5% IGST Applies to Bulk Drugs and APIs Under Entry 226: CAAR Delhi

In re Volvo Auto India Private Limited (CAAR Delhi)

Summary: The Customs Authority for Advance Rulings, Delhi considered an application filed by Mankind Pharma Limited concerning the applicable Integrated Goods and Services Tax rate on imported bulk drugs or Active Pharmaceutical Ingredients (APIs) classifiable under Chapters 28 or 29 of the Customs Tariff. The applicant stated that the APIs were used for manufacture of pharmaceutical formulations and, in certain cases, for testing, clinical research, clinical trials, bioavailability and bioequivalence studies. The applicant had been importing such goods under Forms 10, 11 and CT-17 issued under the statutory drug-control framework and had been discharging IGST at 18%, while contending that the applicable rate was 5%.

The Authority found the application valid under the Customs Act, 1962 and the CAAR Regulations, 2021 and proceeded to determine the rate of IGST. The questions before it were whether 5% IGST was leviable on imported bulk drugs/APIs under Serial No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and, if not, what rate applied to bulk drugs/APIs falling under Chapters 28 or 29.

The Authority examined Section 3(7) of the Customs Tariff Act, 1975, under which imported articles are liable to integrated tax at the rate leviable under Section 5 of the IGST Act, 2017 on a like article supplied in India. It noted that the applicant did not dispute tariff classification under Chapters 28 or 29 and that the issue was confined to the applicable IGST rate.

The Authority considered Serial No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate), which covers “All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs”, other than goods specified at NIL rate under Serial No. 113 of Notification No. 10/2025-Integrated Tax (Rate). Serial No. 113 covers drugs or medicines listed in Annexure I. The Authority recorded that the specified products—Progesterone IP, Isotretinoin Ph. Eur and Epinephrine Bitartrate—were not covered under Annexure I.

In examining whether bulk drugs/APIs fall within “All Drugs and medicines”, the Authority noted that the expression “drug” was not defined in the IGST rate notification or the Customs Act and therefore referred to the statutory framework governing the goods. Section 3(b) of the Drugs and Cosmetics Act, 1940 defines “drug” broadly and includes substances intended for use as components of a drug. The Authority observed that APIs are substances used as components of drugs and are regulated under the Drugs and Cosmetics Act, 1940 and require statutory licences for import.

The Authority also referred to the Drugs (Price Control) Order, 2013, under which “active pharmaceutical ingredients or bulk drug” means pharmaceutical, chemical, biological or plant products conforming to prescribed standards and used as such or as an ingredient in a formulation. On a conjoint reading of that definition with Section 3(b) of the Drugs and Cosmetics Act, 1940, the Authority concluded that bulk drugs/APIs fall within the statutory meaning of “drug”.

The Authority further considered the New Drugs and Clinical Trials Rules, 2019 and their definitions of “active pharmaceutical ingredient”, “bioavailability study”, “bioequivalence study” and “clinical trial”. It reasoned that the definitions concern drugs or active ingredients and that the purpose for which an API is imported does not, by itself, alter its statutory identity as a drug. The Authority therefore rejected the proposition that import for testing, research, clinical trials, bioavailability or bioequivalence purposes necessarily takes the goods outside the expression “drugs”.

The Authority also examined the product-specific Forms 10, 11 and CT-17 furnished by the applicant. It observed that Form 10 concerns import of drugs, Form 11 concerns import of drugs for examination, test or analysis, and Form CT-17 concerns import of new drugs or investigational new drugs for clinical trials, bioavailability or bioequivalence studies or examination, test and analysis. However, because only illustrative licences had been produced, the Authority observed that those documents did not establish that similar licences had been issued for every bulk drug proposed to be imported.

The Authority considered the Tribunal decisions cited by the applicant, including Burroughs Wellcome (I) Ltd. v. Commissioner of C. Ex. and Cus., Mumbai, Cipla Ltd. v. Commissioner of Customs, Chennai, Astrix Laboratories Ltd., Aurobindo Pharma Ltd., and the advance ruling decisions in Laurus Labs Ltd. and Biocon Ltd. These authorities were cited in support of the proposition that “drugs” includes “bulk drugs” where the relevant entry does not expressly exclude them.

The Authority also considered the Customs Authority for Advance Rulings, Mumbai ruling in M/s Cipla Limited, Ruling No. CAAR/Mum/ARC/161,162/2025-26 dated 17.03.2026, which had held that bulk drugs/APIs imported for manufacture of formulations or for testing, clinical trials, bioavailability or bioequivalence studies qualify as “All Drugs” under Serial No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate), provided they are not covered by Serial No. 113 of Notification No. 10/2025-Integrated Tax (Rate).

On interpretation of Serial No. 226, the Authority treated the semicolon in the entry as separating two distinct categories: “All drugs and medicines” and “formulations manufactured from bulk drugs”. It reasoned that restricting “All drugs and medicines” to finished dosage forms would render the separate reference to formulations manufactured from bulk drugs redundant. It also emphasised that the entry refers to “Chapter 30 or any Chapter”, which extends its description-based coverage beyond Chapter 30.

The Authority contrasted Serial No. 226 with Serial Nos. 35 and 36 of Schedule II, which cover all inorganic chemicals under Chapter 28 and all organic chemicals under Chapter 29. It held that those entries are general and Chapter-based, whereas Serial No. 226 is a specific description-based entry for drugs and medicines. Applying the principle generalia specialibus non derogant, the Authority concluded that the specific entry would prevail where the goods answer to the description of “drug”.

The Authority also considered the Supreme Court decision in Commissioner of Customs (Import), Mumbai v. M/s. Dilip Kumar and Company & Ors., 2018 (361) E.L.T. 577 (S.C.). The Authority noted that the Supreme Court had addressed interpretation of exemption notifications and strict construction. It distinguished the present notification by observing that Notification No. 9/2025-Integrated Tax (Rate) is a taxing notification and not an exemption notification. On that basis, it held that the subject goods were appropriately covered under the 5% taxing entry in Serial No. 226.

The Authority ultimately concluded that bulk drugs/APIs fall within the statutory meaning of “drug”, that Serial No. 226 is a specific description-based entry extending to goods falling under any Chapter, and that the purpose of import does not alter the character of the goods as drugs. It therefore held that imported bulk drugs/APIs are covered under Serial No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) and attract IGST at 5%, subject to the goods not being covered under any NIL-rated entry.

Accordingly, Question 1 was answered in the affirmative. The Authority ruled that IGST is leviable at 5% on import of bulk drugs or APIs under Serial No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided the goods are not covered under Serial No. 113 of Notification No. 10/2025-Integrated Tax (Rate). The Authority ruled accordingly.

Cases Discussed

• Burroughs Wellcome (I) Ltd. v. Commissioner of C. Ex. and Cus., Mumbai, 2007 (216) E.L.T. 522 (Tri.-Mum.) — considered for the proposition that “drugs” includes bulk drugs where the relevant entry does not exclude them.
• Cipla Ltd. v. Commissioner of Customs, Chennai, 2007 (218) E.L.T. 547 (Tri.-Chennai) — considered for the proposition that bulk drugs are also drugs.
• Astrix Laboratories Ltd., 2009 (233) E.L.T. 372 (Tri.-Bang.) — considered as a Tribunal decision holding that bulk drugs qualify as drugs.
• Aurobindo Pharma Ltd., 2009 (247) E.L.T. 206 (Tri.-Bang.) — considered on the proposition that an exemption or rate entry which does not distinguish between bulk drugs and other drugs or medicines applies without such distinction.
• Laurus Labs Ltd., 2018 (13) G.S.T.L. 472 (A.A.R.-GST) — considered as an advance ruling taking the view that “drugs” includes “bulk drugs”.
• Biocon Ltd., 2020 (43) G.S.T.L. 281 (App. A.A.R.-GST-Kar.) — considered as an advance ruling taking the view that “drugs” includes “bulk drugs”.
• M/s Cipla Limited, Ruling No. CAAR/Mum/ARC/161,162/2025-26 dated 17.03.2026 — considered as a directly applicable advance ruling holding that bulk drugs/APIs imported for manufacture, testing, clinical trials, bioavailability or bioequivalence studies qualify as “All Drugs” under Serial No. 226, subject to the NIL-rated exclusion.
• Commissioner of Customs (Import), Mumbai v. M/s. Dilip Kumar and Company & Ors., 2018 (361) E.L.T. 577 (S.C.) — considered on the interpretation of exemption notifications and distinguished on the basis that the present IGST rate notification was treated as a taxing notification rather than an exemption notification.

FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI

Mankind Pharma Limited, 208, Okhla Industrial Estate, Phase-III, South Delhi, New Delhi, Delhi, India , 110020 having IEC No. 0593044312 and PAN- AAACM9401C (the applicant, in short) filed the instant applications in Form CAAR-1 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short) for seeking advance ruling. The complete applications were received in the Secretariat of the CAAR, New Delhi on 04.05.2026 along with enclosures in terms of Section 28-H(I) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’).

1.1. The applicant’s submissions are as given below:-

1.2. M/s Mankind Pharma Limited (hereinafter referred to as the “Applicant”) is a pharmaceutical company incorporated in 03.07.1991. The Applicant is a leading manufacturer and supplier of pharmaceutical products.

1.3. In connection with its business, the Applicant purchases and imports a wide range of Bulk Drugs after obtaining the requisite licence. The Bulk Drugs so imported are Active Pharmaceutical Ingredients (APIs). These imported ingredients are used for the manufacture of formulations i.e dosage form of drug and occasionally for testing, clinical research and Bioequivalence study. These imported ingredients, which are active ingredients for medicines, are hereinafter collectively referred to as “bulk drugs/API”.

1.4. Bulk drugs/API are classified under Chapter 28 or Chapter 29 as they are organic and inorganic chemicals. The present application pertains to determination of IGST payable on the import of these bulk drugs/API. The relevant portion from the of the IGST Rate Notification (at SI. No. 226 of Notification No. 9/2025-Integrated Tax (Rate) dated 17th September, 2025) is extracted below:

Si. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
226.	30 or any Chapter	All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated   Tax    (Rate)   dated17th September, 2025]

1.5. SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025 is extracted below:

Si. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
113.	30 or any Chapter	Drugs or medicines listed in Annexure I

1.6. The above is the entry applicable for IGST at NIL rate. The products for which the present ruling is sought are not covered under Annexure I, therefore the same is not applicable in the present case.

1.7. The bulk drugs/API in question are imported after procuring the following licenses under the Drugs and Cosmetics Act, 1940:

Form No. / License No.	Title of License Issued	Illustrative Copy enclosed herewith
Form 10	License to import drugs (excluding those specified in Schedule X) to the Drugs and Cosmetics Rules, 1945	Licence No. IL/BD-014950 BD-972 enclosed
Form 11	Licence to import drugs for the purposes of examination, test or analysis	Licence No. SW/OD/11/2026/0000019082 enclosed
Form CT- 17	License to Import New Drug or Investigational New Drug for the purpose of Clinical Trials or Bioavailability or Bioequivalence study or for examination, test and analysis	Licence No. SW/ND/CT-17/2025/000008865 enclosed

1.8. The Applicant has been importing the Bulk Drugs/API in question under Form 10, 11 & CT-17 licence and has been discharging IGST @18%. However, the Applicant is of the view that IGST is payable correctly @5% only. Accordingly, the present application is being made.

APPLICANT’S ELIGIBLITY FOR ADVANCE RULING

1.9. In order to file an application before the Authority for Advance Ruling, the Applicant must satisfy the conditions prescribed under the Customs Act, 1962 (hereinafter referred to as ‘Customs Act’).

1.10. Provisions relating to Advance Ruling are prescribed under Chapter VB of the Customs Act.

Clause (c) of Section 28E of the Customs Act defines an “Applicant” as:

In this chapter, unless the context otherwise requires,

(c) “applicant” means-

holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

1.11. The Applicant herein has been granted a valid Importer-Exporter Code Number (IEC) under Section 7 of the Foreign Trade (Development and Regulation) Act, 1992. The same is 0593044312.

1.12. Clause (b) of Section 28E of the Customs Act defines ‘advance ruling’ as:

(b) “advance ruling” means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation;

1.13. The Advance Ruling sought is towards goods to be imported in future. The questions on which an application for an advance ruling can be made have been provided under Section 28H of the Customs Act. As per the said Section 28H (2) of the Customs Act, an applicant may make an application for advance ruling in respect of questions relating to:

(a) applicability of notification issued in respect of duties under the Customs Act, 1962,
the Customs Tariff Act, 1975 and any duty char,geable under any other law for the tinze being in force in the same manner as duty of Customs leviable under the Customs Act;

1.14. The present application is being made by the Applicant to confirm the levy of IGST which is levied on the imported goods under Section 3 (7) of the Customs Tariff Act, 1975.

Non Applicability of Bar under Section 281

1.15. Section 281 of the Customs Act, 1962 is set out below:

“SECTION 28-I. Procedure on receipt of application. — (1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the [Principal Commissioner of Customs or Commissioner of Customs] and, if necessary, call upon him to firrnish the relevant records :

Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the [Principal Commissioner of Customs or Commissioner of Customs].

(2)The Authority may, after examining the application and the records called for, by order, either allow or reject the application :

Provided that the Authority shall not allow the application [ *        *       *] where the question
raised in the application is –

a. already pending in the applicant’s case before any officer of customs, the Appellate Tribunal, or any Court;

b. the same as in a matter already decided by the Appellate Tribunal or any Court : Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard :

Provided also that where the application is rejected, reasons for such rejection shall be given in the order.”

1.16. Thus, the conditions set out in Section 281 are satisfied as:

a. the question raised in the present application regarding the rate of IGST for import of bulk drugs is not pending in the Applicant’s own case before any officer of customs, the Appellate Tribunal, or any Court;

b. the question raised in the present application regarding the rate of IGST for import of bulk drugs is not a matter already decided by the Appellate Tribunal or any Court

1.17. Therefore, it flows that in the present case, the Applicant satisfies all the criteria required for filing the application for advance ruling, namely:

a. The Applicant has been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act, 1992;

b. The Applicant is filing the Application in respect of goods prior to their importation into India;

c. The application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act, 1962; and

d. The application is not barred under Section 281 of the Customs Act, 1962.

QUESTION OF LEVY OF IGST ON THE IMPORT OF BULK DRUGS/API

1.18. The levy of IGST on imports into India follows from Section 3 (7) of the Customs Tariff Act, 1975. The relevant portion is extracted below:

“SECTION 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges. (7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8) ⁸[or sub-section (8A), as the case may be.”

1.19. IGST Rates are notified vide Notification No. 9/2025-Integrated Tax (Rate). The relevant portion of Schedule I (5%) to the IGST Rate Notification is extracted below:

SI. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
226.	30 or any Chapter	All Drugs and medicines including their salts and estersanddiagnostic  test kits;   formulations manufactured from bulk drugs [other than those specified at nil at S. No.113 of notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025]

1.20. SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025 is extracted below:

SI. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
113.	30 or any Chapter	Drugs or medicines listed in Annexure I

1.21. As already mentioned above the products for which the present ruling is sought are not covered under Annexure I, therefore the same is not applicable in the present case.

1.22. The Applicant submits that on import of bulk drugs/API, IGST @ 5% alone is applicable under the above extracted SI. No. 226 of Schedule I of Notification No. 9/2025-Integrated Tax (Rate).

1.23. For 5% IGST to be applicable, the imports should satisfy the following conditions:

i. Be classified under Chapter 30 or any other Chapter

ii. Be Drugs or medicines ; and

iii. Not be covered under Sl. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025

1.24. The bulk drugs/API in question satisfy all the above conditions. The fulfilment of each Condition is dealt with in detail in Grounds C to E below.

1.25. Condition i: The entry is applicable to goods irrespective of the classification adopted for the goods under any chapter. Chapter 30 is merely indicative and goods falling under any chapter can fall under this entry.

1.25.1 As per SI. No. 226 of the Schedule I, drugs and medicines classified under any Chapter fall under its ambit and are subject to levy of IGST @5%. The bulk drugs/API in question are generally classified under Chapter 28 or 29. It is clear that these bulk drugs/API, even if not classified under Chapter 30, still fall under the ambit of the entry as it is applicable to drugs and medicines of any Chapter. Therefore, the first condition is met.

1.26. Condition       From a combined reading of the definitions of bulk drugs and drugs under various laws and literature, it is clear that the term “All Drugs and medicines” is inclusive of bulk drugs and hence, levy of IGST in terms of Si. No. 226 of Schedule Ito the Notification shall apply to bulk drugs.

1.26.1. It is submitted that the term “all drugs and medicines” is not defined under the Notification or under the Customs Tariff. Considering the nature of the products in question, the same should be interpreted by considering the relevant provisions under the Drugs Laws of India. Reference is made to the definitions under the Drugs (Price Control) Order, 2013. The relevant extracts are as below:

“(b) “active pharmaceutical ingredients or bulk drug” means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation;

***

“(I) “formulation” means a medicine processed out of or containing one or nzore drugs with or without use of any pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease and, but shall not include

i. any medicine included in any bonafide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines;

ii. any medicine included in the Homeopathic system of medicine; and

iii. any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply; “

1.26.2. Section 3 of the Drugs and Cosmetics Act, 1940 provides the definition of ‘drugs’. The relevant portion is extracted below:

(b) “drug” includes–

(1) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes,

ii. such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;

iii. all substances intended for use as components of a drug including empty gelatin capsules; and

iv. such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board;

1.26.3. Thus, from a combined reading of the definition of bulk drugs under the Drugs (Price Control) Order, 2013 and the definition of drugs under the Drugs and Cosmetics Act, 1940, it is clear that that “drugs” includes substances used as components of a drug i.e. as an ingredient of a drug. When even a gelatin capsule is treated as a drug, it goes without saying that the API on account of which the final medicine is effective, too is nothing but a drug.

1.26.4. Furthermore, under the Drugs and Cosmetics Act and Rules, for import of a bulk drug, the importer needs to procedure numerous licenses and registrations which are applicable to drugs. That is, for purpose of licensing under the Drugs laws of India, bulk drugs are treated as drugs only. This is evident from the following licenses/ registrations issued to the Applicant for import of bulk drugs/API:

Form No and Licence/Registration Issued under Section / Provision	Relevant extracts from the Section/Provision
Form 10 (Rule 23 of the Drugs and Cosmetic Rules, 1945, as amended)	Rule 23 -Import licences.—An import licence in Form 10 shall be required for [import of drugs], excluding those specified in Schedule X, and an import licence in Form 10A shall be required for the import of drugs specified in Schedule X.]
Form 11 (Rule 33 of the Drugs and Cosmetic Rules, 1945)	Rule 33 – Import of drugs for examination, test or analysis.—Small quantities of drugs the import of which is otherwise prohibited under section 10 of the Act may be imported for the purpose of examination, test or analysis subject to the following conditions: – (a) no drug shall be imported for such purpose except under a licence in Form 11; ***
Form CT -17 (Rule 68 to 72 of the New Drugs and Clinical Trials Rules, 2019)	Rule 68 – Grant of licence for import of new drug or investigational new drug for clinical trial or bioavailability or bioequivalence study or for examination, test and analysis.

1.26.5. There is no definition of “bulk drug” in the Drugs and Cosmetics Act, 1940. The fact that the Drugs and Cosmetics Act, 1940 does not differently define bulk drugs/API, and does not make a distinction between bulk drugs/API and drugs for final consumption, entails that the two are treated at par only.

1.26.6. CBIC has reiterated time and again that when it comes to import of Drugs and Medicines, the provisions of the Drugs & Cosmetics Law and the Licenses/Registrations issued by CDSCO must be considered even for interpretating Tax provisions. This is evident from the following Circulars/Communications issued by CDSCO:

a. Letter F.No. 450/8/2007-Cus. IV, dated 22-1-2007

b. Instruction F.No. 450/11/2011-Cus. IV, dated 25-2-2011

c. Circular No. 10/2016-Cus., dated 15-3-2016

d. Circular No. 28/2016-Cus., dated 14-6-2016

e. B.I. & C. Circular No. 44/2018-Cus., dated 13-11-2018

1.26.7. Thus, as the bulk drugs/API in question are “Drugs” under the Drugs and Cosmetics Laws of India, they must be considered as “drugs” even for purposes of IGST Notification.

Even in common parlance, bulks drugs are “Drugs”

1.26.8. Even as per medical literature, bulk drugs are considered to be drugs only. Reference is also made to the definition of ‘drug’ and ‘medicine’ under medical dictionaries. The relevant portions are extracted below:

Dictionary	Definitions
American Heritage Medical Dictionary	· drug (drug) n. 1. A substance used in the diagnosis, treatment, or prevention of a disease or as a component of a medication. *** · Medicine *** · 4. An agent, such as a drug, used to treat disease or injury.”
Dictionary of Medical Terms (fourth edition)	· drug. a natural or synthetic chemical substance which is used in medicine and affects the way in which organs or tissues function · medicine. a preparation taken to treat a disease or condition, especially one in liquid form
Stedman’s Medical Dictionary:	· drug. I. Any substance employed as a medicine in the treatment of disease.

1.26.9. Thus, it is clear that the term “drugs” generally includes all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings; and also include substances intended for use as components of a drug. Therefore, it is submitted that bulk drugs/API should also fall under the ambit of drugs only.

Even as per judicial precedents, the term “drugs” is inclusive of bulk drugs

1.26.10. It is submitted that there is plethora of decisions that hold that the term “drugs” is inclusive of “bulk drugs”. The Tribunal in Burroughs Wellcome (I) Ltd vs Commissioner of C. Ex. and Cus., Mumbai 12007 (216) E.L.T. 522 (Tri-Mum)J, in the context of exemption benefit for life saving drugs, held that the phrase can include bulk drugs as well. The Tribunal observed that the term life saving drugs was not defined in the exemption notification, but upon the term of “drugs” under the Drugs (Prices Control) Order included “bulk drugs”, and accordingly the same was applied to the term life saving drugs.

1.26.11. The definition of “drugs” under the erstwhile Drugs (Prices Control) Order, 1995 was as below:

“(I) “drug” includes

ii. all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis treatment, mitigation, or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;

iii. such substances, intended to affect the structure or any function of the human or animal body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Government by notification in the Official Gazette; and

iii. bulk drugs and formulations; “

1.26.12. Relying on the above-mentioned decision and the definition of drugs (extracted above), the Tribunal in Cipla Ltd. v. Commissioner of Customs, Chennai [2007 (218) E.L. T. 547 (Tri. – Chennai)J held that it is beyond doubt that bulk drugs are also drugs, and that they are defined as such under the Drugs (Prices Control) Order, 1995 also. For this purpose, the Tribunal referred to and relied upon the decision of Tribunal, Mumbai Bench, in the case of Burroughs Welcome (India) Limited, referred above. Relevant portion of the above decision reads as under:

“4. …M/s. Burroughs Wellcome (I) Ltd. had imported Polymyxin B Sulphate and used the same along with some other ingredients in the manufacture of Neosporin. M/s. Pfizer Ltd. had imported Cefoperazone Sodium and used the same for manufacture of Cefoperazone Sodium Injections. The issue before the Tribunal was whether the above parties were eligible for the benefit of exemption from payment of CVD on the items imported by them, under Sl. No. 43 (A) of Notification No. 11/97-CE and under the corresponding entries of successor Notifications. It was not in dispute that the imported items figured in List 2 appended to Sl. No. 43 (A) of the above Notification. While the Revenue classified the goods as ‘bulk drugs’ under Sl. No. 43(B), the assessees classified them as life saving drugs under SI. No. 43 (A). The Tribunal accepted the assessees contention and held that the drugs imported by them were to be categorized under Si. No. 43(A) inasmuch as they found mention in List 2. It was further held that, as Sl. No. 43 (A) was more beneficial than 43 (B), the assessee was not precluded from claiming such benefit at a later stage. It is settled law that, where two exemption Notifications are applicable to a given goods which is otherwise chargeable to duty, the assessee is entitled to avail the benefit of that Notification which is more beneficial vide Indian Oil Corporation Ltd. v. CCE – 1991 (53) 347 (Tribunal), CCE v. Indian Petrochemicals – 1997 (92) E.L.T. 13 (S. C.) and H.C.L. Ltd. v. CC – 2001 (130) E.L.T. 405 (S.C.). Applying the same principle, we hold the view that, if two entries in an Exemption Notification are applicable to a given goods, the assessee can legitimately claim under the more advantageous entry. Therefore, we are inclined to follow, with approval, the view taken by the co-ordinate Bench in the case of Burroughs Wellcome (I) Ltd .& Pfizer Ltd.

5. In the instant case, admittedly, the ‘bulk drugs’ imported by the appellants were specifically mentioned in List 3 appended to Si. No. 80(A) of Customs Notification No. 21/02 and are liable to be considered as ‘drugs’ mentioned at 80(A). It is beyond doubt that ‘bulk drugs’ are also ‘drugs.’ They are so defined under the Drugs (Prices Control) Order, 1995 also. The imported goods, which are specified in List 3, must fall within the coverage of ‘drugs specified in List 3’ and consequently the benefit of Sl. No. 80(A) would be admissible to them in relation to BCD. It would follow that, insofar as CVD is concerned, the benefit of Sl. No. 47(A) of the Central Excise Notification would be available to the goods. We have taken this view upon strict interpretation of the language used in the description of goods under the relevant entries of the Notification, in terms of the Apex Court’s ruling in Gujarat State Fertilisers Co. v. CCE – 1997 (91) E.L.T. 3 (S. C.) and other cases cited by learned DR. In the result, all the appeals filed against the appellate Commissioner’s order on merits are bound to succeed.

1.26.13. The aforesaid decisions were followed by the Tribunal in Astrix Laboratories Ltd. v. CCE & Cus., Hyderabad-I [2009 (233) E.L.T. 372 (Tri. – Bang)] [Refer Para 5, 5.1 and 5.2].

1.26.14. Though the definition of “drug” does not exist under the present Drugs (Prices Control) Order 2013, the definition of “bulk drugs” under the Drugs (Prices Control) Order 2013, and the definition of “drugs” under the Drugs and Cosmetics Act, 1940 should be read conjointly. Reliance is placed on Clause (2) of the Drugs (Prices Control) Order 2013, as extracted below:

“(2) All other words and expressions used herein and not defined but defined in the Act or the Drugs and Cosmetics Act, 1940 (23 of 1940) shall have the meanings respectively assigned to them in the said Acts.”

1.26.15. Thus, in the absence of the definition of “drugs” under the current Drugs (Prices Control) Order 2013, reference is made to the Drugs and Cosmetics Act, 1940. As submitted in the foregoing paragraphs, from a combined reading of the present definitions under the Drugs (Prices Control) Order, 2013 and the Drugs and Cosmetics Act, 1940, it is clear that bulk drugs/API are to be treated as drugs only.

1.26.16. Further, in the present case when the notification also does not define drugs or bulk drugs/API, and nor does it make a specific distinction between the two, it is submitted that the interpretation that bulk drugs/API are drugs should be adopted. Reliance in this regard is placed on the Tribunal decision in Aurobindo Pharma Ltd. v. CCE, Hyderabad-I 12009 (247) E.L.T. 206 (TH. – Bang.)J, wherein it was held that when the notification does not distinguish between bulk drugs, drugs or medicines, then exemption is to be granted is to bulk drugs/API as well.

1.26.17. Further, reference is also made to the recent decision of the Hon’ble CESTAT, Ahmedabad in the case of Shri Baser v. CCEx & St — 2024 (12) TMI 270 wherein reliance was placed on the decisions of Cipla Ltd (supra) and Hetero Drugs Ltd. v. CC (Airport) — 2017 (9) TMI 1275-CESTAT Chennai to hold that drugs and bulk drugs are one and the same. Thus, the exemption benefit under SI. No. 108(A) of Notification No. 12/2012-Cus dated 17.03.2012 was extended to the alleged bulk drugs imported by the Company. The relevant portion of the said decision is extracted hereunder:

“4.1 On examination of the case on merit of M/s Sterlling Biotech Ltd, we find that the dispute is on the exemption entry of the goods in question whether the same would fall under description (A) or (B) of Sr. No. 108 of Notification No. 12/2012-CUS. We find that description (A) grants exemption to drugs and medicines specified in the list No. 3 and 4 of Customs exemption Notification 12/2012-Cus and description (B) provides exemption to bulk drugs used in the manufacture of goods mentioned at (A). The point of dispute is only that whether the drug mentioned at description (A) covers the bulk drugs manufactured by the appellant namely Idarubicin hydrochloric acid, Doxorubicin hydrochloric acid, Daunorubicin hydrochloric acid, Epirubicin hydrochloric acid, Zoledronic Acid. This issue has been considered in various judgments which are given below:-

a. In the case of Cipla Ltd (Supra), Tribunal Chennai has given the following findings:-

b. In the case of Hetero Drugs Ltd (Supra), this Tribunal has considering the same issue whether the bulk drug and drug is same or otherwise. The relevant part of the order is reproduced below:-

….

From the above judgments, it is clear that drugs and bulk drugs are one and the same.  Therefore, the company M/s. Sterling Biotech Ltd was entitled for exemption  Notification 12/2012-CUS entry Sr. No. 108 description (A) which does not involve any  condition such as following the procedure of Central Excise (removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. Therefore,  entire basis of the department that such procedure was not followed is not relevant. Since, the duty demand itself is not prima facie sustainable on the company, there is no question of imposing personal penalty on the employee of M/s. Sterlling Biotech Ltd. who is the appellant herein.”

1.26.18. Thus, it is submitted that there is enough jurisprudence which treats the term “drugs” to include bulk drugs/API.

1.26.19. In fact, the identical issue has recently been considered by this Hon’ble Authority, and a favourable Ruling has been issued to the importer Cipla, after relying on all the aforementioned decisions. This is explained below.

Customs Advance Ruling issued to CIPLA on identical issue

1.26.20. Ruling CAAR/Mum/ARC/161,162/2025-26 dated 17.03.2026 was issued to Cipla Limited, by CAAR, Mumbai. This Ruling squarely covers the issue at hand and in the context of Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 has clearly held that benefit of 5% IGST under Sl. No. 226 of the Notification is available to Bulk drugs/API imported into India as well. The Ruling covers import for further manufacture, as well as for clinical trials, and holds that in both cases IGST applicable on import will be 5% only. The relevant extract from the Ruling is as below:

“7.11 To sum up:

i. The definition of “drug” under Section 3(b) of the Drugs and Cosmetics Act, 1940 is wide and inclusive in nature, and expressly covers substances intended for use as components of a drug. Active Pharmaceutical Ingredients (APIs) / bulk drugs, being pharmaceutical substances used as such or as ingredients in formulations, squarely fall within the ambit of the said definition.

ii. On a conjoint reading of the definition of “active pharmaceutical ingredient / bulk drug” under the Drugs (Price Control) Order, 2013 with the definition of “drug” under Section 3(b) of the Drugs and Cosmetics Act, 1940, and the definitions of “bioavailability study”, “bioequivalence study” and “clinical trial” under the New Drugs and Clinical Trials Rules, 2019, it is evident that APIs, even when imported for testing, bioequivalence, bioavailability or clinical research purposes, retain their statutory character as “drugs” and are not excluded merely on account of their stage or purpose of use.

iii. APIs are regulated and licensed as “drugs” by the Central Drugs Standard Control Organization (CDSCO) under the statutory framework of the Drugs and Cosmetics Act, 1940 and the New Drugs and Clinical Trials Rules, 2019, including for import under Forms 10 and CT-17. Their regulatory recognition as drugs reinforces their statutory character.

iv. Judicial precedents and advance ruling authorities have consistently held that, in the absence of any restrictive language, the expression “drugs” includes “bulk drugs”, and no artificial distinction can be introduced between the two where the notification does not provide so.

v. The wording of SI. No. 226 of Schedule Ito Notification No. 9/2025-Integrated Tax (Rate) is broad and description-based, covering “All drugs and medicines … ” without restriction to finished formulations, and further extends to goods falling under “Chapter 30 or any Chapter”, thereby encompassing APIs classifiable under Chapters 28 and 29.

vi. No. 226 is a specific entry describing goods by their essential character as “drugs”, and therefore prevails over the general entries covering “all inorganic chemicals” or “all organic chemicals” under Chapters 28 and 29.

vii. The character of APIs as “drugs” does not change merely because they are imported for clinical trials, bioavailability or bioequivalence studies. Such studies are integral to the drug approval process and do not alter the intrinsic statutory identity of the goods.

8. In view of the above facts and circumstances of the case, I reach to conclusion that:

8.1 Bulk drugs/Active Pharmaceutical Ingredients (APIs), whether imported for manufacture of formulations or for testing, clinical trials, bioavailability or bioequivalence studies, qualib as “All Drugs” under SI. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided they are not covered under SI. No. 113 of Notification No.  10/2025-Integrated Tax (Rate).

I rule accordingly.”

Restricting the entry to cover only drugs and medicines for final consumption would render the entry to be redundant

1.26.21. From a perusal of the entry, it is clear that it covers the following: (a) all drugs and medicines; (b) salts and esters of such drugs and medicines; (c) diagnostic test kits; and (d) formulations manufactured from bulk drugs/API.

1.26.22. The usage of the semi colon (;) between “all drugs and medicines including their salts and esters and diagnostic test kits” and “formulations manufactured from bulk drugs” indicated that these are two separate items covered under the entry.

1.26.23. Reliance is placed on the Tribunal decision of Hari and Co. v. Collector of Customs, 1991 (53) E.L.T. 336, wherein the semi-colon was interpreted to separate the former group from the latter group. The decision was maintained by the, Supreme Court in Collector of Customs v. Hari and Co., 1997 (96) E.L.T. 503 (S.C.). Reference is also made to the Tribunal’s decision in Heildelberg Cement (India) Ltd. v. Commr. of C. Ex., Nagpur & Raigad, 2015 (315) E.L.T. 53 (Tri. – Mumbat), wherein it was held clauses separated by a semi-colon are to be read disjunctively and not conjunctively.

1.26.24. From the fact that (d) “formulations manufactured from bulk drugs”, are mentioned separately, it can be inferred that (a) “all drugs and medicines” intends to cover ‘bulk drugs’ only, while (d) covers the formulations, drugs and medicines which are manufactured from such bulk drugs/API. If (a) and (d) were intended to mean the same, i.e. that only drugs and medicines for final consumption are covered under the entry, then it would render (a) to be redundant, as (d) already covers such final formulations (often classified under Chapter 30).

1.26.25. Furthermore, all ready to use drugs are covered under Chapter 30 of the Customs Tariff. The fact that the Notification entry covers goods falling under “chapter 30 or any other chapter” entails that it is not restricted to formulations for final consumption, as those would necessarily be classified under chapter 30. Thus, drugs under any other chapter are also covered under the entry.

1.26.26. It is a settled principal of law that no such interpretation shall be adopted that renders an entry redundant. Reliance in this regard is placed on the Hon’ble Supreme Court in Bansal Wire Industries Ltd. v. State of U.P., 2011 (269) E.L.T. 145 (S.C.). The relevant portion is extracted below:

“It is a settled principle of law that the words used in the section, rule or notification should not be rendered redundant and should be given effect to. It is also one of the cardinal principles of interpretation of any statue that some meaning must be given to the words used in the section. Expression “Wire rods and wires” which is mentioned in item no. (xv) would not and cannot cover the expression “tools, alloy and special steels” of entry no. (ix) nor it would refer to the expression “Iron and Steel” as each item used in entry nos. (ix) and (xv) are independent items not depending on each other at all as has been held in the case of Pyare Lal Mehrotra (supra).”

1.26.27. The Hon’ble High Court in TVL. Transtonnelstroy Afcons Joint Venture v. UOI, 2020 (43) G.S. T.L. 433 (Mad.) (para 41), it was every word of the statute should be given meaning and one should not construe a statute in such a way as to render certain words redundant.

1.26.28. Reliance is also placed on the decision of Printers (Mysore) Ltd. Vs. Asstt. Commercial Tax Officer – 1994 (2) SCC 434. The relevant extract of the said judgement is as follows:

“Even apart from the opening words in Section 2 referred to above, it is well settled that where the context does not permit or where it would lead to absurd or unintended result, the definition of an expression need not be mechanically applied. [Vide T.M. Kanniyan v. Income Tax Officer, Pondicherry and Anr. 1968 20 S.C.R. 103, Pushpa Devi and Ors. v. Milkhi Ram (Dead) by his L. Rs. MANU/SC/0149/1990 : [1990]1SCR278 [para 14] and Commissioner of Income Tax, Bangalore v. J.H. Gotla, Yadagiri MANU/SC/0126/1985: [1985] 156ITR323(SC) .”

1.26.29. Therefore, the entry should be interpreted in such a manner that it is not rendered redundant. Accordingly, the term “drugs” should also cover bulk drugs/API.

1.26.30. In fact, prior to Notification No. 9/2025 (Integrated Tax Rate), the earlier Notification was Notification No. 1/2017 (Integrated Tax Rate). Sl. No. 180 Schedule I of the Notification was akin to the present Notification entry. The same is extracted below:

S. No.	Chapter/ Heading/   Sub- heading/ Tariff item	Description of Goods
180.	[30 or any chapter]	Drugs or medicines including their salts nd esters and  diagnostic test kits,  specified  in List1 appended to this Schedule

1.26.31. During the prevalence of the above Notification, as long as the API imported was mentioned in the List 1, IGST of 5% alone was levied. With the new Notification No. 9/2015, the entry almost remains the same, and just the List has been removed. Thus, if APIs mentioned in List 1 were considered to be drugs prior to September, even post the removal of List they will continue to be treated as drugs. In fact, by removal of a restrictive list, the Notification has been expanded and liberalised. Thus, APIs too are undoubtedly drugs.

API for ‘testing, clinical research and bioequivalence study’ also fall under the ambit of ‘drugs’ and are leviable with IGST @5%

1.26.32. The relevant definitions from the Drugs and Cosmetic Rules, 1945 are extracted below: b) “drug” includes–

i. all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;]

ii. such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;

iii. all substances intended for use as components of a drug including empty gelatin capsules; and

iv. such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board;

1.26.33. Prior to 2019, the definitions of `bioavailability study’bioequivalence study’ and ‘clinical trials’ were also under the Drugs and Cosmetics Rules, 1945. However, with the introduction of the New Drugs and Clinical Trials Rules, 2019, the definitions were omitted from the Drugs and Cosmetics Rules 1945. The relevant definitions from the New Drugs and Clinical Trials Rules, 2019 are extracted below:

“2. Definitions.—(1) In these rules, unless the context otherwise requires,—

*le*

(e) “bioavailability study” means a study to assess the rate and extent to which the drug is absorbed from a pharmaceutical formulation and becomes available in the systemic circulation or availability of the drug at the site of action;

(9 “bioequivalence study” means a study to establish the absence of a statistically significant difference in the rate and extent of absorption of an active ingredient from a pharmaceutical formulation in comparison to the reference formulation having the same active ingredient when administered in the same molar dose under similar conditions

***

W “clinical trial” in relation to a new drug or investigational new drug means any systematic study of such new drug or investigational new drug in human subjects to generate data for discovering or verging its,—

i. clinical or;

ii. pharmacological including pharmacodynainics, pharmacokinetics or;

iii. adverse effects, with the objective of determining the safety, efficacy or tolerance of such new drug or investigational new drug; “

1.26.34. It is submitted that from a combined reading of the definitions of ‘drugs’, `bioavailability study’, `bioequivalence study’ and ‘clinical trials’, it is clear that drugs covers even those products which are for bioavailability or bioequivalence studies, or clinical trials.

1.26.35. It is submitted that the definitions of bioavailability study, bioequivalence studies and clinical trials would be rendered redundant if the definition of ‘drugs’ itself was construed to not cover the drugs which are intended for such purposes.

1.26.36. Thus, as long as the product in question is regarded as “Drug” by the CDSCO, irrespective of whether it is for manufacture of medicines, or for clinical trials, it must be considered to be eligible to avail benefit of Sl. No. 226 of Notification No. ⁹/₂025-Integrated Tax (Rate) dated 17.09.2025.

The bulk drugs/API classified under Chapter 28 or Chapter 29 are still rightly subject to levy under Sl. No. 226 of Schedule I, and not under Sl. No. 35 or 36 of Schedule II to the IGST Rate Notification.  In case of any ambiguity in the IGST Rate Notification, it should be interpreted in favour of the taxpayer

1.26.37. Sl. No. 35 and 36 of Schedule II to the IGST Rate Notification cover goods of Chapter 28 and 29 respectively. The relevant portion of the notification is extracted below:

SI. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
35.	28	All inorganic chemicals [other than those specified in notification No.10/2025- Central Tax (Rate) dated 17th September 2025 or other Schedules of this notification]
36	29	All organic chemicals other than gibberellic acid

1.26.38. Sl. No. 226 of Schedule Ito the IGST Rate Notification is extracted again for reference:

Sl. No.	Chapter/Heading/Sub-heading/Tariff item	Description of goods
226.	30 or any Chapter	All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025]

1.26.39. Furthermore, it is submitted that SI. No. 226 of Schedule I is a more specific entry as opposed to the generic entry of SI. No. 35 or 36 of Schedule II, and thus the specific entry would prevail.

1.26.40. It is submitted that in case of any ambiguity in the interpretation of the IGST Rate Notification, such as various applicable entries, it should be interpreted in favour of the taxpayer. Reliance in this regard is placed on the Tribunal decision of Samsung India Electronics Pvt. Ltd. v. Principal Commissioner of Customs, New Delhi, 2025 (7) TMI 229 — CESTAT New Delhi. The relevant portion of the decision is extracted below:

“The Principal Commissioner, however, in paragraph 43 of the impugned order considered the IGST Rate Notification as an Exemption Notification and observed that the benefit of the IGST Rate Notification should be interpreted strictly and the burden to prove applicability would rest upon the tax payer and that the benefit of any ambiguity in the Notification must be interpreted in favour of the Revenue. The Principal Commissioner committed an error in assuming that the IGST Rate Notification is an Exemption Notification. The IGST Rate Notification is at rate Notification and, therefore, a Taxing Notification. It has to be strictly construed and any ambiguity has to be interpreted in favour of the tax payer and against the Revenue as was observed by the Supreme Court in Safari Retreats.”

1.26.41. From the above it is clear that a taxing notification, which prescribes a levy and is not prescribing an exemption, is to be interpreted in favour of the taxpayer. Reliance is also placed on the decision of the Supreme Court in Commissioner of Cus. (Import), Mumbai v. Dilip Kumar & Company, 2018 (361) E.L.T. 577 (S.C.), whereby it established the principle that in case of an ambiguity in a taxing statute and where two interpretations can be adopted, then the benefit of interpretation is to be given to the assessee. It is only in the case of an exemption notification that it should be interpreted in favour of the Revenue. IGST Notification is a taxing statute and not an exemption notification. Thus, even on applying the decision of Dilip Kumar the interpretation should be in favour of the Applicant.

GST Advance Rulings on similar issue

1.26.42. The Applicant would like to submit that prior to the Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, there was Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 effective from 01.07.2017 to 21.09.2025. The two SI. Nos. therein which were relevant to Drugs are extracted below:

SI. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
180.	30 or any Chapter	Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 1 appended to this Schedule.
1.	30	Formulations manufactured from the bulk drugs specified in List 2 appended to this Schedule.

1.26.43. With regard to the above, to the best of the Applicant’s knowledge, there are 4 Advance Rulings dealing with the question whether “Drugs” in SI. No. 180 above includes “bulk drugs”. 3 of them are in favour of the Applicant and 2 are against. The same are analysed below:

1.26.44. The above Rulings are not pertaining to the present legal position. Thus, they are not strictly applicable to the present Application. However, in the interest of completion of information, the above Rulings have been highlighted to the Hon’ble Authority.

1.26.45. All the aforesaid GST Rulings have been considered by Hon’ble CAAR Mumbai prior to issuance of Ruling dated 17.03.2026 to Cipla Limited. The Authority has clearly relied on Rulings of Laurus and Biocon. The Authority has distinguished the Rulings of Sterling Biotech and Altis on the ground that the complete definition of “drugs” was not considered by these Rulings.

1.26.46. Thus, the above recent developments support the Applicant’s present application in support of payment of 5% GST on imports of Bulk Drugs/API.

1.27.  Condition    Not be covered under SL No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025.

1.27.1. Sl. No. 113 to Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025 covers “Drugs or medicines listed in Annexure I”. As submitted in the foregoing paragraphs, the products imported by the Applicant do not figure in SI. No. 113, by virtue of not falling under Annexure I to that notification. Therefore, condition iii is also met.

1.27.2. In light of the above, it is clear that bulk drugs/API used for manufacture of formulations should be subject to levy @5% in terms of S. No. 226 of Schedule Ito the IGST Rate Notification and no other entry.

ISSUES REQUIRING ADVANCE RULING AND APPLICANT’S UNDERSTANDING

In light of the aforementioned submissions, the Applicant’s interpretation of the questions raised will be as under:

Question 1: Whether IGST is leviable @5% for the import of bulk drugs/API in terms of Sl. No. 226 of Schedule I of the IGST Rate Notification?

Applicant’s Understanding:  Yes

Question 2: If not, then what is the correct rate of IGST leviable for the import of bulk drugs/API?

Applicant’s Understanding:  Not applicable.

2. Comments of the Port Commissionerate:

2.1. As per the provision of CAAR Regulation, 2021, the complete applications of the applicant were provided to the concerned Custom Commissionerates, and requested to furnish the requisite comments in the instant matter.

2.2. The port authorities i.e The Principal Commissioner of Customs, ACC (Import), New Custom House, Near I.G.I Airport, New Delhi-110037vide their letter dated 22.07.2026 and The Commissioner of Customs(NS-1), JNCH, Nhava Sheva, Raigad- 400 707 vide their letter dated 14.08.2026 furnished its comments in respect of the instant application no. 20/2026 and 21/2026 respectively, which are reproduced as under:-

2.2.1. Eligibility of the applicant, in terms of Section 28E(c) of the Customs Act, 1962 to seek such advance ruling:

Yes, M/s Mankind Pharma Limited is a valid applicant within the meaning of Section 28E(c) (i) of the Customs Act, 1962. having IEC Code 0593044312.

2.2.2. Applicability of proviso (1) of section 28-1 (2) of the Customs Act. 1962 regarding the question raised in the application:

As per records available with this office, the question raised by the Applicant in the instant application is not, at present, pending in any proceeding in the Applicant’s own case before any officer of Customs, the Appellate Tribunal or any Court. nor has it already been decided in any such proceeding.

1.26.45. All the aforesaid GST Rulings have been considered by Hon’ble CAAR Mumbai prior to issuance of Ruling dated 17.03.2026 to Cipla Limited. The Authority has clearly relied on Rulings of Laurus and Biocon. The Authority has distinguished the Rulings of Sterling Biotech and Altis on the ground that the complete definition of “drugs” was not considered by these Rulings.

1.26.46. Thus, the above recent developments support the Applicant’s present application in support of payment of 5% GST on imports of Bulk Drugs/API.

1.27. Condition Not be covered under SL No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025.

1.27.1. Sl. No. 113 to Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025 covers “Drugs or medicines listed in Annexure I”. As submitted in the foregoing paragraphs, the products imported by the Applicant do not figure in SI. No. 113, by virtue of not falling under Annexure I to that notification. Therefore, condition iii is also met.

1.27.2. In light of the above, it is clear that bulk drugs/API used for manufacture of formulations should be subject to levy @5% in terms of S. No. 226 of Schedule Ito the IGST Rate Notification and no other entry.

ISSUES REQUIRING ADVANCE RULING AND APPLICANT’S UNDERSTANDING

In light of the aforementioned submissions, the Applicant’s interpretation of the questions raised will be as under:

Question 1: Whether IGST is leviable @5% for the import of bulk drugs/API in terms of Sl. No. 226 of Schedule I of the IGST Rate Notification?

Applicant’s Understanding: Yes

Question 2: If not, then what is the correct rate of IGST leviable for the import of bulk drugs/API?

Applicant’s Understanding: Not applicable.

2. Comments of the Port Commissionerate:

2.1. As per the provision of CAAR Regulation, 2021, the complete applications of the applicant were provided to the concerned Custom Commissionerates, and requested to furnish the requisite comments in the instant matter.

2.2. The port authorities i.e The Principal Commissioner of Customs, ACC (Import), New Custom House, Near I.G.I Airport, New Delhi-110037vide their letter dated 22.07.2026 and The Commissioner of Customs(NS-1), JNCH, Nhava Sheva, Raigad- 400 707 vide their letter dated 14.08.2026 furnished its comments in respect of the instant application no. 20/2026 and 21/2026 respectively, which are reproduced as under:-

2.2.1. Eligibility of the applicant, in terms of Section 28E(c) of the Customs Act, 1962 to seek such advance ruling:

Yes, M/s Mankind Pharma Limited is a valid applicant within the meaning of Section 28E(c) (i) of the Customs Act, 1962. having IEC Code 0593044312.

2.2.2. Applicability of proviso (1) of section 28-1 (2) of the Customs Act. 1962 regarding the question raised in the application:

As per records available with this office, the question raised by the Applicant in the instant application is not, at present, pending in any proceeding in the Applicant’s own case before any officer of Customs, the Appellate Tribunal or any Court. nor has it already been decided in any such proceeding.

2.2.3. Specify whether the claim of the applicant regarding the nature of activity, i.e. it is ongoing/proposed is correct:

As per available records and as declared by the applicant, The Applicant has been importing the Bulk Drugs/API in question under Form 10, Form 11 & Form CT-17 licence and has been discharging IGST @18%.

2.2.4. Comments on merit of the question raised in the application. along with all materials in support thereof:

Question of low or fact:

Question 1: Whether IGST is leviable @5cY0 for the import of bulk drugs/API in terms of SL No. 226 of Schedule I of the JGST Rate Notification?

Question 2: If not, then what is the correct rate off GST leviable for the import of bulk drugs/API? Comments:

Mankind Pharma Limited (hereinafter referred to as the “Applicant”) is a pharmaceutical company and a leading manufacturer and supplier of pharmaceutical products. The Applicant purchases and imports a wide range of Bulk Drugs after obtaining the requisite licence. The Bulk Drugs so imported are Active Pharmaceutical Ingredients (APIs). These imported ingredients are used for the manufacture of formulations i.e. dosage form of drug and occasionally for testing, clinical research and Bioequivalence study. These imported ingredients, which are active ingredients for medicines are hereinafter collectively referred to as “bulk drugs/API”. Bulk drugs/API are classified under Chapter 28 or Chapter 29 as they are organic and inorganic chemicals.

2.2.5. The bulk drugs/API in question are imported after procuring the following licenses under the Drugs and Cosmetics Act, 1940

Form No./ License No.	Title of License Issued	Licence No.
Form 10	Licence to impart drugs (excluding those specified in Schedule X to the Drugs and Cosmetics Rules, 1945)	Licence No. IL/BD-014950 BD-972
Form 11	Licence to import drugs for the purposes of examination, test or analysis	Licence No SW/OD/11/2026/ 0000019082
Form CT- 17	License to Import New Drug or Investigational New Drug for the purpose of Clinical Trials or Bioavailability or Bioequivalence study or for Examination, test and analysis.	Licce No. SW/ND/DICT – 17/2025/000008865

2.2.6. In terms of Section 3(7) of the Customs Tariff Act, 1975, ally article imported into India is liable to Integrated Tax at such rate as is leviable under Section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India. The rates of IGST on goods are notified vide Notification No. 9/2025-lntcgrated Tax (Rate) dated 17.09.2025. SI. No. 226 of Schedule I (5%) to the said Notification reads as under:

S.No.	Chapter/Heading/Sub-heading/Tariff item	Description of goods
226	30 or any Chapter	All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at Sl. No. 113 of notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025]

2.2.7. On a plain reading, SI. No. 226 of Schedule I covers: (a) all drugs and medicines; (b) salts and esters of such drugs and medicines; (c) diagnostic test kits; and (d) formulations manufactured from bulk drugs. The entry is, thus, description-based and is not confined to any single Chapter, since it expressly extends any Chapter’.

2.2.8. Nature of the Goods and Whether ‘Bulk Drugs/APIs’ Fall Drugs Within ‘All Drugs and Medicines’

2.2.8.1. The terms ‘drug’ and ‘bulk drug’ are not defined under the Customs Act, 1962, the Customs Tariff Act, 1975, or the IGST rate notifications. Recourse is therefore required to be ‘taken to the statute governing the goods, namely the Drugs and Cosmetics Act, 1940, read with the Drugs (Price Control) Order, 2013.

2.2.8.2. Section 3(b) of the Drugs and Cosmetics Act, 1940 defines ‘drug’ to include-

i. all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the pulpose of repelling insects like mosquitoes;

ii. such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of [vermin] or insects which cause disease in human beings or animals: as may be specified from time to time by the Central Government by notification in the Official Gazette;

iii. all substances intended for use as components of a drug including empty gelatin capsules and

iv. such devices intended for interned or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after-consultation with the Board

2.2.8.3. As stated above, Clause (iii) is significant because it expressly brings substances used as components or ingredients within the definition of a ‘drug,’ without requiring that the substance itself be administrable to a patient in finished form.

2.2.8.4. Clause (2)(b) of the Drugs (Price Control) Order, 2013 defines ‘active pharmaceutical ingredient or bulk drug’ as any pharmaceutical, chemical, biological or plant product, including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940, which is used as such or as an ingredient in any formulation.

2.2.8.5. On a conjoint reading of this definition with Section 3(b)(iii) of the Drugs and Cosmetics Act, 1940, Bulk Drugs/APIs — being pharmaceutical or chemical substances used as such or as ingredients in formulations — squarely fall within the statutory meaning of ‘drug’.

2.2.8.6. Bulk Drugs/APIs are, further. regulated and licensed as drugs by the Central Drugs Standard Control Organisation (CDSCO) under Form Drug’s and Cosmetics Act, 1940 and the New Drugs and Clinical Trials Rules, 2019 (including under Forms 10 and CT-17, where applicable). This regulatory recognition reinforces their statutory character as ‘drugs’, irrespective of whether they are imported for manufacture of finished formulations or for testing, clinical trial, bioavailabili 1 y or bioequivalence purposes, since such studies are themselves statutorily governed under the New Drugs and Clinical Trials Rules, 2019 and are integral to the drug- approval process. The stage or purpose of use at the time of import does not alter the intrinsic statutory identity of the goods as ‘drugs’.

2.2.9. Interpretation of SI. No. 226 — Effect of the Semicolon and ‘Any Chapter’ SI. No. 226 uses the expression ‘All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs’. The semicolon demarcates two distinct limbs – (i) all drugs and medicines (including salts, esters and diagnostic kits); and (ii) formulations manufactured from bulk drugs. Thus, the qualifying words “manufactured from bulk drugs” are confined to the second limb and do not curtail the scope of the first limb, which covers all drugs and medicines.

2.2.9.1. Applicability to Bulk Drugs/APIs- Bulk Drugs/APTs are covered under the first limb, namely, “all drugs and medicines including their salts and esters”. A Bulk Drug or Active Pharmaceutical Ingredient (API) is the medicinal substance that imparts the therapeutic effect and constitutes the essential drug component from which pharmaceutical formulations are manufactured. It is, therefore, itself a drug or medicine, albeit not in a finished dosage form. The second limb does not define or limit the scope of the first limb; rather, it independently extends the benefit to formulations manufactured from such bulk drugs.

2.2.9.2. Further, the use of the expression ‘Chapter 30 or any Chapter’ manifests a clear intent to extend coverage beyond finished formulations of Chapter 30 to drug substances/APIs classifiable under other Chapters, including Chapters 28 and 29, under which Bulk Drugs/APIs are ordinarily classified.

2.2.10. Specific Entry vis-a-vis General Entry

SI. Nos. 35 and 36 of Schedule 11 to the IGST Rate Notification cover ‘All inorganic chemicals’ (Chapter 28) and ‘All organic chemicals other than gibberellic acid.’ (Chapter 29) respectively, at the general rate. These entries arc broad and Chapter-based, without regard to the description or end-use of the goods. SI. No. 226, in contrast, is a description-based entry covering goods answering to the description of ‘drugs and medicines’, regardless of Chapter. Where goods are covered both by a general (Chapter-based) entry and a specific (description- based) entry, the well-settled principle generalia specialibus non derogant requires that the specific entry prevail. Bulk Drugs/APIs which satisfy the description of ‘drugs’ would, therefore, be appropriately classifiable for rate purposes under SI. No. 226, notwithstanding their tariff classification under Chapters 28 or 29.

2.2.11. Nature of the Notification – Rate Notification, Not Exemption Notification

Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 is a rate (taxing) notification and not an exemption notification. ft is a settled position, as reiterated by the Hon’ble Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company [20 I 8 (361) E.L.T. 577 (S.C.)], that while an exemption notification must be construed strictly against the assessee at the threshold, once applicability is established, and in the case of a taxing entry as such, any genuine ambiguity is to be resolved in favour of the taxpayer. This position was applied to an identically structured IGST Rate Notification by the Tribunal in Samsung India Electronics Pvt. Ltd. v. Principal Commissioner of Customs, New Delhi [2025 (7) TMI 229-CESTAT New Delhi]. Accordingly, even assuming any residual ambiguity as to whether SI. No. 226 covers Bulk Drugs/APIs, such ambiguity would fall to be resolved in favour of the Applicant.

2.2.12. Judicial Precedents Holding that ‘Bulk Drugs’ are ‘Drugs’

The proposition that ‘bulk drugs’ are ‘drugs’, for the purpose of description-based duty/tax entries that do not expressly exclude them, is supported by a consistent line of Tribunal decisions: Burroughs Wellcome (I) Ltd. v. Commissioner of C. Ex. and Cus., Mumbai [2007 (216) E.L.T. 522 (Tri.-Mum.)] and Cipla Ltd. v. Commissioner of Customs, Chennai [2007 (218) E.L.T. 547 (Tri.-Chennai)]. These decisions consistently hold that where an exemption/rate entry uses the expression ‘drugs’ without express exclusion of bulk drugs, no artificial distinction between ‘drugs’ and ‘bulk drugs’ can be introduced — a position further affirmed in Aurobindo Pharma Ltd. v. CC_E, Hyderabad-I [2009 (247) E.L.T. 206 (Tri.-Bang.)]

2.2.13. Directly Applicable Precedents on the Present IGST Entry

The Customs Authority for Advance Rulings, Mumbai, in the case of M/s Cipla Limited (Ruling No. CAAR/Mum/ ARC/ 161,162/2025-26 dated 17.03.2026), has held that Bulk Drugs/Active Pharmaceutical Ingredients (APIs), whether imported for manufacture of formulations or for testing, clinical trials, bioavailability or bioequivalence studies, qualify as ‘All Drugs’ under SI. No. 226 of Schedule I to Notification No. 9/2025–Integrated Tax (Rate) dated 17.09.2025 and attract IGST @5%, provided they are not covered under SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17:09.2025.

2.2.14. Recommendation-

In view of the above discussion, this office is of the considered view that Bulk Drugs/Active Pharmaceutical Ingredients proposed to be imported by the Applicant, being substances covered by the definition of ‘drug’ under Section 3(b) of the Drugs and Cosmetics Act, 1940 and ‘active pharmaceutical ingredient/bulk drug’ under the Drugs (Price Control) Order, 2013, appears to attract IGST@5% under SI. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17 09.2025, subject to the specific goods proposed to be imported not being covered under the Nil-rated entry at SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025.

2.2.15. Whether the question raised is pending before any Officer of Customs, the Appellate Tribunal or any Court:

As per records available with this office, no such case of the Applicant on the question raised in the instant application is pending with.

3. Record of Personal hearing:

The Authorized Representatives (A.R.) of the applicant appeared on 16.07.2026 for the personal hearing conducted in virtual mode and reiterated the submissions made in the CAAR application and requested to extend the benefit of notification no. 09/2025 (S1 No. 226). No Authorized Representative appeared on behalf of the Department during the personal hearing.

4. Findings, Discussion & Conclusion:

4.1 Having examined the CAAR-1 application, the comments received from the jurisdictional Customs Commissionerate, the record of personal hearing and the applicable legal framework, I find the application to be valid in terms of the Customs Act, 1962 and the CAAR Regulations, 2021. I, therefore, allow the application and proceed to determine the Levy of IGST on Bulk drugs or Active Pharmaceutical ingredients (APIs) on the basis of the information on record. The question posed for advance ruling is:

Question 1: “Whether Integrated Goods and Services Tax (IGST) is leviable @ 5% on import of bulk drugs (Active Pharmaceutical Ingredients – APIs) in terms ofSL. No. 226 ofSchedule Ito Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025? “

Question 2: “If Not then what is the correct rate of the IGST leviable for the import of bulk drugs/API falling under chapter 28 or 29 of the Schedule of Customs Tariff Act, 1975? “

4.2. Statutory Framework

4.2.1. In terms of Section 3(7) of the Customs Tariff Act, 1975, any article imported into India is liable to IGST at such rate as is leviable under Section 5 of the IGST Act, 2017 on a like article supplied in India. Section 3(7) of the Customs Tariff Act,1975 has been reproduced below:

“Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub­section (8) [or sub-section (8A), as the case may be”

4.3. Nature of the Goods

4.3.1. As per application, the Applicant imports bulk drugs or Active Pharmaceutical Ingredients (APIs), classifiable under Chapter 28 or Chapter 29 of the Customs Tariff. These APIs are used:

i. in manufacture of pharmaceutical formulations: and

ii. in certain cases, for testing. clinical trials, bioavailability and bioequivalence studies.

4.3.2. I observed that the applicant has submitted a copy of Form 10 ,Form 11 and Form CT-17 issued by Central Drugs Standard Control Organization (CDSCO). The Form-10 is regarding ‘Licence to import drugs (excluding those specified in Schedule X) to the Drugs and Cosmetics Rules, 1945’ in respect of drug named “Progesterone IP .” . Form 11 is regarding “Licence to import drugs for the purposes of examination, test or analysis” in respect of drug named “Isotretinoin Ph. Eur”. The Form CT-17 is regarding ‘Licence to import new Drug or investigational new drug for the purpose of clinical trial or bioavailability or bioequivalence study or for examination, test and analysis’ in respect of the drug named “Epinephrine Bitartrate”.

4.3.2.1. From a plain reading of the aforesaid licences, it is evident that each licence is issued in respect of the specific drug(s) expressly mentioned therein and authorizes their import only for the purpose and subject to the conditions stipulated in the respective licence. Thus, the licences are product-specific.

4.3.2.2. I further observe that the applicant has furnished only one Form 10, Form 11 and Form CT-17 as illustrative documents. These licences relate only to the above-mentioned drugs and do not establish that similar licences have been issued in respect of every bulk drug proposed to be imported by the applicant.

4.4. I note that Rule 33 of the Drugs and Cosmetics Rules 1945 specifically deals with “Import of drugs for examination, test or analysis”. The Rule provides that small quantities of drugs the import of which is otherwise prohibited under Section 10 of the Drugs and Cosmetics Act, 1940 may be imported for examination, test or analysis subject to prescribed conditions and only under a licence in Form 11.Therefore, the statutory scheme itself recognises the goods covered thereunder as drugs and regulates their import accordingly. The grant of a Form 11 licence is predicated upon the goods possessing the character of drugs under the Drugs and Cosmetics Act,1940 and not upon their intended end-use. Consequently, the fact that an API or bulk drug is imported for examination, testing or analysis does not alter its essential character as a drug.

4.5. I further note that Rule 23 of the Drugs and Cosmetics Rules, 1945 specifically deals with “Import licences” and prescribes the statutory requirement for obtaining an import licence for drugs. Rule 23 provides that an import licence in Form 10 shall be required for the import of drugs, other than those specified in Schedule X. Rule 68 of New Drugs and Clinical Trials Rules, 2019 deals with the Grant of licence for import of new drug or investigational new drug for clinical trial or bioavailability or bioequivalence study or for examination, test and analysis.

4.6. Further, the applicant has submitted that there is no dispute regarding tariff classification under Chapters 28 or 29. The question raised in the present application is also not one of tariff classification but confined to the determination of the applicable rate of Integrated Goods and Service Tax on the import of such bulk drugs.

4.7. IGST rates are notified vide Notification No. 0⁹/₂025-Integrated Tax (Rate) dated 17.09.2025. SI. No. 226 of Schedule I (5%) reads as under:

SI. No.	Chapter/Heading/Su b-heading/Tariff item	Description of goods
226.	30 or any Chapter	All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025]

4.7.1. SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) grants NIL rate to “Drugs or medicines listed in Annexure I.” The relevant portion of the Notification is as under

SI. No.	Chapter/Heading/Sub- heading/Tariff item	Description of goods
113.	30 or any Chapter	Drugs or medicines listed in Annexure I

It is not disputed that the subject goods i.e. Progesterone LP., Isotretinoin Ph. Eur and Epinephrine Bitartrate are not covered under Annexure I.

4.8. As discussed, SI. No. 226 of Schedule I (5%) covers all drugs and medicines. The applicant has contended that the Bulk drugs or Active Pharmaceutical ingredients (APIs) a r e covered under the expression “All Drugs and Medicines” and are covered under SI. No. 226 being drugs. Therefore, it is to be analysed:

” Whether Bulk drugs or Active Pharmaceutical ingredients (APIs) ” are covered under the expression “All Drugs and Medicines” or otherwise”

4.9. The expression “drug” is not defined in the IGST Rate Notification and neither in Customs Act. In such circumstances, recourse can be taken to the relevant statute governing the goods, namely the Drugs and Cosmetics Act, 1940.

4.10. I observe Section 3(b) of the Drugs and Cosmetics Act, 1940 defines “drug”. The said definition of drugs is produced as below:

3(b) “drug” includes–

(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;]

(ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;

(iii) all substances intended for use as components of a drug including empty gelatin capsules; and

(iv) such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board; From the above definition of drug it is evident that drugs cover:

• • • all medicines for internal or external use;
    • all substances intended for diagnosis, treatment, mitigation or prevention of disease; and
    • all substances intended for use as components of a drug.

4.10.1. I observe Active Pharmaceutical Ingredients(APIs) are substances used as component of a drug. They are regulated under the Drugs and Cosmetics Act and require statutory licences for import of APIs. Therefore, APIs appear to fall within the ambit of “drug” under Section 3(b).

4.11. I observe that the bulk drugs or active pharmaceutical ingredients are not specifically defined in Drugs and Cosmetics Act, 1940. Therefore, reference is made to the definitions under the Drugs (Price Control) Order, 2013. The relevant extracts are as below:

“2(b) “active pharmaceutical ingredients or bulk drug” means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation;

***

2(i) ‘formulation” means a medicine processed out of or containing one or more drugs with or without use of any pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease and, but shall not include

(I) any medicine included in any bonafide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines;

(ii) any medicine included in the Homeopathic system of medicine; and

(iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply;”

4.11.1 In view of above bulk drug or active pharmaceutical ingredients refers to pharmaceutical or chemical substances used as such or as an ingredient in any formulation. Accordingly, I observe that as per conjoint reading of the above definition of bulk drug or active pharmaceutical ingredients with Section 3(b) of the Drugs and cosmetics Act,1940, bulk drugs/APIs fall within the statutory meaning of “drug”.

4.12. The applicant has submitted that Prior to 2019, the definitions of ‘bioavailability study’, ‘bioequivalence study’ and ‘clinical trials’ were also under the Drugs and Cosmetics Rules, 1945. However, with the introduction of the New Drugs and Clinical Trials Rules, 2019, the definitions were omitted from the Drugs and Cosmetics Rules 1945. The relevant definitions from the New Drugs and Clinical Trials Rules, 2019 are extracted below:

“2. Definitions. – (1) In these rules, unless the context otherwise requires, –

***

c) “active pharmaceutical ingredient” means any substance which can be used in a pharmaceutical formulation with the intention to provide pharmacological activity; or to otherwise have direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease; or to have direct effect in restoring, correcting or modifying physiological functions in human beings or animals;

e) “bioavailability study” means a study to assess the rate and extent to which the drug is absorbed from a pharmaceutical formulation and becomes available in the systemic circulation or availability of the drug at the site of action;

(f) “bioequivalence study” means a study to establish the absence of a statistically significant difference in the rate and extent of absorption of an active ingredient from a pharmaceutical formulation in comparison to the reference formulation having the same active ingredient when administered in the same molar dose under similar conditions

***

(j) “clinical trial” in relation to a new drug or investigational new drug means any systematic study of such new drug or investigational new drug in human subjects to generate data for discovering or verifying its, —

i. clinical or;

ii. pharmacological including pharmacodynamics, pharmacokinetics or;

iii. adverse effects,

with the objective of determining the safety, efficacy or tolerance of such new drug or investigational new drug; “

4.12.1 From the above I observe that:

i. The definition of “active pharmaceutical ingredient” is framed on what the substance can do —provide pharmacological activity, or act on disease or on physiological function. A substance answering this description remains an API whether it goes to a manufacturing plant, a trial site or a testing laboratory.

ii. A bioavailability study is defined as a study of the drug, and a bioequivalence study as a study of an active ingredient in a pharmaceutical formulation. The subject matter of the study is thus a drug; a study conducted on a substance which is not a drug would not answer these definitions at all.

iii. A clinical trial is a study of a new drug or investigational new drug. The article under trial is a drug. The trial is undertaken precisely because it is a drug whose safety, efficacy and tolerance require to be established.

iv. Section 3(b) of the Drugs and Cosmetics Act, 1940 in any event brings within “drug” the components of a drug. An API used to prepare the formulation administered in a trial or study is such a component, and is a drug on that count as well.

v. The import is itself controlled under drug law. Import of a new drug or investigational new drug for a clinical trial, or for a bioavailability or bioequivalence study, or for examination, test and analysis, requires a licence in Form CT-17 from the Central Licencing Authority, under the New Drugs and Clinical Trials Rules, 2019

4.12.2. I observe that a combined reading of the definitions of “drugs”. “Bioavailability study”, “bioequivalence study” and “clinical trial” makes it evident that the term “drugs” is wide enough to include products intended for use in bioavailability or bioequivalence studies, as well as for clinical trials. Therefore, the mere fact that the API is imported for testing or research purposes, and not for direct therapeutic use, does not, by itself, exclude it from the ambit of “drugs” under the applicable legal framework.

4.13. Judicial Precedents

4.13.1 The Applicant has relied upon various Tribunal decisions wherein it has been held that bulk drugs are also drugs or “drugs” is inclusive of “bulk drugs”.

a. The Tribunal in Burroughs Wellcome (I) Ltd vs Commissioner of C. Ex. and Cus., Mumbai [2007 (216) E.L.T. 522 (Tri-Mum)J,held that the phrase ‘life saving drugs” has not been defined either in the notification or in the Drugs (Prices Control) Order. Moreover, “drugs” have been defined to include “bulk drugs”

b. The Tribunal in Cipla Ltd. v. Commissioner of Customs, Chennai – 2007 (218) E. L.T. 547 (Tri.-Chennai) held that it is beyond doubt that ‘bulk drugs’ are also ‘drugs.

c. In Astrix Laboratories Ltd. – 2009 (233) E.L.T. 372 (Tri.-Bang.) , the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore Bench ruled that bulk drugs qualify as “drugs”

These decisions consistently held that bulk drugs are also drugs, particularly where the exemption/benefit entry uses the expression “drugs” without exclusion.

4.13.2 Further, in Aurobindo Pharma Ltd. -2009 (247) E.L.T. 206 (Tri.-Bang.), it was held that exemption notifications do not distinguish between bulk drugs and other drugs or medicines, meaning duty exemptions apply equally to bulk drugs.

4.13.3. Advance ruling decisions:

I observe that in Laurus Labs Ltd., 2018 (13) G.S.T.L. 472 (A.A.R. -GST) and Biocon Ltd., 2020 (43) G.S.T.L. 281 (App. A.A.R. – GST -Kar.), the Advance Ruling Authorities have taken the view that the expression “drugs” includes “bulk drugs.”

4.14. Directly Applicable Precedents on the Present IGST Entry:

The Customs Authority for Advance Rulings, Mumbai, in the case of M/s Cipla Limited [Ruling No. CAAR/Mum/ARC/161,162/2025-26 dated 17.03.2026], has held that Bulk drugs/Active Pharmaceutical Ingredients (APIs), whether imported for manufacture of formulations or for testing, clinical trials, bioavailability or bioequivalence studies, qualms as “All Drugs” under Si. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided they are not covered under SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate).

4.15. Interpretation of SI. No. 226 of Notification No. 09/2025-Integrated Tax (Rate) dated 17.09.2025

4.15.1. SI. No. 226 of Schedule I (5%) reads as under:

SI. No.	Chapter/Heading/Su b-heading/Tarff item	Description of goods
226.	30 or any Chapter	All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025]

The presence of a semi-colon clearly demarcates two independent and distinct categories of goods, namely:

i. All drugs and medicines (including salts, esters and diagnostic kits); and

ii. Formulations manufactured from bulk drugs.

4.15.2. If the phrase “All drugs and medicines” were to be construed as being confined solely to finished dosage forms ready for retail consumption, the subsequent and specific reference to “formulations manufactured from bulk drugs” would be rendered redundant and superfluous. It is a settled canon of statutory interpretation that an entry must be construed in a manner that gives meaning and effect to every word used therein, and avoids any interpretation that would render a part of the provision otiose.

4.15.3. Moreover, the entry applies to goods falling under “Chapter 30 or any Chapter.” The careful use of the expression “or any Chapter” manifests a clear legislative intent to extend the scope of coverage beyond Chapter 30, thereby encompassing drugs and drug substances classifiable under other Chapters, including Bulk drugs or Active Pharmaceutical ingredients (APIs) fa lling under Chapters 28 and 29.

4.15.4. In view of the above discussion as well as on conjoint reading of definition of drugs given in Section 3(b) of Drugs and Cosmetics Act, 1940, Bulk drugs or Active Pharmaceutical ingredients (APIs) as mentioned in Drugs (Price Control) Order. 2013 and reading of the definitions of “bioavailability study”, “bioequivalence study” and “clinical trial” as mentioned in New Drugs and Clinical Trials Rules, 2019, it can be concluded that the bulk drugs/APIs fall within the statutory meaning of “drug”.

4.15.5. I observe that SI. Nos. 35 and 36 of Schedule II cover “All inorganic chemicals” falling under Chapter 28 and “All organic chemicals” falling under Chapter 29 respectively. These entries are broad and generic in nature, as they encompass all goods classifiable under the said Chapters without any restrictive description.

4.15.6. In contrast, SI. No. 226 specifically covers ” All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated Tax (Rate) dated 17th September, 2025J”, without being confined to any particular Chapter of the Tariff. The scope of this entry is description-based rather than Chapter-based, and therefore it operates as a specific entry covering goods answering to the description of drugs and medicines.

4.15.7. It is a well-settled principle of classification that where goods are covered both by a general (Chapter-based) entry and a specific (description-based) entry, the well-settled principle generalia specialibus non derogant requires that the specific entry shall prevail. Accordingly, Bulk drugs or Active Pharmaceutical ingredients (APIs), though classifiable under Chapters 28 or 29 for tariff purposes, when they satisfy the description of “drug”, are appropriately covered under SI. No. 226 for the purpose of determination of applicable rate of tax. The SI. No. 226 entry is a specific entry which will prevail over the general entry of “all organic chemicals other than gibberellic acid”.

4.15.8 The applicant has furnished only one Form 10, Form 11 and Form CT-17 as illustrative documents. These licences relate only to the above-mentioned drugs and do not establish that similar licences have been issued in respect of every bulk drug proposed to be imported by the applicant. As per Sl. No. 226, all Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated Tax, then IGST @5 % is applicable.

4.16. Nature of the Notification

4.16.1. I observe Notification No. 9/2025-Integrated Tax (Rate) is a rate notification and not an exemption notification.

4.16.2 I observe that the applicant has placed reliance on the decision of the Hon’ble Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, 2018 (361) E.L.T. 577 (S.C.), wherein it was held that in case of ambiguity in a taxing statute, and where two interpretations are possible, the interpretation beneficial to the assessee should be adopted. However, in the case of an exemption notification, the same must be construed strictly in favour of the Revenue.

4.16.3 . I observe that the IGST Notification in question is a taxing notification and not an exemption notification. Therefore, applying the ratio laid down in Dilip Kumar & Company, the subject goods of the applicant are appropriately classifiable under SI. No. 226 of Schedule Ito Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, which is a taxing entry and not an exemption entry.

4.17. Conclusion:

i) The definition of “drug” under Section 3(b) of the Drugs and Cosmetics Act, 1940 is wide and inclusive in nature, and expressly covers substances intended for use as components of a drug. Active Pharmaceutical Ingredients (APIs) / bulk drugs, being pharmaceutical substances used as such or as ingredients in formulations, squarely fall within the ambit of the said definition.

ii) APIs are regulated and licensed as “drugs” by the Central Drugs Standard Control Organization (CDSCO) under the statutory framework of the Drugs and Cosmetics Act, 1940 and the New Drugs and Clinical Trials Rules, 2019, including for import under Forms 10, Form 11 and Form CT-17. Their regulatory recognition as drugs reinforces their statutory character.

iii) Judicial precedents and advance ruling authorities have consistently held that, in the absence of any restrictive language, the expression “drugs” includes “bulk drugs”, and no artificial distinction can be introduced between the two where the notification does not provide so.

iv) The wording of SI. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) is broad and description-based, covering ” All Drugs and medicines including their salts and esters and diagnostic test kits; formulations manufactured from bulk drugs [other than those specified at nil at S. No. 113 of notification No. 10/2025-Integrated Tax” without restriction to finished formulations, and further extends to goods falling under “Chapter 30 or any Chapter”, thereby encompassing APIs classifiable under Chapters 28 and 29.

v) No. 226 is a specific entry describing goods by their essential character as “drugs”, and therefore prevails over the general entries covering “all inorganic chemicals” or “all organic chemicals” under Chapters 28 and 29.

vi) The regulatory framework governing import of drugs consistently recognizes the subject goods as drugs irrespective of the specific purpose of import. Form 10 is issued for import of drugs, Form 11 is issued for import of drugs for examination, test or analysis and Form CT-17 is issued for bioequivalence studies. Accordingly, the purpose of import does not alter the statutory identity of the goods a drugs.

vii) The character of Bulk drugs or Active Pharmaceutical ingredients (APIs) as “drugs” does not change merely because they are imported for clinical trials, bioavailability or bioequivalence studies. Such studies are integral to the drug approval process and do not alter the intrinsic statutory identity of the goods.

In view of the forgoing discussion it is evident that Bulk drugs or Active Pharmaceutical ingredients (APIs), are covered under SI. No. 226 of Schedule Ito Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and attract IGST at the rate of 5%, subject to the goods not being covered under any NIL- rated entry.

5. For the reasons recorded in the foregoing discussion and findings, the answers to the questions raised by the applicant are as follows: –

Question 1: Whether Integrated Goods and Services Tax is leviable @5% for the import of bulk drugs/API in terms of SI. No. 226 of Schedule I of Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025?

Answer- Yes, Integrated Goods and Services Tax is leviable @5% for the import of Bulk drugs or Active Pharmaceutical ingredients (APIs) in terms of Si. No. 226 of Schedule I of Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided they are not covered under SI. No. 113 of Notification No. I 0/2025-Integrated Tax (Rate).

5. I rule accordingly.