S. Venkatesan, Sr. Vice-President

1. The facts of this case have been set out very fully in the Order-in-Original of the Collector of Central Excise, Baroda, and it is not necessary to reproduce them. Briefly, the appellants have been manufacturing patent and proprietary medicines falling under Central Excise Tariff Item 14E and pharmacopoeial preparations falling under Tariff Item 68. During the period 1978-79 to 1982-83 (upto January 83) they were manufacturing the abovementioned goods. In regard to the pharmacopoeial preparations they were availing themselves of the benefit of exemption available to small manufacturers of goods falling under that item. In regard to the patent and proprietary medicines, they were availing themselves of the separate exemption for small manufacturers, under Notification No. 71/78, dated 1-3-78, which was subsequently replaced by Notification No. 80/80, dated 19-6-80.

2. Following a visit of the preventive staff to the factory of the appellants, a show cause notice was issued to them on 12-8-83 for wrongfully availing themselves of the exemption under Notifications No. 71/78 and No. 80/80. It was alleged that during the financial years 1979-80 to