13 Indian Pharma Firms Charged By Customs

A total of 13 Indian pharmaceutical companies, including some of the leading groups in the industry, have been accused by Customs & Excise of claiming "Modvat" credit not due to them. The Mumbai-1 customs unit has indicted the companies for making use of credit on duty paid on inputs (purchases) used for manufacturing products exempt from duty and later claiming government rebates on the goods intended for export.

The customs authority says it expects to collect about $1 million from the operation. The companies involved are Elder Projects, Elder Pharmaceuticals, Tata-Pharma Ltd, Triochem Projects, Aries Pharmaceuticals, Milan Laboratories, Unique Pharmaceuticals, Ebers Pharmaceuticals, Ethical Pharmaceuticals, Alkern Laboratories, Shree Pharmaceuticals, Prophylla Biologicals Pty Ltd and ANJ Pharmaceuticals. All are bulk manufacturers of paracetamol, aspirin and tetracycline, and have both domestic and international markets.

Although the total netted by customs is not large, the Mumbai-1 unit says the method used by the drugmakers was "novel." They would declare their drug product to be generic, which exempted them from payment of duty in the local market. Drugs classified as generics and sold under generic names are entirely exempt from duty. These would then be expected to go for export.