HETRO DRUGS LTD. Vs. CCE

JUDGEMENT

(1.) THESE appeals have been filed against Order -in -Appeal Nos. 25 and 26/06 dated 22.2.2005 passed by the Commissioner of Central Excise (Appeals -II), Hyderabad.

(2.) THE appellants are manufacturers of bulk drugs and drug intermediaries. Out of the 56 drugs manufactured by the appellants, about 11 are exempted from payment of duty and rest are dutiable. The appellants availed CENVAT credit on duty paid on the inputs. Some of the inputs used by the appellants which are used in both dutiable and exempted final products. In respect of common inputs used for the manufacture of exempted products, the appellants reversed the credit of the duty before issuing the inputs for production. Further, the appellants have been declaring the fact of the reversal of the credit in respect of the inputs utilized in the manufacture of exempted product in the monthly ER 1 return filed by them. The Revenue felt that the appellants should pay 8% of the sale value of the exempted product under Rule 6(3)(b) of the CENVAT Credit Rules, 2002. Consequent to the proceedings initiated by the Revenue, the lower authorities in two orders demanded a total amount of Rs. 42,60,593/ -. Further, a penalty of Rs. 19,50,000/ - has been imposed. The first appellate authority confirmed the orders of the lower authorities. Hence, the appellants have come before this Tribunal for relief.

(3.) LD . Counsel adduced the following points: