SEARLE INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is a Company engaged in the business of manufacture of medicines. Under Exemption Notification No.48/77 dated 1.4.1977, issued in exercise of powers conferred under sub-rule 1 of Rule 4 of the Central Excise Rules, 1944, framed under the Central Excise and Salt Act, 1944 (hereinafter referred to as "the Rules" and "the Act" respectively), clinical samples cleared by the manufacturer of patent or proprietary medicines, being medicines falling under Item No.14E of the First Schedule to the Act were exempted from payment of excise duty. The expression `manufacturer' in the exemption notification was defined in the explanation appended thereto which reads as under:

(2.) The petitioner's case is that although exemption from payment of duty on clearance of clinical samples was available to the it, under a mistake of law, it went on paying excise duty on those samples. According to the petitioner, this mistake was discovered subsequently when the exemption notification and particularly the definition of `manufacturer' contained in the explanation was construed by the Division Bench of this court in a decision rendered in the case of Suhrid Geigy Limited v. Union of India and anr. reported in 1980 (6) ELT 759.

(3.) On the question of interpretation of definition of `manufacturer' provided in the explanation, the contention advanced on behalf of the Department in the case of Suhrid Geigy Limited v. Union of India and anr. (supra) was that in order to get benefit of the notification for exemption, the Company and the manufacturer should satisfy both conditions as contained in clauses (i) and (ii) of clause (a) of the explanation to exemption notification (supra). The argument advanced on behalf of the Department was that only such Company which is a manufacturer and which does not hold any share in the capital of any foreign company and no part of the capital of which is held by a foreigner or a foreign company, would alone be entitled to be treated as `manufacturer' for the purpose of exemption notification.