Central Excise - Notification No. 3/82-CE, dated 1-11-82 before its amendment by Notification No. 234/86-C.E., dated 3-4-86 - Manufacture and clearance of 'Bulk Drugs' clarification regarding - Central Excise - 31/88-CX.3

Central Excise - Notification No. 3/82-CE, dated 1-11-82 before its amendment by Notification No. 234/86-C.E., dated 3-4-86 - Manufacture and clearance of 'Bulk Drugs' clarification regarding Circular No. 31/88-CX.3 Dated 2-12-1988 [From F. No. 120/20/88-CX.3] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Notification No. 3/82-CE, dated 1-11-82 before its amendment by Notification No. 234/86-C.E., dated 3-4-86 - Manufacture and clearance of 'Bulk Drugs' clarification regarding. It has been brought to the notice of the Board that some manufacturers were producing caffeine from tea wastes which was classifiable under the erstwhile residuary tariff item 68 upto 27-2-1986, and thereafter as an organic chemical under chapter 29 of the Central Excise Tariff Act, 1985. A part of the caffeine thus obtained was being cleared to manufacturers of drugs and a part was being cleared to manufacturers of beverages and soft drinks and the Department had not collected any duty on these clearances. 2. The Government had granted exemption to 'Bulk Drugs' falling under erstwhile Tariff Item No. 68 vide notification No. 234/82 dated 1-11-1982. As per explanation given under the said notification, 'Bulk Drugs' means any chemical or biological or plant product, conforming to pharmacopceial standards, used for the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals and used as such or as an ingredient in any formulation. 3. After the new Tariff came into force with effect from 28-2-1986, the Government issued notification No. 234/86 with effect from 3-4-1986 granting exemption to 'Bulk Drugs' falling under Chapter 28 or 29 of Central Excise Tariff Act, 1985. The exemption under this notification was available subject to the condition that the manufacturer furnishes certificate from the Drugs Controller to the Government of India to the effect that the drugs or chemicals which are claimed for exemption under this notification are the 'Bulk Drugs' within the meaning of 'Bulk Drugs' given in the explanation to this notification and are 'normally' used for the diagnosis, treatment mitigation or prevention of diseases in human beings or animals, and used as such or as an ingredient in any formulation. The explanation in the said notification defining 'Bulk Drugs' is broadly the same as it was given in the earlier exemption notification No. 234/82. 4. In the present case, a portion of caffeine was supplied to the manufacturers of beverages and soft drinks. Evidently, in such a situation, these goods cannot be deemed to have been used for the purpose of diagnosis, treatment, mitigation or prevention of diseases in human beings or animals and used as such or as an ingredient in any formulation. The exemption for these goods as 'Bulk Drugs' under the above notifications for the purposes specified in these two notification. Therefore, it is clarified that, in terms of the above notifications, the exemption to 'Bulk Drugs' can be extended only when the 'Bulk Drugs; are used as 'Bulk Drugs' for the purpose specified therein.