1985 (2) TMI 258 - AT - Customs

Summary

Issues:
1. Interpretation of Notification No. 104/82-C.E. for countervailing duty exemption on citric acid monohydrate.
2. Determining whether citric acid monohydrate qualifies as a drug, drug-intermediate, or medicine for exemption.
3. Clarifying the requirement of actual use of citric acid monohydrate in medicinal formulations for exemption.

Analysis:
The judgment involves the interpretation of Notification No. 104/82-C.E. regarding countervailing duty exemption on citric acid monohydrate. The consignment in question was imported under this notification, but the lower authorities mistakenly applied Notification No. 55/75-C.E., which had been abrogated by the time of import. The Tribunal clarified that the terms of Notification No. 197/82-C.E. should determine the dispute, allowing free assessment of bulk drugs used in medicinal formulations.

Regarding the classification of citric acid monohydrate as a drug or medicine, the Tribunal ruled in favor of the importer. Citing a previous ruling, the Tribunal established that citric acid monohydrate qualifies as a medicine, drug-intermediate, and pharmaceutical product. The substance was deemed to be a bulk drug, used in medicinal formulations, and met the criteria for exemption under the relevant notification.

A crucial issue addressed in the judgment was the requirement of actual use of citric acid monohydrate in medicinal formulations for exemption eligibility. The importer argued that the substance need not be physically present in a formulation but should be capable of such use. However, the Tribunal disagreed, emphasizing that the law mandates the substance to be used for the treatment, mitigation, or prevention of diseases in humans. The Tribunal highlighted the necessity for establishing the actual use of the substance in entitled purposes to qualify for exemption.

In conclusion, the Tribunal declared that the lower authorities were not incorrect in denying the exemption initially. However, they were directed to further investigate if the importer could provide evidence of the citric acid monohydrate's use in a manner that aligns with the exemption criteria. The customs authorities were instructed to conduct inquiries, and if the use for exemption purposes was established, the appropriate duty refund would be granted.