2008 (12) TMI 199 - AT - Central Excise

Area based exemption increase in installed capacity - Notification No. 50/2003-C.E., dated 10-6-2003 and Notification No. 49-50/2003-C.E. dated 10-6-2003 - held that there is nothing in the Notification that the installed capacity would be determined on the basis of number of products and power load - ubstantial expansion of 25% would be determined to the unit as a whole but not product-wise or power load - various evidences placed by the appellants including the certificate of the DIC that there is a substantial expansion of installed capacity by more than 25% increase - appellant produced Chartered Engineer Certificate, which cannot be brushed aside in a casual manner, in absence of any expert s opinion brought on record by Revenue to demolish his report - appellants substantially expanded their installed capacity by more than 25% on or after 7th January, 2003 eligible for exemption - CBEC letter F.No. 354/08/98-TRU, dated 9-7-99

Issues:
- Entitlement to area-based exemption under Notification No. 49-50/2003-C.E.
- Calculation of installed capacity for availing exemption benefits.
- Reliability of District Industries Centre (DIC) Certificate.
- Interpretation of substantial expansion criteria under the Notification.
- Consideration of documentary evidence for determining substantial expansion.

Entitlement to area-based exemption under Notification No. 49-50/2003-C.E.:
The case involved the appellants, engaged in manufacturing precast concrete products, seeking the benefit of area-based exemption under Notification No. 49-50/2003-C.E. The Asstt. Commissioner of Central Excise and the Commissioner (Appeals) had denied the exemption, leading to the filing of appeals by the appellants. The issue revolved around whether the appellants were entitled to avail the exemption under the said notification.

Calculation of installed capacity for availing exemption benefits:
The appellant contended that they had substantially expanded their installed capacity by more than 25% on a specific date, supported by various documents such as a Chartered Engineer's certificate and a certificate of a Chartered Accountant. The argument presented was that the Commissioner (Appeals) erred in calculating the installed capacity based on the number of products, specifically pipes and poles, rather than considering the expansion of the unit as a whole. The appellant relied on relevant case laws and circulars to support their position.

Reliability of District Industries Centre (DIC) Certificate:
The reliability of the DIC Certificate was questioned by the Department's Representative (DR) during the proceedings. The DR argued that the DIC reports were based on 16 products, while the appellants claimed exemption for only two products. This raised doubts about the accuracy and reliability of the DIC Certificate as evidence for determining the substantial expansion of the installed capacity.

Interpretation of substantial expansion criteria under the Notification:
The Tribunal analyzed the relevant portion of the notification to determine the criteria for substantial expansion, emphasizing that the exemption applied to industrial units that had undertaken substantial expansion by increasing the installed capacity by at least 25%. The Tribunal clarified that the expansion should be considered for the unit as a whole and not on a product-wise basis, as contended by the lower authorities.

Consideration of documentary evidence for determining substantial expansion:
The Tribunal considered the documentary evidence provided by the appellants, including the Chartered Engineer Certificate, to establish the substantial expansion of the installed capacity by more than 25%. The Tribunal highlighted the importance of expert opinions and the lack of contradictory evidence from the Revenue to dispute the appellant's claims. The decision was influenced by the documentary evidence presented, leading to the setting aside of the impugned orders and granting relief to the appellants.

In conclusion, the judgment focused on interpreting the substantial expansion criteria for availing exemption benefits, emphasizing the need to consider the expansion for the unit as a whole rather than on a product-wise basis. The reliability of documentary evidence and expert opinions played a crucial role in determining the substantial expansion of the installed capacity, ultimately leading to the allowance of the appeals and the disposal of the stay application.

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