Bulk-drug exemption requires proof of pharmacopoeial standard; end-use certificates cannot be imposed unless expressly required.

Bulk-drug exemption under Notification No. 31/88-C depended on proof that the goods satisfied the prescribed bulk-drug meaning and pharmacopoeial standard under the Drugs (Price Control) Order, 1987; mere inclusion in the Merck Index or a Drug Controller certificate was not enough without satisfactory chemical or other evidence. End-use certificates were not an invariable precondition, because the later Board circular confined that requirement to the other bulk drugs in the annexed list and three products were already covered by the Second Schedule. The exemption therefore turned on compliance with the bulk-drug and standard requirements, not on a blanket end-use certificate condition.

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Issues: (i) Whether the products in question qualified as bulk drugs for the purpose of Notification No. 31/88-C; and (ii) whether end-use certificates were a precondition for availing the exemption.

Issue (i): Whether the products in question qualified as bulk drugs for the purpose of Notification No. 31/88-C.

Analysis: The notification covered bulk drugs and the definition required the goods to answer to the meaning of bulk drug under the Drugs (Price Control) Order, 1987. The essential feature noticed was that only drugs of pharmacopoeial standard could be treated as bulk drugs for this purpose. The record, however, did not contain chemical test evidence or other satisfactory material to establish that all the products answered that standard. Mere inclusion in the Merck Index or a certificate from the Drug Controller was not sufficient to dispense with that requirement.

Conclusion: The products could not be treated as exempt bulk drugs unless their pharmacopoeial standard was shown; the claim succeeded only to the extent that this requirement was satisfied.

Issue (ii): Whether end-use certificates were a precondition for availing the exemption.

Analysis: The later Board circular confined the insistence on end-use certificates to the other bulk drugs mentioned in the annexed list. Three of the products were already covered by the Second Schedule to the Drugs (Price Control) Order, so end-use certificates were not necessary for them. For the remaining items, the absence of proof of alternative use and the material placed from the Merck Index supported the assessee's case, though the benefit remained subject to the goods being shown to conform to pharmacopoeial standard and to the relevant specifications.

Conclusion: End-use certificates were not invariably required, and the exemption could not be denied merely for want of such certificates in the circumstances of the case.

Final Conclusion: The appeal succeeded in part, and the exemption benefit was directed to be available only where the stated conditions regarding bulk-drug character and standard were met.

Ratio Decidendi: A condition not expressly required by the exemption notification cannot be imported to deny the benefit, and exemption for bulk drugs depends on proof that the goods satisfy the prescribed bulk-drug and pharmacopoeial-standard requirements.

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