2015 (4) TMI 735 - AT - Central Excise

Area based exemption - Notification No. 50/2003-CE - whether the appellant have expanded their installed capacity by more than 25% - Interest u/s 11AB - imposition of penalty under Rule 25 - Held that - If the claim of the appellant is correct, they would be eligible for the exemption notification. The appellant in support of this claim rely upon the certificate dated 25 September 2003 given by M/s B.K. Arora and Associates. The Department, however, relies upon the report of Professor Arun Kumar of the Department of Electronics and Computer Engineering in IIT, Roorkee. While the certificate of M/s B.K. Arora and Associates certifies that the appellant have expanded their installed capacity from 2 million CRTs per annum to 3 million CRTs per annum and this has been achieved by installing additional equipment as per the details given and by modification of certain existing machinery, Professor Arun Kumar in his report has doubted the correctness of the certificate of the Chartered Engineer and has also observed that he could not find any facility for fabrication of the machinery which are claimed to have been fabricated by the appellant in their factory. The Commissioner has chosen to rely upon the opinion of Professor Arun Kumar on the ground that he is an independent authority and his report is a later report and only a Chartered Engineer s certificate cannot wish away the expert s report . Since the Commissioner s conclusion is based on the expert opinion of Professor Arun Kumar, in our view, his cross examination by the appellant should have been permitted, as the report of Professor Arun Kumar is only an opinion whose correctness has to be tested by his cross examination. The Commissioner in the impugned order simply relies upon the IIT Professor report on the ground that it is a later report and he is an independent authority and therefore she has no reasons to doubt the same. But she does not discuss as to why the certificate given by the Chartered Engineer is not correct. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 50/2003-CE.
2. Validity of the substantial expansion claim by the appellant.
3. Reliance on expert opinions and reports.
4. Cross-examination of experts.

Issue-Wise Detailed Analysis:

1. Eligibility for exemption under Notification No. 50/2003-CE:
The appellant's eligibility for exemption hinged on whether they had undertaken substantial expansion of their installed capacity by at least 25% on or after 07/1/03, as per Notification No. 50/2003-CE. The notification provided full duty exemption for units that either commenced production after 07/1/03 or undertook substantial expansion of capacity.

2. Validity of the substantial expansion claim by the appellant:
The appellant claimed to have increased their production capacity from 20 lakh CRTs to 30 lakh CRTs per annum by adding new equipment and modifying existing machinery. This claim was supported by a certificate from M/s B.K. Arora and Associates, Chartered Engineers. However, the Department, based on a report by Professor Arun Kumar of IIT Roorkee, doubted this expansion, leading to the issuance of show cause notices demanding duty and penalties.

3. Reliance on expert opinions and reports:
The Department's denial of the exemption was primarily based on Professor Arun Kumar's report, which concluded that no substantial expansion had occurred. The Commissioner upheld this report over the Chartered Engineer's certificate, reasoning that Professor Arun Kumar was an independent authority. The appellant contested this reliance, arguing that Professor Arun Kumar, being from the Department of Electronics and Computer Engineering, was not qualified to assess mechanical engineering aspects of capacity expansion.

4. Cross-examination of experts:
The Tribunal noted that the Commissioner's decision heavily relied on Professor Arun Kumar's report without allowing the appellant to cross-examine him. The Tribunal emphasized that both the Chartered Engineer and Professor Arun Kumar should be cross-examined to test the validity of their opinions.

Judgment:
The Tribunal set aside the impugned orders and remanded the matter for denovo adjudication. It directed that during the denovo proceedings, the cross-examination of Professor Arun Kumar should be permitted, and the Department should also be allowed to cross-examine the Chartered Engineer. This would ensure that the correctness of the expert opinions could be thoroughly tested. The miscellaneous applications for extension of stay were dismissed as infructuous since the appeals had been disposed of.

Conclusion:
The Tribunal's decision highlighted the importance of cross-examining expert witnesses to ensure a fair and thorough adjudication process. The case was remanded to the Commissioner for a fresh decision, taking into account the cross-examinations of the experts involved.