Exemption for formulations based on specified bulk drugs cannot be denied for lack of National Health Programme use.

A formulation based on a bulk drug specified in the First Schedule to the Drugs (Prices Control) Order, 1987 was treated as eligible for exemption because the notification did not require proof of use in a National Health Programme. Denial of exemption solely on the ground that the product was not shown to be sold or used for that programme was therefore not justified. Clarifications under an earlier notification supported that reading, and trade notices concerning a different notification and drug category were not applicable. The exemption claim was accepted.

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Issues: Whether the product manufactured by the assessee was entitled to exemption as a formulation based on a bulk drug specified in the First Schedule to the Drugs (Prices Control) Order, 1987, and whether such exemption could be denied on the ground that the product was not shown to be used for the National Health Programme.

Analysis: The product was accepted as a formulation based on a bulk drug specified in the First Schedule to the Drugs (Prices Control) Order, 1987. The exemption notification did not impose any condition that the formulation must be used only for a specified National Health Programme. The Board's clarification under the earlier notification supported the view that denial of exemption merely because the goods were not sold or used in the context of a National Health Programme was not justified. The trade notices relied upon below were found to relate to a different notification and to a different category of bulk drugs.

Conclusion: The assessee was entitled to the exemption.

Final Conclusion: The appeal succeeded and the exemption claim in respect of the product was accepted.

Ratio Decidendi: Where an exemption notification grants relief to formulations based on specified bulk drugs and does not make end-use for a National Health Programme a condition, exemption cannot be denied on that ground alone.

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