CESTAT Finds Factual Error in Denial of Duty Exemption on Imported Clinical Trial Drugs, Remands Matter [Read Order]

The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) remanded the case of Lambda Therapeutic Research Limited after finding a factual error in the denial of a customs duty exemption on imported clinical trial drugs.

Lambda Therapeutic Research Limited, the appellant, engaged in conducting clinical research, imported various bioequivalence drugs for clinical trials during the years 2007–2008 to 2011–2012.

The customs department raised a demand of Rs. 6,11,800 on the ground that the imports were not eligible for duty exemption, alleging that the company had not filed the required application in “Form 44” under the Drugs and Cosmetics Act. The Commissioner (Appeals) upheld this finding, which led the appellant to approach the CESTAT.

The appellant’s counsel argued that the finding of the Commissioner (Appeals) was factually incorrect. The counsel submitted that the company had indeed submitted the application in “Form 44” on September 11, 2009, as shown in the appeal records.

They argued that since the Drugs Control Authority had already treated the imported drugs as meant for clinical trials, the denial of exemption was unsustainable. The counsel requested that the matter be remanded with an opportunity to submit additional documents, case laws, and supporting evidence.

The department’s counsel agreed that there appeared to be a factual mistake and argued that the matter should be remanded to the Commissioner (Appeals) to verify the use of “Form 44” and reconsider the findings.

The single-member bench comprising Somesh Arora (Judicial Member) observed that both parties agreed on the existence of a factual error regarding the filing of “Form 44.” It explained that the issue required a fresh examination of documents and that a fair opportunity should be given to the appellants to present additional material.

The tribunal remanded the case to the Commissioner (Appeals) for a fresh decision. The tribunal directed that the penalties imposed on the two individual appellants be reconsidered in line with the outcome of the demand. The appeals were allowed by way of remand.

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