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Issues:
1. Interpretation of Exemption Notification regarding excise duty on phenol U.S.P. 2. Classification of phenol as a drug or drug intermediate for exemption eligibility. 3. Allegation of petitioners scoring out 'U.S.P.' on bills of entry and its relevance to the case. Analysis: 1. The case involved the interpretation of an Exemption Notification dated 1st March 1975, No. 55 of 1975, regarding the levy of countervailing duty on the import of phenol U.S.P. The Assistant Collector of Customs imposed an 8% duty on the consignment under the residuary item of the Central Excises and Salt Act, 1944. The petitioners contended that phenol U.S.P. qualified for exemption under the Notification. The learned single Judge allowed the writ petition, emphasizing that phenol fell under the exemption category of "all drugs, medicines, pharmaceuticals and drug intermediates not elsewhere specified" as per the Notification. 2. The court analyzed whether phenol could be classified as a drug or a drug intermediate to be eligible for the exemption. The petitioners provided evidence of phenol's inclusion in various pharmacopoeias and certificates from laboratories. The respondents argued that the exemption required proof of actual use as a drug or drug intermediate, which the court found impermissible to read into the Notification. The court concluded that phenol's presence in pharmacopoeias indicated its status as a drug and a drug intermediate, thereby qualifying for the exemption. 3. An argument was raised regarding the petitioners allegedly scoring out 'U.S.P.' on the bills of entry, suggesting a change in classification. However, the court dismissed this argument, noting the lack of such allegation in the respondents' affidavit. The court emphasized that end-use was irrelevant for exemption under the Notification, which applied to the mentioned articles without specifying any particular use requirement. Consequently, the appeal was dismissed, and the respondents were directed to pay the petitioners' costs for the appeal. In conclusion, the judgment clarified the eligibility of phenol U.S.P. for exemption from excise duty under the Exemption Notification based on its classification as a drug or drug intermediate, disregarding end-use considerations. The court's decision upheld the writ petition's allowance and emphasized adherence to the Notification's terms without imposing additional requirements beyond those specified.
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