Broad reading of drug intermediate eligibility upheld for exemption under the central excise notification

Dimethyl Sulphate was treated as eligible for exemption as a drug intermediate under Notification No. 55/75-C.E. because the exemption covered drugs, medicines, pharmaceuticals and drug intermediates broadly. A certificate showing use in the manufacture of a medicinal product supported the claim, and the argument that it could not qualify merely because it acted as a methylating agent and did not form part of the final product was rejected. The expression "drug intermediate" was read in a broad, functional sense rather than a narrow penultimate-substance meaning, and the exemption was allowed.

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Issues: Whether Dimethyl Sulphate was eligible for exemption as a drug intermediate under Notification No. 55/75-C.E. dated 1-3-1975.

Analysis: The exemption notification issued under Rule 8(1) of the Central Excise Rules, 1944 covered all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified. The product was supported by a certificate indicating use as a drug intermediate for manufacture of a medicinal product. The contention that it could not qualify merely because it functioned as a methylating agent and did not form part of the end-product was rejected in light of the earlier interpretative approach treating the expression drug intermediate broadly. The product need not be confined to a narrow penultimate-substance meaning if it is shown to serve as an intermediate in drug manufacture.

Conclusion: Dimethyl Sulphate was held eligible for exemption as a drug intermediate, and the appeal was dismissed.

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