1986 (8) TMI 62 - HC - Customs

Summary

Issues:
1. Interpretation of Notification No. 55/75 dated March 1, 1975 regarding the exemption from excise duty on the import of Phenol USP.
2. Determination of whether Phenol USP qualifies as a drug or a drug intermediate for the purpose of exemption from countervailing duty.
3. Requirement for the importer to establish the actual use of the imported material as a drug or drug intermediate for availing exemption benefits.

Analysis:
The judgment pertains to a petition filed under Article 226 of the Constitution of India by a partnership firm engaged in importing chemicals, specifically Phenol USP. The firm contested the imposition of countervailing duty by the Assistant Collector of Customs, claiming exemption under Notification No. 55/75 dated March 1, 1975. The key issue was whether Phenol USP qualifies as a drug or a drug intermediate as per the notification to be exempt from duty.

The court examined various evidences presented by the petitioners, including references to Pharmacopoeias of India, Britain, and the United States, certificates from laboratories, and a circular issued by the Central Board of Excise and Customs. The material indicated that Phenol USP was recognized as a drug or a drug intermediate in the pharmaceutical industry, supporting the petitioner's claim.

The department, represented by learned counsel, argued that the exemption required proof of actual use as a drug or drug intermediate, beyond mere branding. Additionally, reliance was placed on the dictionary meaning of "intermediate" to challenge the classification of Phenol USP. However, the court dismissed these arguments, emphasizing that the notification did not impose additional requirements beyond the substance being classified as a drug or drug intermediate.

Ultimately, the court held in favor of the petitioners, declaring that the import of Phenol USP was not liable for countervailing duty under the Customs Tariff Act. The ruling granted relief to the petitioners, discharged their obligations under interim orders, and did not award costs due to the circumstances of the case.