Benefit of Customs Duty Exemption on Imported Drugs applicable to Bulk Drugs Also: CESTAT [Read Order]
The department had objected, contending that while the goods were described as “drugs” at the time of importation, they were later referred to as “bulk drugs” during clearance to the Domestic Tariff Area (DTA).
Benefit - Customs Duty Exemption - Imported Drugs applicable - Bulk Drugs - CESTAT - Taxscan
Benefit - Customs Duty Exemption - Imported Drugs applicable - Bulk Drugs - CESTAT - Taxscan
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Ahmedabad, has held that the term “drugs” under the relevant customs duty exemption notification includes “bulk drugs” as well, thereby granting the appellant pharma export unit the benefit of customs duty exemption.
The case involved Apicore Pharmaceuticals Pvt. Ltd., a 100% Export-Oriented Unit (EOU) engaged in the manufacture of pharmaceutical products under Chapter 29 of the Central Excise Tariff. The dispute pertained to the period from June 2015 to September 2016, during which the appellant imported certain goods described as “drugs” and claimed exemption under Notification No. 12/2012-Cus., dated 17 March 2012 (Serial No. 147(A)), which provided a concessional rate of customs duty not exceeding 5%.
The department objected, contending that while the goods were described as “drugs” at the time of importation, they were later referred to as “bulk drugs” during clearance to the Domestic Tariff Area (DTA). The Department’s representative, M.P. Solanki, Assistant Commissioner (Authorized Representative), argued that the appellant could not alter the classification and avail further benefits as applicable to “bulk drugs.”
Defending the claim, Chartered Accountant (CA) Vidhi Makad, appearing for the appellant, relied on the CESTAT Bangalore ruling in Aurobindo Pharma Ltd. v. Commissioner of C. Ex., Hyderabad-I [2009], wherein it was held that the term “drug” includes “bulk drug” as per the Drugs (Prices Control) Order, 1995, and that both categories are entitled to exemption benefits when specified under the relevant lists of customs notifications.
The Bench of Judicial Member Somesh Arora, after hearing both sides, observed that the issue had already been conclusively settled in the Aurobindo Pharma case, where the Tribunal held that all drugs and medicines, including their salts, esters, and diagnostic test kits listed under Notification No. 21/2002-Cus., dated 1 March 2002, qualify for the exemption.
The Tribunal noted that the distinction between “drugs” and “bulk drugs” was immaterial for the purpose of applying the notification.
Finding no contrary precedent presented by the Department, the Tribunal ruled that the matter was no longer res integra and allowed the appeal. The CESTAT concluded that the pharma exporter was entitled to the exemption and directed consequential relief.
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