Purposive construction of exemption notifications upheld for Refampicin-based life-saving medicines; refund claim also held maintainable.

A beneficial customs exemption for Refampicin used in life-saving medicines was construed purposively, so the drug could not be denied exemption merely because it was used in tablet, capsule or other dosage forms. The later notification expressly expanding the entry was treated as clarificatory of the existing exemption scheme, confirming that the coverage was not meant to be read narrowly. The refund claim was also held maintainable because it was filed within six months of duty payment, and the objection that the appellants should first have challenged bond enforcement was rejected. The denial of refund and exemption was therefore unsustainable.

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Issues: (i) Whether Refampicin used in the manufacture of tablets, capsules and other formulations was eligible for customs exemption under the relevant exemption notifications; (ii) Whether the refund claim could be rejected as not maintainable on the ground that the appellants should have appealed against enforcement of the bond.

Issue (i): Whether Refampicin used in the manufacture of tablets, capsules and other formulations was eligible for customs exemption under the relevant exemption notifications.

Analysis: The imported bulk drug was admittedly used in the manufacture of life-saving medicines. The exemption entry covered Refampicin/Refampicin capsules, and the later notification expressly expanded the entry to include Refampicin capsules, syrup/tablets and INH capsules/tablets, showing that the scope of the entry was not intended to be read narrowly. A beneficial exemption notification must be construed so as to advance its object, and the manner of administration or dosage form cannot defeat exemption where the drug is otherwise covered and used for the stated life-saving purpose. The later notification was treated as clarificatory of the existing position.

Conclusion: The exemption could not be denied on the ground that the drug was used in tablet form, and the appellants were entitled to the benefit of the notification.

Issue (ii): Whether the refund claim could be rejected as not maintainable on the ground that the appellants should have appealed against enforcement of the bond.

Analysis: The refund claim had been filed within six months from payment of duty. In those circumstances, the objection that the appellants ought to have challenged bond enforcement did not render the refund claim legally untenable.

Conclusion: The objection to maintainability was rejected.

Final Conclusion: The order denying refund and exemption was unsustainable, and the appellants succeeded in obtaining consequential relief.

Ratio Decidendi: A beneficial exemption notification must receive a purposive construction, and a later notification that expands or specifies the coverage of an entry may operate as a clarification of the scope already intended by the exemption scheme.

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