2016 (8) TMI 30 - AT - Customs

Duty drawback - export of Bulk Drugs. - Classification of Metformin HCL USP/PH EUR - Tariff item no. 2925209002 in the drawback schedule or Tariff item no. 2925000099 (others) - Held that - Pharmacopeia IP, BP, EP, JP, or USP may be treated as interchangeable. The Circulars are binding on the department and the contention of the department, that basing on pharmacopeia suffixed the product has to be reclassified as other is not tenable. The Tariff item 2925209002 pertains to Metformin HCL BP. Mere difference in pharmacopeia cannot make the product fall under others. The Circulars as well as letter from the office of DGFT makes this clear. Therefore the benefit of 4% at the rate on FOB value in drawback schedule cannot be denied. The restriction of drawback claim to ₹ 1,34,820/- (calculating @ 1%) by classifying the product as others is not legal or proper. Decided in favor of assessee.

Summary

Issues:
- Classification of export product for drawback claim

Analysis:
The main issue in this case is whether the appellant's claim of drawback at a rate of 4% on the FOB value of the export product Metformin HCL USP/PH EUR is valid under Tariff item no. 2925209002, as opposed to the department's contention that the goods should be classified under Tariff item no. 2925000099, attracting only 1% of drawback on FOB value.

The appellant, engaged in the manufacture of Bulk Drugs, filed a drawback claim for an amount of ?5,39,279 claiming 4% of FOB value under drawback schedule No. 295209002 against the products Metformin HCL PH EUR & Metformin HCL USP. The department argued that since the products exported were not specifically listed under the claimed drawback schedule, they should be reclassified under a different category with a lower drawback rate.

During the proceedings, the appellant referenced Circulars and a letter clarifying the interchangeability of pharmacopeia suffixes like IP, BP, USP, etc., for export products. These documents emphasized that pharmacopeia standards should be treated as interchangeable, allowing flexibility in the classification of exported goods based on the suffix used in the export order.

The Tribunal found that the Circulars and letter from the office of DGFT clearly established that pharmacopeia suffixes like IP, BP, USP, etc., should be treated as interchangeable. Therefore, the contention of the department to reclassify the product based on pharmacopeia suffixes was deemed untenable. As a result, the appellant was held eligible for the full drawback claim of ?5,39,279, and the restriction imposed by the department was considered unsustainable.

Ultimately, the Tribunal allowed the appeal, granting the appellant the full drawback claim amount with any consequential reliefs. The judgment highlighted the importance of aligning the classification of export products with the relevant tariff items and emphasized the binding nature of Circulars and official communications in interpreting such classifications.