Bulk drug exemption denied where imported cholesterol lacked therapeutic or preventive use under the notification

Notification No. 234/82-C.E. was applied to deny exemption for imported cholesterol because the bulk drug definition was taken to require conformity with pharmacopoeia standards and use for diagnosis, treatment, mitigation or prevention of disease, whether by itself or as a formulation ingredient. The material on record showed the product was used mainly as an emulsifying agent and anti-irritant, and no sufficient evidence established therapeutic or preventive properties within the notification. Mere possible use in a medicinal formulation was held insufficient to attract the exemption. One Member dissented and would have remanded the matter for further enquiry.

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Issues: Whether Cholesterol BP imported by the appellants was eligible for exemption from additional countervailing duty as a bulk drug under Notification No. 234/82-C.E.

Analysis: The majority held that the definition of "bulk drug" in the notification required the substance to conform to pharmacopoeia standards and to be used for diagnosis, treatment, mitigation or prevention of disease, either by itself or as an ingredient in a formulation. On the material produced, the imported cholesterol was shown to be used mainly as an emulsifying agent and anti-irritant, and no evidence established that it possessed therapeutic or preventive properties of the kind contemplated by the notification. The fact that it might be used in a medicinal formulation was held insufficient by itself to attract the exemption.

Conclusion: The claim for exemption was rejected and the imported cholesterol was held not eligible for the benefit of Notification No. 234/82-C.E., against the assessee.

Dissenting Opinion: One Member held that the literature and the Drugs Controller's certificate showed enough basis to treat the matter as requiring further investigation and would have set aside the order and remanded the case to the Collector (Appeals) for fresh disposal.

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