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2023 (10) TMI 877 - AT - Central ExciseExemption when the goods are used elsewhere other than the factory of production - product ‘Danazol’ which is a bulk drug or medicine - appellant had cleared the product ‘Danazol’ to other manufacturers like M/s. Arvind Remedies - Sl. No. 47A of the Notification No. 4/2006-CE dated 1.3.2006 - Rule 6(3) of CENVAT Credit Rules, 2004. Whether the product ‘Danazol’ which is a ‘bulk drug’ would fall under Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 or it has to be considered as ‘drug or medicine’ which falls under Sl. No. 47B of the said Notification? - HELD THAT:- In case the goods fall under Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 and are unconditionally exempted, whether the common input credit used in the exempted product would be reversible / duty payable to the percentage of value of the exempted goods as per Rule 6(3) of CENVAT Credit Rules, 2004? - HELD THAT:- The judgments in AUROBINDO PHARMA LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD-I [2009 (3) TMI 810 - CESTAT, BANGALORE] and DR. REDDY’S LABORATORIES LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD [2009 (8) TMI 580 - CESTAT, BANGALORE] have held that since the term ‘bulk drugs’ and ‘drug and medicines’ have not been defined in the Notification, the definition as per Drugs (Price Control) Order, 1995 is relevant. As per Drugs (Price Control) Order, 1995, the term ‘drug’ have been defined to include ‘bulk drug’ and formulations. Thus, the said judgments put in mathematical terms could be understood as meaning that while ‘drug’ is a superset, ‘bulk drugs’ is the subset, whereby ‘bulk drugs’ are covered by the term ‘drugs’. Hence, it is for the appellant to choose which ever Sl no of the exemption is more favourable to him. Judicial discipline requires to follow the ratio of the above judgments - the appellant is entitled to the benefit of unconditional exemption from tax as per Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006. In case the goods fall under Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 and are unconditionally exempted, whether the common input credit used in the exempted product would be reversible / duty payable to the percentage of value of the exempted goods as per Rule 6(3) of CENVAT Credit Rules, 2004? - HELD THAT:- It is seen that the department had followed a two-pronged strategy. Initially Show Cause Notices were issued to the appellant denying unconditional exemption for ‘Danazol’ under Sl. No. 47A of Notification No.4/2006-CE. Subsequently, they took the stand that the appellant is entitled for the benefit of Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006, however, the appellant is required to reverse the credit/ pay the amount demanded as a percentage of sale value of the exempted goods ‘Danazol’, as per law during the relevant period, under Rule 6(3) of CENVAT Credit Rules, 2004 - it is found that there has been some confusion in the minds of the department and they have blown hot and cold on the same issue at different points of time. The exemption has been correctly availed by them. The department is permitted to verify the mathematical accuracy of the claims of reversal made by the appellant and demand the excess credit taken or refund the excess reversal of credit made by the appellant if any. Needless to say that in case of a demand, the appellant may be given an opportunity to explain the reversal of credit made by them. The benefit of Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 for the product 'Danazol’ is allowed - Credit reversed by the appellant under Rule 6(3) of CENVAT Credit Rules, 2004 is subject to verification by the department - appeal disposed off.
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