Binding High Court precedent and notice discipline preserved the clinical-samples exemption despite pending SLP review challenge.

A High Court ruling striking down a foreign-shareholding exclusion in the clinical-samples exemption was treated as binding, so the mere pendency of an SLP did not justify denial of the notification benefit. The Tribunal also held that the Revenue could not sustain review proceedings by adding fresh objections at that stage when those grounds were absent from the show cause notice. As a result, the review was quashed and the assessee retained the exemption for duty-free clearance of clinical samples.

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Issues: Whether the review proceedings under Section 36(2) of the Central Excises and Salt Act, 1944 could be sustained, and whether the assessee was entitled to the benefit of Notification No. 48/77-C.E. dated 1st April, 1977 despite the pending SLP against the High Court decision striking down the foreign-investment classification.

Analysis: The Notification exempted clinical samples subject to specified conditions, but its explanation denied the benefit to a company having any foreign shareholding or foreign interest. The earlier High Court decision had held that this classification lacked rational nexus with the object of the exemption, namely service to patients through availability of samples, and was therefore discriminatory under Article 14 and ultra vires the rule-making power. The Tribunal treated that ruling as binding and held that the mere pendency of an SLP did not justify refusal of the benefit of the notification. It also held that the Revenue could not enlarge the review show cause notice by introducing a fresh objection of non-compliance with other notification conditions when that ground had not been stated in the notice.

Conclusion: The review proceedings were quashed, the assessee was held entitled to the benefit of the notification, and the Revenue's attempt to raise new objections at the review stage failed.

Final Conclusion: The Tribunal affirmed the assessee's entitlement to duty-free clearance of clinical samples under the notification and refused to sustain the review initiated by the Revenue.

Ratio Decidendi: An inferior tribunal must follow the law declared by a High Court unless that declaration is stayed or set aside, and the Revenue cannot expand the scope of a review show cause notice by raising fresh grounds not alleged in the notice.

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