2019 (5) TMI 1785 - AT - Central Excise

Area Based Exemption - substantial Expansion - benefit of N/N. 01/10 dt.6.2.2010 - benefit denied on the ground that appellant has invested ₹ 161.13 lakhs resulting total expansion of 24.46%. Therefore, there is shortfall by ₹ 3.56 lakh - HELD THAT - In the impugned order, the Commissioner (Appeals) has reduced certain amount towards expansion on certain machinery and plant, one such machine is HSD machine is nothing but a grinder and the same is part of plant and machinery - it is found that the machine is part of plant and machinery and if the cost of the machine HSD machine is taken into consideration then the total investment worked out to ₹ 164.69 lakhs which is more than 25% of the total investment already made by the appellant. The appellant is entitled to avail the benefit of Notification No.01/2010 dt.6.2.2010 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of benefit under Notification No.01/10 dt.6.2.2010
- Evaluation of substantial expansion for availing exemption

Analysis:
1. Denial of benefit under Notification No.01/10 dt.6.2.2010:
The appellant, engaged in manufacturing synthetic enamel and acrylic emulsion, sought to avail the benefit of Notification No.01/10 dt.6.2.2010 by undertaking substantial expansion through additional investment in plant and machinery by more than 25%. The appellant had received necessary approvals for the expansion from the DIC. However, the adjudicating authority initially held that the appellant had met the criteria under the notification. Subsequently, the Commissioner (Appeals) reduced the total investment amount, resulting in a shortfall below the required 25% expansion threshold. This led to the denial of the exemption benefit to the appellant.

2. Evaluation of substantial expansion for availing exemption:
During the appeal proceedings, the appellant contended that the reduction in the value of a specific machine, the HSD machine, by the Commissioner (Appeals) was unjustified. The appellant argued that considering the HSD machine's cost in the total investment would meet the 25% expansion requirement. Upon examining the photograph of the HSD machine, the Tribunal found it to be a part of the plant and machinery. Including the cost of the HSD machine, the total investment exceeded 25%, fulfilling the condition of the notification. Consequently, the Tribunal set aside the impugned order and allowed the appeal, granting the appellant the benefit of Notification No.01/10 dt.6.2.2010.

This detailed analysis of the judgment highlights the issues of denial of benefit under a specific notification and the evaluation of substantial expansion for availing the exemption, providing a comprehensive understanding of the legal reasoning and decision-making process involved in the case.