2016 (1) TMI 521 - AT - Central Excise

Area based exemption - substantial expansion by way of installed capacity by not less than 25% - Notification No. 50/2003-CE dated 10/6/03 - it was contended that production capacity of the both the units are to be counted as one - Held that - prior to substantial expansion the Paper Board unit was having installed capacity of 15 TPD and Spiral Paper Tube unit was having installed capacity of 5 TPD, therefore, there was a total production capacity of the factory was 20 TPD. After expansion in Paper Board unit, the total installed capacity has been increased to 30 TPD which is more than 25% of the installed capacity prior to substantial expansion. On this ground itself, the Revenue has no case. Further, in the case of Tirupati LPG Industries Ltd. vs. CCE, Meerut I 2015 (10) TMI 622 - CESTAT NEW DELHI , the assessee was having two separate units in their factory one for manufacturing of LPG cylinder and another for conductors unit and this Tribunal has considered the substantial expansion of both the units separately, therefore, following the precedent decision of this Tribunal and observation made by the learned Commissioner (Appeals) in the impugned order, we do not find any infirmity in the impugned order. - Decided against the Revenue.

Summary

Issues Involved:
1. Entitlement to Benefit of Exemption Notification No. 49-50/2003-CE.
2. Definition and Interpretation of "Substantial Expansion."
3. Timeliness of the Department's Appeal as per Section 35E of the Central Excise Act, 1944.
4. Distinction between "Factory" and "Industrial Unit."

Issue-wise Detailed Analysis:

1. Entitlement to Benefit of Exemption Notification No. 49-50/2003-CE:
The Revenue appealed against the order granting the respondent the benefit of exemption Notification No. 49-50/2003-CE, arguing that the respondent had not undertaken substantial expansion in the Spiral Paper Tube section. The respondent argued that substantial expansion had been achieved in the Paper Board section, increasing its capacity from 15 TPD to 25 TPD, which was certified by experts from the Department of Paper Technology, IIT, Roorkee. The Tribunal upheld the respondent's claim, stating that the overall installed capacity of the factory increased by more than 25%, meeting the conditions for exemption.

2. Definition and Interpretation of "Substantial Expansion":
The core issue was whether substantial expansion required an increase in each section of the factory or could be satisfied by an overall increase in capacity. The Tribunal referred to previous judgments, including *Tirupati LPG Industries Ltd. vs. CCE, Meerut - I*, which held that substantial expansion could be considered separately for different units within the same factory. The Tribunal concluded that an overall increase of 25% in installed capacity suffices for the exemption, regardless of individual section expansions.

3. Timeliness of the Department's Appeal as per Section 35E of the Central Excise Act, 1944:
The respondent contended that the Department's appeal was time-barred, as it was filed beyond the stipulated period. The Tribunal examined Section 35E, which allows for a review order to be made within six months, but not beyond one year from the date of the original order. The Tribunal found that the Department's appeal was filed within the permissible one-year period and thus was not time-barred.

4. Distinction between "Factory" and "Industrial Unit":
The Tribunal addressed whether the terms "factory" and "industrial unit" were interchangeable. The respondent argued that the exemption notification applied to industrial units, not entire factories. The Tribunal agreed, citing various judgments and a CBEC clarification that supported the view that industrial units within a factory could be considered separately for the purpose of exemption. The Tribunal emphasized that the substantial expansion of the Paper Board unit qualified for the exemption, even though the Spiral Paper Tube unit did not undergo expansion.

Conclusion:
The Tribunal upheld the order granting the respondent the benefit of the exemption notification, confirming that substantial expansion had occurred in the Paper Board unit. The appeal filed by the Revenue was dismissed, and the respondent's cross-objections were disposed of accordingly. The Tribunal's decision was based on a detailed examination of the facts, legal provisions, and relevant case law, affirming the respondent's entitlement to the exemption.