2015 (8) TMI 341 - AT - Central Excise

Refund - Benefit of area based exemption - Commencement of production of new product after the cut-of date i.e. 31.12.2005 or increased the capacity of the production - Notification No.39/2001-CE, dt.31.07.2001 - refund claims of the amount which had been paid towards Basic Excise Duty from PLA - whether the manufacturing process of Billets and Ingots are not identical - Held that - As per Steel Industry Glossary of Terms, Mass of metal obtained from casting liquid steel into a mould. The resulting ingot a semi-finished product - is typically then hot rolled or forted. A Semi-finished long product of upto 150 mm square cross-section with round corners. Billets can be continuously cast or hot rolled from either ingots or larger Concast billets and blooms. On perusal of the Chartered Engineer s certificate, we find that the liquid metal is moulded manually to make Ingots. But in the case of production of Billets, liquid metal is moulded through caster. The Respondents in their Cross Objection No.E/Cross/82/2011 stated that the Billets are being manufactured with the help of automatic moulding machine i.e. Concast Machine. So, it is clearly evident from the records that the Concast Machine was installed for manufacturing of the Billets after 31.12.2005. So, the Respondents are not eligible to avail the benefit of the exemption notification. - we set aside the impugned order of both the authorities below - Decided in favour of Revenue.

Summary

Issues:
- Eligibility for exemption under Notification No.39/2001-CE for manufacturing Billets and M.S. TMT Bars.
- Interpretation of the cut-off date for setting up new industrial units.
- Classification of Billets and Ingots under Central Excise Tariff Act.
- Impact of installation of Concast Machine on production capacity and eligibility for exemption.

Analysis:
1. Eligibility for Exemption: The case involved a dispute regarding the eligibility of the Respondents for the benefit of area-based exemption under Notification No.39/2001-CE for manufacturing Billets and M.S. TMT Bars. The Revenue contended that the Respondents were not eligible for the exemption as the Billet Concast Plant was set up after the cut-off date of 31.12.2005. The Respondents, on the other hand, argued that the installation of the Concast Machine was for enhancing production capacity and quality improvement, not for manufacturing a new product. The Tribunal analyzed the provisions of the notification and relevant case laws to determine eligibility.

2. Interpretation of Cut-off Date: The Notification specified that the exemption would apply only to new industrial units set up on or after the publication date but not later than 31.12.2005. The Tribunal referred to the decision of the Hon'ble Gujarat High Court in a similar case where the benefit of exemption was denied as the machinery for production was not fully installed before the cut-off date. The Tribunal considered the timeline of setting up the machinery and its implications on eligibility for exemption.

3. Classification of Goods: The Revenue argued that Billets and Ingots are classifiable under different sub-headings, emphasizing the distinction between the two products. The Tribunal examined the differences between Billets and Ingots, including their marketability and saleability, to determine their classification under the Central Excise Tariff Act. Reference was made to relevant case laws and industry definitions to support the classification analysis.

4. Impact of Concast Machine Installation: The central issue revolved around the installation of the Concast Machine by the Respondents after 31.12.2005. The Revenue contended that the machine was specifically set up for manufacturing Billets, making the Respondents ineligible for the exemption. The Respondents argued that the machine was installed for quality improvement and production capacity enhancement. The Tribunal scrutinized the purpose of installing the Concast Machine, the Chartered Engineer's certificate, and previous decisions to determine the impact on eligibility for exemption.

5. Decision and Ruling: After considering arguments from both sides, analyzing relevant provisions, case laws, and industry definitions, the Tribunal concluded that the Respondents were not eligible for the exemption under Notification No.39/2001-CE. The Tribunal set aside the orders of the lower authorities and allowed the appeals filed by the Revenue, emphasizing the importance of compliance with the specified criteria for availing exemptions under the Central Excise Tariff Act.