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Issues:
- Interpretation of exemption notification for clinical samples of patent medicines - Applicability of the explanation in the exemption notification - Denial of exemption benefits to a company based on shareholding in a foreign company or by a foreigner - Challenge to the order of the Assistant Collector of Central Excise Analysis: 1. The judgment revolves around the interpretation and applicability of an exemption notification concerning clinical samples of patent medicines. The petitioner, a joint stock company manufacturing medicines in Bombay, claimed exemption under a notification exempting clinical samples of patent medicines from excise duty. The notification specified conditions for exemption, including limits on clearances and packaging requirements. 2. The dispute centered on the applicability of an explanation in the notification defining the term "manufacturer." The petitioner challenged the denial of exemption benefits by the Assistant Collector of Central Excise, arguing that the company met the criteria for exemption despite the explanation's provisions. The Gujarat High Court had previously held a similar explanation ultra vires, pending appeal in the Supreme Court. 3. The judgment analyzed whether the petitioner, an Indian company, was entitled to exemption despite past collaborations with a Malaysian company and minimal foreign shareholding due to historical circumstances. The court rejected the department's argument that the petitioner's past joint venture and foreign shareholding disqualified it from the exemption, emphasizing the negligible foreign influence and the government's objective of promoting indigenous pharmaceutical companies. 4. The court scrutinized the factual data regarding the petitioner's shareholding, noting that a small percentage of shares were held by the custodian of enemy property and a British national. Despite this, the court concluded that such minimal foreign shareholding did not warrant denial of the exemption benefits, as it aligned with the government's intent to support domestic pharmaceutical industries. 5. Ultimately, the court ruled in favor of the petitioner, holding that the company was entitled to the benefit of the exemption notification. The court directed the Assistant Collector to verify the company's refund claim promptly and pay any refund due. The judgment emphasized the importance of upholding the government's objective of encouraging indigenous industries in the pharmaceutical sector. 6. The court refrained from delving into the legality of the explanation in the exemption notification, focusing solely on the petitioner's entitlement to the exemption benefits. The judgment highlighted the need to consider the overarching purpose of the notification in promoting domestic pharmaceutical manufacturing and ensuring fair application of exemption provisions.
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