2018 (7) TMI 1200 - AT - Central Excise

Area-Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - Substantial expansion of capacity - cross examination of Professor Arun Kumar not done. Held that - The directions of this Tribunal to pass order after cross examination of Professor Arun Kumar were not followed. This Tribunal makes a note that it was not possible to cross examine Professor Arun Kumar because of his sad demise before the date of personal hearing - In the circumstances Revenue should have moved an application before this Tribunal for its direction in the circumstances where it was not possible to follow the directions of this Tribunal. The Original Authority has no where established that certificate dated 25.09.2003 issued by Shri B.K. Arora, Chartered Engineer is not an admissible piece of evidence - Further the Original Authority has relied on the actual production whereas the requirement of notification is installed capacity. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of the Order-in-Original dated 27.09.2016 passed by the Commissioner of Customs, Central Excise & Service Tax, Hapur.
2. Interpretation of the exemption under Notification No. 50/2003-CE dated 10.06.2003.
3. Reliance on expert opinions in determining substantial expansion of installed capacity.
4. Compliance with directions for cross-examination of experts.

Analysis:

1. The appeal was directed against the Order-in-Original dated 27.09.2016 passed by the Commissioner of Customs, Central Excise & Service Tax, Hapur. The impugned order covered proceedings related to a show cause notice dated 28.04.2006, in addition to matters covered by two previous Orders-in-Original. The appellant claimed exemption under Notification No. 50/2003-CE dated 10.06.2003 based on an expansion of their capacity. Revenue challenged this claim based on investigations and expert reports.

2. The main issue revolved around the interpretation of the exemption notification concerning substantial expansion of installed capacity. The appellant relied on a certificate by a Chartered Engineer to support their claim of a capacity increase. However, Revenue contested this based on the report of Professor Arun Kumar from IIT Roorkee, who doubted the accuracy of the certificate. The Tribunal emphasized the distinction between mechanical engineering expertise and electronic engineering in assessing capacity expansion.

3. The Tribunal found that the Commissioner's decision heavily relied on the expert opinion of Professor Arun Kumar without allowing for cross-examination. The Tribunal noted that the reliance on the expert's report without proper scrutiny and cross-examination was erroneous. The Tribunal emphasized the importance of testing the correctness of expert opinions through cross-examination for a fair adjudication process.

4. The failure to conduct the cross-examination of Professor Arun Kumar due to his demise was acknowledged. However, the Tribunal highlighted that Revenue should have sought directions in such circumstances. The Tribunal concluded that the Commissioner did not establish the inadmissibility of the Chartered Engineer's certificate and erroneously focused on actual production instead of installed capacity. Consequently, the impugned Order-in-Original was set aside, and the appeal was allowed, granting the appellant consequential relief in accordance with the law.