1997 (12) TMI 182 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Potassium Iodate as a "bulk drug"
2. Requirement of an end-use certificate for exemption
3. Interpretation of Notification No. 8 of 1995
4. Applicability of legal precedents and judicial interpretations

Issue-Wise Detailed Analysis:

1. Classification of Potassium Iodate as a "bulk drug":
The appellant claimed exemption from duty on potassium iodate as a "bulk drug" under Notification No. 8 of 1995. The Collector rejected this, stating that potassium iodate was used in manufacturing iodized salt, not for medicinal purposes. The appellant argued that potassium iodate met the definition of a "bulk drug" as per the Drug Prices Control Order (DPCO) and that the notification did not require an end-use certificate. The Tribunal noted that potassium iodate possesses therapeutic properties and is used in the prophylaxis and treatment of iodine deficiency disorders, thus qualifying it as a "bulk drug."

2. Requirement of an end-use certificate for exemption:
The Collector insisted on an end-use certificate to confirm the medicinal use of potassium iodate. The appellant contended that the notification did not mandate such a certificate, and the Board had clarified that it was not required for bulk drugs like potassium iodate. The Tribunal referenced the Bombay High Court's judgment in Citric India Ltd., which held that once a product is found to be a drug, the exemption is available without limiting it to quantities used in drug manufacture. The Tribunal concluded that an end-use certificate was not necessary for potassium iodate.

3. Interpretation of Notification No. 8 of 1995:
The Collector interpreted the notification to apply only to bulk drugs used for medicinal purposes. The appellant argued that the notification's definitions of "bulk drug" and "formulation" were identical to those in the DPCO, and potassium iodate met these definitions. The Tribunal agreed with the appellant, stating that the notification's language did not restrict the exemption to drugs already used for medicinal purposes but included those capable of such use.

4. Applicability of legal precedents and judicial interpretations:
The Tribunal considered various legal precedents, including the Supreme Court's judgment in Balakrishna Pillai and the Bombay High Court's judgments in Citric India Ltd. and Union of India v. Rakesh Enterprises. These cases supported the view that the definition of "bulk drug" includes substances capable of medicinal use and that end-use certificates are not mandatory for exemption. The Tribunal also noted the Board's circular, which did not list potassium iodate among drugs requiring an end-use certificate.

Conclusion:
The Tribunal concluded that potassium iodate qualifies as a "bulk drug" under Notification No. 8 of 1995 and that an end-use certificate is not required for the exemption. The appeal was allowed, and the impugned order was set aside. Both members of the Tribunal concurred with this decision, emphasizing the binding nature of the Bombay High Court's interpretation and the consistency of Tribunal decisions on this matter.