2018 (10) TMI 1544 - AT - Central Excise

Area based expansion - substantial expansion or not - N/N. 50/03-CE dt.10.6.2003 - it appeared to the Revenue that there was no substantial expansion by increasing installed capacity by more than 25% - contention of the appellants is that there is no such requirement under clause (b) of para 2 of the said notification. Held that - We have perused the record and seen recommendation by the jurisdictional Range Superintendent and also report submitted by the team of the District Industries Centre that the installed capacity was increased by 31% - thus the condition of the notification was satisfied by the appellant. Without going into the issue of limitation, it is held that the appellants were eligible for exemption under Notification No.50/03-CE dt.10.6.2003 for the period covered by the present appeals - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Notification No.50/03-CE dt.10.6.2003 regarding substantial expansion for exemption under Central Excise duty.

Analysis:
The case involved two appeals challenging Order-in-Original No.14/CE/CHD-I/2011 passed by the Commissioner of Central Excise, Chandigarh. The appellants, engaged in providing IT solutions, claimed exemption under Notification No.50/03-CE dt.10.6.2003 for their activities in Himachal Pradesh. The Revenue alleged insufficient expansion based on computer purchases and issued a show cause notice for duty recovery and penalties. The appellants contended that their digitalized activity constituted substantial expansion, meeting the notification's criteria. They presented reports showing increased machinery, capacity, power load, and employees. The jurisdictional Range Superintendent and a team from the District Industries Centre supported the appellants' claim. The appellants argued that the installed capacity increase of 31% satisfied the notification's requirement of not less than 25%.

The Revenue's argument centered on the lack of substantial expansion in the installed capacity of specified goods, while the appellants emphasized the 31% increase in installed capacity as meeting the notification's condition. The Tribunal reviewed the records, including reports confirming the capacity increase, and found the appellants compliant with the notification's requirements. Without delving into the limitation issue, the Tribunal held that the appellants were entitled to exemption under Notification No.50/03-CE dt.10.6.2003 for the relevant period. Consequently, the impugned order was set aside, and both appeals were allowed.

This judgment clarifies the interpretation of Notification No.50/03-CE dt.10.6.2003 concerning substantial expansion for claiming exemption under Central Excise duty. The Tribunal emphasized the importance of meeting the installed capacity increase requirement, as evidenced by reports and recommendations supporting the appellants' claim. The decision underscores the need for a factual assessment of expansion activities to determine eligibility for duty exemptions under specific notifications.