Drug intermediate exemption turns on actual end-use in drug manufacture, not on whether the chemical has other uses.

Methyl acetoacetate was treated as a drug intermediate for exemption purposes because it was actually used in the manufacture of Analgin I.P., and end-use was considered implicit in that classification. The fact that the chemical also had non-drug uses did not by itself disqualify it from exemption under Notification No. 55/75-C.E., so long as the relevant use was in drug manufacture. The benefit of the notification was therefore available to the extent the imported chemical was used for making the drug, consistent with the prior departmental view on the same product.

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Issues: Whether methyl acetoacetate, imported and used in the manufacture of Analgin I.P., qualified as a drug intermediate eligible for exemption under Notification No. 55/75-C.E. dated 1-3-1975.

Analysis: The notification exempted drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified. The Tribunal accepted that a chemical may have several uses, but for tariff and exemption purposes its classification as a drug intermediate depends on actual use in the manufacture of drugs. The Tribunal approved the view that end-use is implicitly built into the meaning of drug intermediate, and that a chemical does not cease to be a drug intermediate merely because it has other non-drug uses. Since the goods were used by the appellants in the manufacture of Analgin I.P. and the facts were consistent with the earlier departmental order on the same product, the benefit of the exemption was held applicable to the extent of such drug use.

Conclusion: Methyl acetoacetate was held to be a drug intermediate for the purpose of the exemption notification, and the refund claim succeeded to the extent of its use in the manufacture of Analgin I.P.

Final Conclusion: The appeals were allowed and the exemption benefit was extended for the drug-manufacturing use of the imported chemical.

Ratio Decidendi: A chemical is a drug intermediate for exemption purposes when it is actually used in the manufacture of drugs, and its other uses do not disqualify it from that classification.

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