In re Sun Pharma Laboratories Limited (CAAR Mumbai)
Summary: The Customs Authority for Advance Rulings, Mumbai held that Bulk Drugs/Active Pharmaceutical Ingredients (APIs) imported by Sun Pharma Laboratories Limited qualify as “All Drugs and medicines” under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and are consequently eligible for the concessional IGST rate of 5%, provided the particular Bulk Drug/API does not fall within the exclusions specified in that entry, including goods covered by Sl. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025. The Applicant imported a range of Bulk Drugs/APIs classifiable under Chapters 28 or 29 of the Customs Tariff and contended that these substances, though not finished formulations, were drugs because they were active pharmaceutical ingredients used in manufacturing pharmaceutical formulations and were regulated under the Drugs and Cosmetics Act, 1940 and the applicable Rules. The Applicant also imported certain APIs for examination, testing, clinical research, bioavailability or bioequivalence studies.
CAAR examined the statutory definition of “drug” under Section 3(b) of the Drugs and Cosmetics Act, which expressly includes substances intended for use as components of a drug, and considered the definitions under the Drugs (Prices Control) Order, 2013. It observed that Bulk Drugs/APIs used as active ingredients in pharmaceutical formulations fall within the statutory concept of “drug”. The Authority further held that Sl. No. 226 is a description-based specific entry covering “All Drugs and medicines including their salts and esters; and diagnostic test kits; formulations manufactured from bulk drugs”, irrespective of whether the goods are classifiable under Chapter 28, Chapter 29 or another Chapter, subject to the specified exclusions. It rejected an interpretation that would confine “drugs” to finished medicines, observing that such a construction would render parts of the entry redundant.
