2008 (8) TMI 233 - AT - Central Excise

Notification No. 33/99-C.E. granting Area based exemption to units in North East notification require units to have achieved the desired expansion of 25% in the installed capacity respondent submit that due to insurgency and terrorist activity in the area though purchases were made prior to the date of notification the actual installation has been done after the issue of the notification - held that if the installed capacity of the section having the lowest capacity has been increased to the desired extent of 25% a unit would be considered to have achieved the expansion in terms of the Notification considering the actual date of installation Commissioner is justified in granting exemption

Summary

Issues: Alleged failure to achieve desired expansion under Notification No. 33/99-C.E., challenge to impugned order based on Board's Review order, consideration of machinery installation date for exemption eligibility.

In this case, the Respondents were accused of not meeting the required expansion of 25% as per Notification No. 33/99-C.E. The Jurisdictional Commissioner ruled in favor of the Respondents after determining that the necessary expansion had been achieved, granting them exemption under the said notification. The Department appealed this decision following Board's Review Order 207-R/2004. The Department's challenge focused on a specific paragraph in the impugned order regarding the capacity increase in the Dryer Section, which was the lowest compared to other sections in the factory. The Tribunal referred to a previous case and held that achieving the expansion in the section with the lowest capacity to the required extent suffices for meeting the expansion criteria. Consequently, the Tribunal found no grounds to interfere with the Commissioner's decision.

Another aspect raised in the Board's Review order was the date of machinery installation concerning exemption eligibility. The Board contended that since the machinery was purchased before the notification issuance, the exemption should not apply. However, the Respondents clarified that due to security issues in the region, the machinery installation was delayed until after the notification was released. The Tribunal supported the Commissioner's decision to consider the actual installation date, affirming that the exemption was rightfully granted. Therefore, the Department's appeal, based on the Board's order, was dismissed for lacking merit. The Tribunal's decision upheld the Commissioner's ruling, emphasizing the importance of meeting expansion requirements and considering actual installation dates for exemption eligibility.