1. Heard both sides. Shri R.G. Sheth, learned Advocate, for the appellants states that credit has been denied on a small part of the raw material used for testing the quality which is required under Drugs and Cosmetics Act, 1940 before rest of the raw material is taken up for manufacture of medicine. He further states that without such testing for quality control it would not be possible to manufacture medicines for human consumption or to meet the legal requirement under the said Drugs Act. As such, it is his submission that use of a small part of the raw material for quality check is part of the overall manufacturing process. In this regard, he also cites decision of the Apex Court in the case of C.C.E. v. Rajasthan State Chemical Works -1991 (55) E.L.T.444 (S.C.).
2. I have also heard Shri Bidhan Chandra, learned J.D.R. who supports the finding of the lower authorities that the raw material taken for testing is used up in the test process and the same is not used for production of finished goods.
3. After hearing both sides and perusal of the cited decision of the Apex Court, I am of the view that testing of raw material for quality control as required under another statute can be taken to be included in the process of manufacture of the finished goods and as such, the credit of duty paid on raw material is admissible to the appellants.
Accordingly, I set aside the orders passed by the lower authorities.
The appeal is allowed with consequential benefit to the appellants.