(1.) The petitioner No. 1 is a partnership firm registered under the Indian Partnership Act and carries on business as importers of chemicals. The petitioners placed order for import of "Phenol USP" with Nampoo Trading Company Limited of Japan and the indent was for a total quantity of 26 metric tonnes. The consignment arrived in Bombay on September 8, 1982 and the petitioners had filed five Bills of entries on September 1, 1982 in respect of this consignment. The petitioners claim that Phenol USP is a basic drug or a pharmaceutical or a drug intermediate and in accordance with Notification No. 55/75 dated March 1, 1975 duty of excise is not leviable on the import of Phenol USP. The Assistant Collector of Customs did not accept the claim and levied countervailing duty at the rate of 8% which is the rate specified under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944. The order of assessment passed by the Assistant Collector has given rise to the filing of this petition on September 6, 1982 under Article 226 of the Constitution of India.
(2.) The point which arises for determination is whether the import of phenol USP is entitled to advantage of Notification No. 55/75 dated March 1, 1975. It is not in dispute that phenol USP is liable to duty under Tariff Item No. 68 of the First Schedule to the Central Excises and Salt Act. The description of the item is "All other goods, not elsewhere specified" and the rate of duty prescribed is 12% ad valorem. The Central Government, in exercise of powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 published Notification dated March 1, 1975 prescribing that the goods specified in the Schedule annexed to the Notification are exempt from the whole of the duty of excise leviable thereon. Item No. 19 of the Schedule reads as under :
(3.) Dr. Kantawala, learned counsel appearing on behalf of the petitioners, in support of his submission that phenol USP is a drug or a drug intermediate, relied upon diverse material and it is necessary to examine the same. The learned counsel submitted that phenol USP is included in the Indian, British and United States of America Pharmacopoeia. The item 'phenol' is described on page 381 of Pharmacopoeia of India, Volume I, Third Edition, 1985. In 1970 Edition at page 376, it is stated that Phenol is either in liquid or glycerin form. On page 359 of British Pharmacopoeia, 1973, the drug phenol has been described and recites that it is used as antiseptic, preservative and antipruritic. On page 611 of the United States Pharmacopoeia, Twentieth Edition, 1980, drug Phenol has been described and the perusal of the same indicates that Phenol is mixed with the fixed oil, mineral oil, or white petroleum for further usage. Dr. Kantawala submits, and in my judgment, with considerable merit that if phenol is included in Pharmacopoeia of India, Britain and United States of America, there cannot be any manner of doubt that the phenol is a drug or in any event a drug intermediate. The learned counsel also relied upon Certificate dated November 19, 1981 issued by T.S. Shah for URALAB declaring that phenol has been used as a preservative and has been officially categorised as a basic drug and included in the Indian, British and various other Pharmacopoeis. It further recites that phenol is one of the most important raw material employed in the manufacture of intermediates which subsequently are used for manufacturing of many well-known basic/bulk drugs. Another certificate dated November 20, 1981 issued by the Director of Italab Private Limited is relied upon and the said certificate declares that phenol is used in pharmaceutical industries as a component in formulations such as injections, mouth-wash, ear-drugs, etc. It further recites that it is also an intermediate in the manufacture of basic drug such as Aspirin.