Bulk drug exemption turns on capability of use, and end-use certificate is unnecessary unless the notification requires it.

An exemption notification defining "bulk drug" by reference to pharmaceutical or chemical products used as such or as an ingredient in a formulation was construed to cover products capable of such use, not only those shown to have been actually used in a medicinal product. Potassium iodate was found to possess therapeutic properties and to be used in iodised salt for preventing iodine deficiency disorders, so exemption could not be denied merely because actual medicinal end-use was not proved. As the notification did not expressly require an end-use certificate, its absence was not fatal, and the product qualified for exemption as a bulk drug.

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Issues: Whether potassium iodate was entitled to exemption as a bulk drug under Notification No. 8/1995-C.E. without production of an end-use certificate, and whether the product had to be shown to have been actually used as a drug rather than being capable of such use.

Analysis: The notification defined a bulk drug as a pharmaceutical, chemical, biological or plant product conforming to pharmacopoeial or other standards in the Second Schedule to the Drugs and Cosmetics Act, 1940, and used as such or as an ingredient in a formulation. The expression "used" was construed in the sense of being usable or capable of being used, not confined to actual prior use in a medicinal product. Potassium iodate was found to possess therapeutic properties and to be used in iodised salt for preventing iodine deficiency disorders. The Tribunal relied on the settled view that end-use evidence is not essential where the notification itself does not require an end-use certificate, and on the Board circular which did not require such certificate for potassium iodate.

Conclusion: An end-use certificate was not necessary, and potassium iodate qualified for exemption as a bulk drug. The appeal was therefore allowed.

Ratio Decidendi: Where an exemption notification defines "bulk drug" by reference to its capability of use as such or as an ingredient in a formulation, exemption cannot be denied merely because actual medicinal end-use is not proved or an end-use certificate is absent, unless the notification expressly so requires.

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