Pharmaceutical exemption for citric acid applies only to clearances tied to medicinal or pharmaceutical manufacture.

Citric acid of pharmacopoeial grade was treated as capable of falling within the notification's coverage of drugs, pharmaceuticals and drug-intermediates because it had recognised medicinal and pharmaceutical uses, even though it also had non-medicinal applications. The exemption, however, was not available for every clearance of citric acid merely because of its chemical character. It applied only where the clearances were shown to be for use in the manufacture of drugs, medicines or pharmaceuticals, and was denied for other uses. The resulting relief was therefore confined to qualifying pharmaceutical clearances.

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Issues: (i) Whether citric acid of pharmacopoeial grade was a drug, pharmaceutical or drug-intermediate within the scope of the exemption notification; (ii) whether exemption was available to all clearances of citric acid or only to clearances used in the manufacture of drugs, medicines or pharmaceuticals.

Issue (i): Whether citric acid of pharmacopoeial grade was a drug, pharmaceutical or drug-intermediate within the scope of the exemption notification.

Analysis: The exemption notification covered drugs, medicines, pharmaceuticals and drug-intermediates not elsewhere specified. The substance was shown to have recognised medicinal and pharmaceutical uses, including use in formulations, citrates, anticoagulant solutions, buffers and other pharmaceutical preparations. The fact that citric acid also had extensive non-medicinal uses did not, by itself, exclude it from the pharmaceutical category.

Conclusion: Citric acid was held to be capable of being classed as a drug, pharmaceutical and drug-intermediate for purposes of the notification.

Issue (ii): Whether exemption was available to all clearances of citric acid or only to clearances used in the manufacture of drugs, medicines or pharmaceuticals.

Analysis: The Tribunal held that the notification exempted drugs and pharmaceuticals, not citric acid as such in every possible use. Since the same substance could be put to pharmaceutical and non-pharmaceutical uses, the exemption could not be extended to clearances not shown to be for medicinal or pharmaceutical manufacture. The notification could not be expanded by ignoring the actual use where the substance was claimed as exempt on the basis of its pharmaceutical character.

Conclusion: Exemption was confined to citric acid cleared for use in the manufacture of drugs, medicines or pharmaceuticals and was denied for other clearances.

Final Conclusion: The appeal succeeded only in part, with relief restricted to qualifying pharmaceutical clearances of citric acid and denial of exemption for the remaining clearances.

Ratio Decidendi: Where exemption is granted to a drug, pharmaceutical or drug-intermediate, the benefit extends only to clearances that answer that character in fact and are shown to be for the relevant medicinal or pharmaceutical use, and not to all clearances of a chemically capable substance.

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