ORDER
V.P. Gulati, Member (T)
1. This is an appeal against the order of Collector of Central Excise (Appeals), Bombay. The appellants have made written submission for decision of the appeal on merits. The short point for consideration, In this appeal, is whether Cholesterol BP imported by the appellants is exempt from payment of C.V. Duty in terms of Notification 234/82-C.E. The claim of the appellants is under entry No. 21 of the said exemption Notification. The description of the goods exempt under this serial No. is as under:
“All drugs and medicines not elsewhere specified.”
2. The appellants have pleaded that the cholesterol is used in medicinal formulation and they should be considered as bulk drug, they have cited an order of the Tribunal C-205/85 dated 20.2.1985. In that case, the Tribunal has considered the issue whether citric acid monohydrate BP was elligible for the benefit of Notification 104/82 as amended by Notification 197/82 in terms of entry,
“All bulk drugs, medicines and drug intermediates not elsewhere specified.”
3. The learned JDR for the department pleaded that cholesterol is only a bulk chemical and cannot be considered as a drug. In this connection, he pointed out to that the definition of the term bulk drug as given in the Notification No. 234/82. The same for convenience of reference is reproduced as under:
“All bulk drugs and medicines not elsewhere specified.”
* * * *
Explanation: In this notification “bulk drug” means any chemical or biological or plant product, conforming to pharmacopoeil standards, used for the diagnosis, treatment, mitigation of prevention of diseases in human beings or animals and used as such or as an ingredient in any formulation.
Explanation II: For the purpose of this notification, the expression.”
4. He pleaded that there is no evidence that the required criteria for the item to be considered as drug has been satisfied. He pleaded that for the item to be considered as drug, it should be used for any of these purposes as such or as an ingredient in the formulations. He pleaded that there is nothing on record to show that the item imported can be used as such or as an ingredient in a formulation for diagnosis, treatment, or prevention of the disease.
5. We observe that the criteria set out for bulk drug, as pointed out by the learned JDR for the department has not been satisfied in the present case. It is seen from the literature produced by the appellants that the item imported finds uses as under:
“Uses. Cholesterol impacts water-absorbing power to ointmentaand is used as an emulsifying agent. Cholesterol is employed as an anti-irritant in spirituous ‘hair tonics’ in concentrations of up to 2% and it is incorporated in many cosmetic ointments.
Cholesterol has a physiological role.”
6. It is seen that the Cholesterol is intended to be used as an emulsifying agent and in some hair tonics it prevents irritation. Obviously, the cholesterol only masks the Irritability caused by some of the ingredients in the tonics. No evidence has been produced to show that the cholesterol treats any condition of the scalp or the hair. The appellants also have produced a letter from the Drug Controller.
7. We observe that the Drug Controller has, in this letter, referred to the scope of the term drug under Notification No. 234/82. He has opined that inasmuch as the cholesterol is used as ingredient in the medicinal formulation, the same should be treated as a bulk drug. We observe, that the notification makes it clear that a bulk drug by Itself should have properties of either diagnosis or treatment or prevention of disease in human beings or should be for mitigation of the same. It has not been stated by the learned Drug Controller of India that cholesterol has any one of these properties. It is not enough that an item should enter as an ingredient in a medicinal formulation, but for the purpose of notification it is essential that it should be for any one of the purposes set out in the explanation to the notification.
8. In the case cited by the appellants, the Tribunal has laid the guidelines for the purpose of eligibility of the goods imported in the context of Notification No. 234/82 and criteria laid down is as under :-
Therefore, when a chemical is not used as a medicine or in a medicinal formulation, It 1s not entitled to the exemption because by giving exemption to citric acid monohydrate which is used in applications unconnected with the diagnosis, treatment or prevention of diseases, we would be giving the exemption to a substance that has not earned it. The substance or chemical does not earn the exemption by being that particular substance or chemical, but by functioning as a drug or a medicine, when it assumes the role of a drug, medicine or therapeutic agent, either by itself or as an ingredient in a curative preparation.”
The Tribunal in that case allowed the appeal by remand in the light of the above criteria. We observe that in the notification under consideration in the case before us, drug intermediates are omitted from the scope of the exemption and the issue has to be in the context of whether the foods quality or bulk drug. The facts of this case are, therefore, distinguishable from the case cited by the appellants. In any Case, the view held by us is in no way in conflict with the decision in the case cited.
9. We, in view of the above, hold that cholesterol imported by the appellants Is not eligible for the benefit of Notification 234/82.
10. We, in view of the above, therefore dismiss the appeal.
V.T. Raghavachari, Member (J)
11. I have carefully perused the order prepared by Shri Gulati. Since I am unable to persuade myself to agree with the said order I am recording this separate order.
12. The goods imported were Cholesterol BP. The issue Is whether the same is entitled to exemption from payment of additional duty of customs as falling under item No. 21 of Notification No. 234/82-C.E., dated 1.11.1982. The claim is that the same is a bulk drug not elsewhere specified.
13. The Collector (Appeals) rejected this claim on the ground that the appellants were unable to produce any literature in support of their contention that the imported goods had therapeutic or prophylactic properties. The appellants’ claim that this observation of the Collector is in fact not correct, since they had produced before him, under letters dated 25.3.1985 and 1.4.1985, copies of extracts of the USP and page 1066 of Mar-tindale to establish that Cholesterol has skin protectant and anti-irritant properties. By that as it-may, the appellants have produced for our perusal photo copy of page 1066 of the book “Paraffins and similar Bases” (no information has been given as to the author or publisher). Under the heading Cholesterol (USP) it is mentioned that Cholesterol is Irri-ployed as an anti-irritant in hair tonic in concentration of upto 2% and It is Incorporated in many cosmetic ointments. They have also produced photo-copy of page 370 of the United States Pharmacopeia XIX where Cholesterol is shown as a constituent in the preparation of Hydrophilic Petrolatum which is described as a topical protectant. These extracts do suggest that Cholesterol has, at the least, a preventive aspect, whether it has or not uses for diagnosis, treatment, or mitigation.
14. The appellants have, however, further produced a certificate of the Drugs Controller of India, addressed to the Collector and dated 5.5.1987. This letter appears to have been in response to a query from the Collector under his letter dated 17.3.1987. It stated in this letter as follows: ‘
“It is clarified that Cholesterol USP is used as an ingredient in the manufacture of drugformulation and hence eligible for duty exemptions under the notification. The definition of the bulk drug in the Notification No. 234/86-C.E., dated 3.4.1986 refers to bulk drugs or Pharmacopoeia! standards which are used as such or as an ingredient in any formulation. The therapeutic value is not the considered criteria in the above notification.”
It should be seen that this letter contains the opinion of the Drugs Controller as to whether Cholesterol USP would be a bulk drug in terms of the definition thereof In Notification No. 234/86 in which also the definition is similar to the definition in Notification No. 234/82. It would not be proper to ignore this certificate of the Drug Controller for the reasons stated in the order of Shri Gulati. At the least the matter requires further Investigation, specially since the opinion of the Drugs Controller had been obtained at the request of the department itself.
15. In the circumstances it appears to me that it would be proper that the impugned order be set aside and the matter be remanded to the Collector (Appeals) for disposal afresh after taking into account the books cited as also the opinion of the Drugs Controller. I would, therefore, propose an order allowing the appeal, setting aside the Impugned order and remanding the matter to the Collector (Appeals) for disposal afresh in the light of the observations supra.