2009 (3) TMI 819 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 6(3)(b) of the Cenvat Credit Rules, 2004 regarding payment of duty on exempted products.

Analysis:
The appellants, manufacturers of Bulk Drugs and Medicaments, availed Cenvat credit on inputs/capital goods. Some products were exempted from excise duty by Notification No. 6/2003. Lower authorities concluded that 8%/10% of exempted formulations' value must be paid, as per Rule 6. Appellants argued they paid correctly for drugs cleared internally. The main issue was whether to pay on exempted bulk drugs or formulations. The JCDR contended bulk drugs were intermediate products. The Tribunal found appellants paid correctly for bulk drugs, as they were exempted. The Tribunal disagreed with the JCDR's interpretation, citing Notification No. 6/2003.

The Tribunal referenced the Texmo Industries case, stating a final product is an excisable item produced from inputs. The Tribunal found the appellants' actions in line with the law. The JCDR's argument that bulk drugs were intermediate products was dismissed. The Tribunal emphasized that if bulk drugs were exempted, payment was not required. The Texmo Industries case's ratio was applied, favoring the appellants. The Tribunal held the impugned orders were unsustainable and allowed the appeals with consequential relief.