1994 (9) TMI 160 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 31/88 regarding concessional rates for bulk drugs.
2. Requirement of End-use Certificate for availing benefits under the notification.
3. Determination of whether the products in question qualify as bulk drugs under the notification.
4. Compliance with pharmacopoeial standards for products to be considered as bulk drugs.
5. Consideration of Merck Index and Drug Controller's certification in determining the nature of the products.
6. Necessity of End-Use Certificates for certain products covered by the Drug (Price Control) Order.

Analysis:

The case involved an appeal against the order of Collector (Appeals), Chandigarh dated 30-9-1992, concerning the interpretation of Notification No. 31/88 for concessional rates on bulk drugs. The main issue revolved around whether the appellants rightly availed the benefit of the notification and the necessity of producing End-use Certificates for the same. The Circular No. 8/90-CX-III dated 6-3-1990 by CBEC initially required End-use Certificates for availing benefits, but a subsequent circular clarified that such certificates were only necessary for specific bulk drugs listed, which did not include the drugs in question in this case.

The Notification No. 31/88 described bulk drugs and other bulk drugs, with the definition of 'bulk drug' aligning with the Drugs Order 1987. The appellants argued that their drugs were accepted and licensed by the Drug Control Authorities as bulk drugs, with no alternative use except for formulation purposes. They contended that the Central Excise Department should have accepted the certificates issued by the State Drug Controller, and any inquiry into actual usage was unwarranted as not specified in the notification.

The Tribunal observed that determining whether the products qualified as bulk drugs under the notification was crucial, with emphasis on compliance with pharmacopoeial standards. The Chief Chemist's opinion supported considering the products as bulk drugs subject to verification of standards. However, lack of evidence regarding pharmacopoeial standards raised doubts. The Collector (Appeals) and lower authorities assumed the items were bulk drugs without proper verification.

The Tribunal noted that the appellants submitted End-Use Certificates issued by customers, but new evidence could not be considered without proper procedure. The necessity of End-Use Certificates was discussed, especially for products covered by the Drug (Price Control) Order. The Merck Index and Drug Controller's certification were considered, but the absence of evidence for alternative use raised concerns.

In conclusion, the appeal was allowed based on the observations made, emphasizing the need for proper verification of pharmacopoeial standards and compliance with the notification's requirements for availing benefits on bulk drugs.