2018 (2) TMI 625 - AT - Central Excise

Benefit of N/N. 50/2003-CE dated 10.06.2003 - as in the respondent case, there was substantial expansion by installing additional plant and machinery and by increasing the existing installed capacity by more than 50% of the existing installed capacity, they claimed the benefit of the exemption Notification in question - Held that - The Tribunal in the case of CCE, Shillong vs. Hindustan Coco Cola 2004 (2) TMI 493 - CESTAT, KOLKATA relied upon by the Commissioner (Appeals) has observed that the condition of increase in the installed capacity would relate to overall expansion and not in all the sections of the manufacturing unit individually - benefit of notification allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of exemption notification for substantial expansion of factory capacity.

Analysis:
The case involved a dispute regarding the interpretation of an exemption notification for the substantial expansion of factory capacity under the Central Excise Tariff Act, 1985. The respondent-assessee, engaged in manufacturing various products falling under different chapters, undertook significant expansion to avail the benefit of exemption Notification No. 50/2003-CE. The dispute arose when the Revenue denied the exemption, leading to demands of duties and penalties.

The appellate authority considered various documents, including certificates, production charts, and circulars, to assess the extent of expansion undertaken by the assessee. The authority noted the substantial increase in production capacity, installation of additional plant and machinery, and other relevant factors supporting the claim for exemption. Additionally, the authority referred to a circular clarifying the requirement of a 25% increase in installed capacity through additional machinery for qualifying as substantial expansion.

The Revenue, in its appeal, contested the interpretation of the notification, arguing that the increase in capacity should be in each segment of the factory. However, the Tribunal, relying on precedent and the circular, upheld the appellate authority's decision. The Tribunal emphasized that the condition of a 25% increase in installed capacity pertains to overall expansion and not individual sections of the manufacturing unit. As the Tribunal found no fault in the Commissioner's interpretation, the Revenue's appeal was dismissed.

In conclusion, the judgment clarified the criteria for substantial expansion under the exemption notification, emphasizing the overall increase in installed capacity through additional machinery. The decision underscored the importance of considering the totality of expansion efforts rather than focusing on individual segments of the factory.