2007 (6) TMI 354 - AT - Customs

Drugs - Life saving drugs bulk drugs - Exemption - Words and Phrases - Life saving drugs - Held 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 - 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 - 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 - appeal allowed.

Summary

Issues:
1. Interpretation of exemption under Notification 11/97 for imported drugs used in manufacturing life-saving drugs.
2. Claiming more beneficial exemption under serial No. 43(A) at different stages of proceedings.
3. Definition of "life-saving drugs" and inclusion of bulk drugs under the exemption.

Issue 1: Interpretation of exemption under Notification 11/97:
The case involved appeals by two companies, one importing Polymyxin B Sulphate and the other importing Cefoperazone Sodium for manufacturing life-saving drugs. The dispute centered around the grant of exemption under Notification 11/97 for the imported drugs used in manufacturing life-saving drugs. The appellants claimed exemption under serial No. 43(B) for bulk drugs used in manufacturing life-saving drugs specified in List 2. The Tribunal noted that the exemption under serial No. 43(B) required following specific procedures and exempted only basic customs duty. In contrast, exemption under serial No. 43(A) did not require procedural steps and exempted both basic and additional customs duty.

Issue 2: Claiming more beneficial exemption at different stages:
The appellants argued for claiming the more beneficial exemption under serial No. 43(A) even if not initially claimed. The Tribunal agreed that the appellants could claim a more beneficial exemption at a later stage, especially when they had not claimed it earlier. The case law cited supported this view, allowing appellants to seek a different exemption if found ineligible for the initial one. The Tribunal found that the term "life-saving drugs" was not defined in the notifications, and since "drugs" included "bulk drugs," life-saving drugs could also encompass bulk drugs.

Issue 3: Definition of "life-saving drugs" and inclusion of bulk drugs:
The Tribunal analyzed that the term "life-saving drugs" was not defined in the notifications, indicating a broader coverage intended by the Government. The Budget Circular for 1995 supported this interpretation by exempting life-saving drugs under a generic description without specifying forms. The Tribunal concluded that since the imported drugs were listed in List 2 of the notifications, they were entitled to exemption under serial No. 43(A) for both appellants.

In conclusion, the Tribunal allowed both appeals, setting aside the previous orders and granting exemption from basic and additional customs duty under serial No. 43(A) for the imported drugs used in manufacturing life-saving drugs.