G. Sankaran, Member (T)

1. The captioned appeals were initially filed as revision applications before the Central Government and have come as transferred proceedings, in terms of Section 131B(2) of the Customs Act 1962, to this Tribunal for disposal as they were appeals filed before it.

2. The issue involved in these three appeals is common and this common order disposes of all the appeals.

3. The issue is whether the chemical -GLYOXAL 40% -imported by the appellants (hereinafter referred to as FALRDEAL) was eligible for exemption from additional duty of customs with reference to Central Excise notification No. 55/75 dated 1-3-1975 as a "drug intermediate" falling under item No. 68 of the Central Excise Tariff Schedule (CET.)

4. The lower authorities held that the chemical was a raw material for the manufacture of a drug intermediate, namely, 2-Methyl Imidazole. It was a versatile chemical having multifarious uses. Since it was not exclusively or even predominantly used in the manufacture of drugs, it was not entitled to exemption as a "drug intermediate" in terms of the notification referred to above.

5. The appeal was heard on 18-11-1983. Shri Rajadhyaksha, the learned Counsel for FAIRDEAL, made the following submissions :-

(i) Glyoxal 40% is used by FAIRDEAL for manufacture of Metronidazole I.P., a drug for which they hold a licence from the Commissioner, Food Drugs Administration, Maharashtra State. The process could be briefly summed up thus –

Glyoxal 40%- 2 Methyl ImidazoIe-"-Metronidazole I.P. The licence covers also the manufacture of 2-Methyl Imidazole.

(ii) Glyoxal 40% which is used in the manufacture of the drug Metronidazole is a "drug intermediate" within the meaning of Notification No. 55/75-C.E.

(iii) The predominant use of Glyoxal 40% is in the manufacture of Metronidazole I.P. This has been acknowledged by the very same Appellate Collector (whose orders are under challenge before us) who, in a later order dated 15-12-80 on three appeals filed by the same appellants (FAIRDEAL), held, after study of the voluminous data placed before him by FAIRDEAL, that the principal use of Glyoxal 40% is as raw material in the manufacture of drugs. In view of this principal use, the Appellate Collector concluded in that order that Glyoxal is a drug intermediate falling within the scope of Notification No. 55/75-C.E.

(iv) Glyoxal 40% manufactured indigenously by M/s. Rajasthan Glyoxai Ltd. was being assessed to 'Nil' duty in terms of Notification No. 55/75-C.E. by the concerned excise authorities, as may be seen from the photostat copy of the relevant classification list submitted as evidence (Pages 45 to 49 of the Paper Book in Appeal No. 689/1980-C).

6. Appearing on behalf of the respondent, Shri A.K. Jain submitted that-

(i) the word "intermediate" has not been defined in the relevant notification. It is, therefore, useful to turn to a standard book like Hawley's Condensed Dictionary which has this to say : -

"An organic compound, either cyclic (derived from coal tar or petroleum product such as benzene, toluene, naphthalene, etc.) or acyclic (e.g., ethyl and methyl alcohol). These compounds may be considered as chemical stepping stones between the parent substance and the final product. The cyclic type (e.g., aniline, beta-naphthol, and benzoyl-benzoic acid) still predominate as intermediates for synthetic dyes and have few other uses; the acyclic type in general have many independent uses. Exceptions are hexamethylenetetramine, an acyclic intermediate for phenol formaldehyde resin, and butadiene for synthetic elastomeis. Intermediates are the foundation of the modern approach to organic technology. The distinction between an intermediate and an end-product is not always precise."

(ii) The same Dictionary gives the following information : On the uses of Glyoxal: -

"Giades: 40% solution; pure, solid; V.P.

Uses : Permanent-press fabrics; dimensional stabilization of rayon and other fibres. Insolublizing agent for compounds containin