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Issues involved: Claim for exemption under Notification No. 144/65-C.E. based on the manufacture of patent or proprietary medicines using imported raw material Cimitidine; Rejection of exemption claim by Assistant Collector and Collector due to non-compliance with Rule 56A of the Central Excise Rules, 1944.
Summary: Issue 1: Exemption Claim under Notification No. 144/65-C.E.: The respondents sought exemption amounting to Rs. 7,28,966.24 p. for duty paid on medicines manufactured from imported raw material Cimitidine u/s 3 of the Customs Tariff Act, 1975, under Notification No. 144/65-C.E., dated 4th September, 1965. Issue 2: Non-Compliance with Rule 56A of Central Excise Rules: Both the Assistant Collector and the Collector rejected the exemption claim citing non-compliance with Rule 56A of the Central Excise Rules, 1944, which outlines the procedure for seeking exemption. The Tribunal, however, concluded that the respondent was entitled to the benefit of the substantive part of Rule 56A without confirming adherence to the procedure specified in the rule. The Supreme Court noted that the exemption sought under the notification was subject to the condition that the procedure outlined in Rule 56A must be followed. Rule 56A(1) empowers the Central Government to specify excisable goods for which the procedure in sub-rule (2) applies, requiring an application to the Collector for permission to manufacture and use specified materials. As no such application was made by the respondent, it was held that even if the right to exemption existed, compliance with Rule 56A was mandatory. The Court found no evidence that the prescribed procedure was followed by the respondent. In conclusion, the Court allowed the appeal, setting aside the Tribunal's decision and denying the benefit of the notification to the respondent due to non-compliance with Rule 56A. No costs were awarded in this matter.
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