Drug intermediate exemption applies where a substance contributes to drug structure and is supported by evidence of intermediate use.

Sodium bisulphite used in the manufacture of analgin was treated as a drug intermediate eligible for duty exemption under the applicable notification. The material showed that it contributed to the structure of the drug rather than merely assisting the chemical reaction, and drug-control certificates together with chemical reference material supported its use as an intermediate. On the cumulative evidence, the exemption claim was upheld in favour of the assessee.

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Issues: Whether sodium bisulphite used in the manufacture of analgin qualified for duty exemption as a drug intermediate under the relevant exemption notifications.

Analysis: Sodium bisulphite was found to contribute to the structure of the drug rather than serving merely as an aid to the chemical reaction. The record also contained drug-control certificates supporting its use in the manufacture of analgin, and the cited chemical reference material indicated medicinal and intermediate uses consistent with the claimed exemption. On the cumulative evidence, the substance was treated as falling within the scope of the exemption for drug intermediates.

Conclusion: The claim for exemption was upheld in favour of the assessee.

Ratio Decidendi: A substance that contributes substantially to the structure of a drug in its manufacture, and is supported by evidence of use as an intermediate, can qualify for exemption as a drug intermediate under the applicable notification.

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