1983 (12) TMI 172 - AT - Customs

Summary

Issues:
- Interpretation of Central Excise Notification No. 55/75 regarding exemption from additional duty of customs for chemical-GLYOXAL 40%
- Classification of Glyoxal 40% as a "drug intermediate"
- Predominant use of Glyoxal 40% in the manufacture of drugs
- Definition of "intermediate" in the context of chemical compounds

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi dealt with appeals transferred to the Tribunal under Section 131B(2) of the Customs Act, 1962. The central issue revolved around the eligibility of chemical-GLYOXAL 40% for exemption from additional duty of customs under Central Excise Notification No. 55/75 as a "drug intermediate" under Item No. 68 of the Central Excise Tariff Schedule. The lower authorities had ruled against the appellants, stating that Glyoxal 40% was not predominantly used in drug manufacturing and thus did not qualify for the exemption.

During the hearing, the appellants argued that Glyoxal 40% was used in the manufacture of Metronidazole I.P., a drug for which they held a license, making it a "drug intermediate" as per the notification. They presented evidence of the principal use of Glyoxal 40% in drug manufacturing, supported by a previous order by the Appellate Collector. The respondent, on the other hand, referred to standard definitions of "intermediate" and highlighted the versatile uses of Glyoxal 40%, questioning its predominant use in drug manufacturing.

The Tribunal considered the submissions and the definition of "intermediate" as chemical stepping stones between the parent substance and the final product. They noted the lack of precise distinction between an intermediate and an end product. Given the undisputed use of Glyoxal 40% in drug manufacturing processes, the Tribunal concluded that it qualified as a "drug intermediate" under the notification. They emphasized that the benefit of the notification should be extended in such cases and allowed the appeals, directing customs authorities to grant consequential relief to the appellants.

In conclusion, the judgment clarified the interpretation of the Central Excise Notification regarding the exemption for Glyoxal 40% as a "drug intermediate." It highlighted the importance of the predominant use of the chemical in drug manufacturing processes and the definition of "intermediate" in the context of chemical compounds. The decision provided clarity on the eligibility of Glyoxal 40% for the exemption under the notification and directed customs authorities to act accordingly within a specified timeframe.