Drug intermediate exemption extends to a substance used in manufacture, not only a penultimate product in the process.

Methyl dichloro acetate was held to qualify as a drug intermediate under Notification No. 55/75-C.E. because it was used in the manufacture of chloramphenicol, and the exemption was not confined to a penultimate product obtained by a simple process. The ruling rejected a narrow construction that would limit drug intermediate status by stage of entry into the manufacturing process, and also rejected a predominant-use requirement as impracticable and contrary to the object of the exemption. The concessional benefit was therefore available to the importer.

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Issues: Whether methyl dichloro acetate was entitled to the concessional treatment available to a drug intermediate under Notification No. 55/75-C.E.

Analysis: The substance had been used in the manufacture of chloramphenicol, and the narrower view that a drug intermediate must be only the penultimate product obtained by a simple process was rejected. The substantive requirement was only that the substance should be used as an intermediate in the manufacture of a drug, irrespective of the stage at which it entered the manufacturing process. The demand for predominant use was held to be impracticable and inconsistent with the object of the exemption.

Conclusion: The substance qualified as a drug intermediate and the concessional benefit was available to the importer.

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