Exemption for mixed bulk-drug formulations depends on the presence of a listed bulk drug, not constituent predominance.

A pharmaceutical formulation containing Diphenoxylate Hydrochloride and Atropine Sulphate was treated as eligible for exemption under Notification No. 6/2002-CE because the exemption applied to formulations made from listed bulk drugs. The explanation to the notification allowed a formulation to contain one or more bulk drugs with or without pharmaceutical aids, and the presence of Atropine Sulphate, a listed bulk drug, was sufficient. The ratio by weight of the constituents was held irrelevant unless the notification itself made it decisive, so the predominance of the non-listed drug did not defeat exemption.

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Issues: Whether a pharmaceutical formulation consisting of Diphenoxylate Hydrochloride and Atropine Sulphate was eligible for exemption under Notification No. 6/2002-CE dated 01.03.2002 when only Atropine appeared in the relevant list of bulk drugs.

Analysis: Serial No. 57 of the notification granted exemption to formulations manufactured from bulk drugs specified in List 2, and the explanation permitted a formulation to contain one or more bulk drugs with or without pharmaceutical aids. The dispute turned on whether the predominance of Diphenoxylate Hydrochloride by weight excluded the product from exemption because that drug was not listed. The notification was held to be attracted where a formulation contains more than one bulk drug and at least one listed bulk drug is present. The ratio of the constituent drugs was found to be irrelevant, and the formulation was treated as eligible because Atropine Sulphate was a listed bulk drug and both constituents were active ingredients. The reasoning was also supported by the Supreme Court decision relied upon by the respondent.

Conclusion: The formulation was eligible for exemption and the Revenue's challenge failed.

Ratio Decidendi: For a notification granting exemption to formulations manufactured from listed bulk drugs, the exemption cannot be denied merely because a non-listed bulk drug is the major constituent, so long as the formulation contains at least one listed bulk drug and the constituent ratio is not made determinative by the notification.

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