2008 (9) TMI 763 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalties under Notification No. 50/03 dated 1-6-03 based on substantial expansion criteria.

Analysis:
1. The applicant sought waiver of pre-deposit of duty and penalties amounting to Rs. 14.54 crores, contending that their unit, an existing one, undertook substantial expansion post 7-1-03 as per Notification No. 50/03. They argued that the investment made after 7-1-03, including the purchase of a centrifugal machine, justifies the benefit of the notification. They cited a circular stating that investment in plant and machinery need not define substantial expansion as long as installed capacity increases by 25%.

2. The revenue opposed, claiming the expansion occurred before 7-1-03, with minimal expansion post that date. They highlighted that most post-7-1-03 investments were for pre-existing work, thus denying the notification's benefit. The revenue relied on a Supreme Court case to argue against financial hardship, pointing out the applicant's significant income from sales.

3. The Tribunal analyzed the evidence, including detailed machinery installations, and found that only minor expansions occurred post 7-1-03, such as the procurement of a centrifugal machine. The majority of post-7-1-03 investments were for pre-existing work, failing to meet the 25% capacity increase threshold. The applicant's financial hardship argument was countered with a Supreme Court ruling on pre-deposit obligations.

4. Considering the circumstances and financial status, the Tribunal directed the applicant to deposit 50% of the duty within eight weeks, waiving the remaining pre-deposit and penalties. Compliance was to be reported by a specified date.

This detailed analysis of the judgment highlights the arguments, evidence, and legal considerations involved in the decision regarding the waiver of pre-deposit of duty and penalties based on the substantial expansion criteria under Notification No. 50/03.