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2006 (3) TMI 438 - AT - Central Excise
Issues:
1. Interpretation of Notification No. 50/03 regarding substantial expansion of installed capacity. 2. Requirement of installation of additional plant and machinery for capacity increase. 3. Claim of benefit under the notification due to capacity expansion through modification of existing machinery. 4. Consideration of relevant guidelines issued by the Board for capacity expansion. Analysis: 1. The case involved a dispute regarding the denial of benefit under Notification No. 50/03, which required a substantial increase in installed capacity. The appellant claimed a 33% capacity expansion, which was not contested by the revenue. 2. The revenue argued that the increase in capacity should result from the installation of additional plant and machinery, as per Circular No. 772/5/2004-CX. However, the tribunal found that the capital and machinery added were not proportionate to the capacity increase, relying on an expert report. 3. The appellant contended that despite prior sickness, the capacity increase was achieved through necessary modifications to existing machinery, justifying the benefit claim for substantial expansion. The tribunal considered the appellant's argument and examined the production flow-chart, noting significant capacity increases at various production stages. 4. The tribunal referred to the Board's guideline stating that a 25% capacity increase should result from the installation of additional plant and machinery. However, it emphasized that the notification did not explicitly require additional machinery and that expansion could occur through machinery modification or substitution. 5. Ultimately, the tribunal found merit in the appellant's contention, noting the substantial capacity increase and production expansion without disputing the revenue's claims. It held that imposing conditions on additional machinery beyond the notification's scope was unwarranted. Consequently, the stay petition was allowed, halting recovery pending appeal disposal.
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