1. The Collector (Appeals), Bombay by his order dated 29-1-1990 has allowed five appeals of the importers and allowed them the benefit of the exemption from payment of duty under Notification No. 45/79 for goods Cyclophosphamide for injection and tablets. The Revenue has preferred only two appeals against the common order of the Collector (Appeals).
2. The main ground made out by the Revenue in this appeal is that during the material period of import from 28-2-1986 to.17-7-1986, Notification No. 45/79-Cus. was not applicable to bulk drugs and that the imported goods did not figure in the Notification No. 208/81-Cus.
The Notification No. 382/86-Cus. amending Notification No. 45/79-Cus.
was issued only on 18-7-1986 to grant exemption to the goods which were specified in Chapter 99. Hence, there was no notification available at the material time for grant of exemption to the imported goods.
3. We have heard Shri Jayaraman, learned JDR for the Revenue and Shri D.N. Kohli, learned Consultant for the respondents. Shri Jayaraman submitted that the importers had imported bulk drugs and not life saving drugs and further submitted that the Notification No. 45/79-Cus.
amending by Notification No. 208/81, the imported item had been deleted from the said notification and the Collector (Appeals) was not justified in allowing the refund claims of the importer. Shri Jayaraman further submitted that Chapter- 99 included only drugs and medicines which are for ready to use for the patients undergoing treatment for cancer. The drugs and medicines should be anti-cancer treatment and therefore, Chapter 99 does not apply to bulk drugs which are covered under Chapter 29 or 30. The item imported fell under Chapter 29 as a chemically defined compound and it is not a drug and medicine for immediate treatment to patients, although it may be used in the manufacture of anti-cancer drugs and medicines. He submitted that Notification No. 382/86-Cus. clearly indicated that Chapter 99 was for drugs, medicines which are meant for immediate use in anti-cancer treatment.
4. Shri D.N. Kohli, learned Consultant on the other hand, submitted that the item imported had been included in Chapter 99 and it carried 'nil' rate of duty and the exemption was inbuilt in the notification.
His contention was that during the material time, tariff changes took place and the item was brought under Chapter 99. As a consequence, the Notification No. 208/81 dated 22-9-1981 was amended by Notification No.174/86-Cus., dated 1-3-1986 by which the imported item was omitted. The Notification No. 382/86-Cus. restored the benefit which had been withheld by amending Notification No. 174/86. The Notification No.382/86 was a clarificatory notification and it had effected from the date of introduction of Chapter 99. He submitted that there was no infirmity in the order and sought for dismissal of the appeal.
5. We have carefully considered the submissions made by both the sides and perused the records. The question is as to whether imported item Cyclophosphamide for injection and tablets is entitled for benefit of Notification No. 382/86 retrospectively from the date of introduction of Chapter 99.
6. Notification No. 45/79-Cus., dated 1-3-1979 was applicable to specified bulk drugs falling under Chapter 29 or Chapter 30, used in the manufacture of life saving drugs and medicines. The item cyclophosphamide appeared in Serial No. 11 of the Table of the said notification. Notification No. 208/81 dated 22-9-1981 granted exemption to specified life saving drugs and medicines from payment of basic duty and countervailing duty. Cyclophosphamide was shown in Serial No. 11 of the Schedule of the notification. This notification was amended by Notification No. 103/86-Cus., dated 17-2-1986 and by the said notification, Item 11 was deleted from the Schedule for grant of exemption of basic duty and C.V. duty.
7. Chapter 99 was introduced from the passing of CTA, 1975 and it reads as follows -Heading Sub-heading Description of article Rate of dutyNo. No. Standard Preferential Areas99.01 9901.00 * * * * free (10) Cyclocytidine injection This Chapter 99.01 sub-heading 9901.00 applies to anti-cancer drugs.
Serial No. 11 reads Cyclophosphamide tablets and Cyclophosphamide for injections. The item imported as described in the invoice is Cyclophosphamide for injection and Cyclophosphamide for tablets. Hence only Cyclophosphamide for injection will fall under Chapter 99 as there is no mention of Cyclophosphamide for tablets in Serial No. 11.
However, Cyclophosphamide tablets are included. What has been imported is bulk drug for manufacture of cyclophosphamide tablet. Therefore, the item cyclophosphamide will not fall within Chapter 99 for eligibility of nil rate of duty.
"In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 45-Cus., dated the 1st March, 1979, namely- In the said notification, in the first proviso, for the words, "life saving drugs and medicines specified", the words and figures "life saving drugs and medicines falling within Chapter 99 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) or "shall be substituted." 9. A clear reading of the above notification indicates that bulk drugs used in the manufacture of life saving drugs and medicines falling under Chapter 99 are wholly exempt from basic customs duty. Therefore, this notification clarifies that items included in Chapter 99 are life saving drugs and medicines and not bulk drugs. It cannot be read more to say that it clarifies for grant of exemption retrospectively to the items in question from the date of introduction of Chapter 99. Hence, the exemption for cyclophosphamide, a bulk drug, used in the manufacture of life saving drugs and medicines was withdrawn by Notification No. 103/86 dated 17-2-1986 and it did not in anyway automatically grant exemption from payment of basic customs duty by its supposed inclusion under Chapter 99 as contended by the Consultant. As bulk drug does not fall under Chapter 99, it is only by introduction of Notification No. 382/86 dated 18-7-1986 the exemption has been reintroduced. The item cyclophosphamide continues to fall under Chapter 29 and it is used for manufacture of drugs and medicines falling under Chapter 99. It is not as though it has been removed from Chapter 29 and classified under Chapter 99 except for cyclophosphamide for injections which falls under Serial No. 11 of Chapter 99. The grant of exemption by learned Collector in the impugned order to item cyclophosphamide for injection alone will be entitled for nil rate of duty under Chapter 99 and not the item cyclophosphamide for tablets which is not covered under Chapter 99. To this extent alone, the Revenue succeeds in this appeal and the order of the Collector (Appeals) stands modified. The relief to item 'Cyclophosphamide for injection' being granted not on the reasoning given by the learned Collector in his order but by the fact that the item 'cyclophosphamide for injection' is chargeable with nil rate of duty under Chapter 99. The importer had sought for relief on this ground also as is evident from the reading of the refund claim and the grounds of appeal filed before the Collector which has been produced before us for perusal.