the book under the heading Propylene Glycol it is found stated under the head 'Veterinary Uses' as follows:-
"Propylene Glycol is used in the treatment of Bovine Ketosis and pregnancy toxaemia of sheep. Usual dose for both cattle is 200 to 300 ml and for sheep 60 to 100 ml; these dose are repeated daily for 3 or 4 days."
11. It is thus clear that Propylene Glycol is used in the treatment of animals. In that event, it would be a bulk drug as defined in Notification No. 234/82. We, therefore, hold that the importer is entitled to succeed in both the appeals. Accordingly, Appeal No. 1323/86-C is dismissed and Appeal No. 2809/87-C is allowed with consequential relief, if any.