2016 (2) TMI 146 - AT - Central Excise

Area based exemption - Denial of exemption under notification no.50/2003-CE dated 10.06.2003 - appellant has wrongly mentioned their installed capacity as 30000 Mts. in certain documents - duty demand along with interest and the penalty - Held that - In this case although the appellant sought proposed annual capacity in the year 1995-96 to 30,-000 MT p.a. but the installed capacity was only 26400 pm. The progress report filed by the appellant for the period June, 2003 with IFCI, shows 5400 MT/PA by way of expansion from 21000 MT to 26400 MT. We also find that audit report by the departmental officers clearly indicates that the licensed capacity and installed capacity of the appellant was 30,000 MT p.a. and 26400 MT. respectively. The letter dated 17.07.2001 issued by the IFCI supplied by CA also proposed that the installed capacity prior to October, 2003 was 26400 MT. We also observe that the ld. Commissioner (Appeals) in another proceedings also held that the installed capacity prior to extension took place in the month of October, 2003 was 26400 MT. and the said order has been accepted by the department. In these set of facts, we also hold that prior to October, 2003 when substantial expansion took place in the factory premises of the appellant the installed capacity was 26400 MT p.m. The installed capacity was increased to 33000 MTs in the month of October, 2003, which is substantial expansion i.e. more than 25% of the installed capacity. In that circumstances, the appellant is entitled for the benefit of the duty free under exemption notification no.50/2003-CE dated 10.06.2003. Therefore, the duty cannot be demanded from the appellant. - Decided in favour of assessee.

Summary

Issues:
- Appeal against duty demand by denying exemption under notification no.50/2003-CE dated 10.06.2003.
- Discrepancy in appellant's installed capacity and entitlement to exemption.
- Interpretation of various documents and certifications regarding the installed capacity.
- Adjudication of duty demand, interest, and penalty imposition.
- Applicability of exemption notification based on installed capacity increase.

Analysis:
The appellant appealed against the duty demand imposed for denying exemption under notification no.50/2003-CE dated 10.06.2003 due to discrepancies in their declared installed capacity. The appellant's factory in Himachal Pradesh claimed duty-free clearance based on an enhanced installed capacity, but the authorities alleged misrepresentation of the actual capacity. The appellant's capacity was initially 26000 MTs, with subsequent increases leading to a claimed capacity of 33000 MTs. The dispute arose from the difference between the proposed and actual installed capacities over the years, as indicated in various documents and certifications.

The appellant argued that their installed capacity was correctly stated as 26400 MT based on historical expansions and certifications from relevant authorities. They contended that the increase to 33000 MT in October 2003 was a valid expansion justifying the exemption claim. The appellant referenced past orders favoring their capacity claims and argued against the duty demand. On the contrary, the department highlighted documents suggesting a proposed capacity of 30000 MT and self-certifications indicating the same. They opposed the appellant's entitlement to exemption based on the discrepancy between proposed and actual capacities.

After considering both arguments, the tribunal analyzed the evidence, including certificates, reports, and official communications. The tribunal found that the appellant's installed capacity was indeed 26400 MT before the substantial expansion to 33000 MT in October 2003. This increase was deemed a valid expansion justifying the exemption under notification no.50/2003-CE. The tribunal referenced various certifications and reports supporting the appellant's claims and concluded that the duty demand, interest, and penalties were unwarranted. Consequently, the tribunal set aside the impugned order, allowing the appeal with appropriate relief.

In conclusion, the judgment resolved the dispute regarding the appellant's entitlement to duty exemption based on their installed capacity. By analyzing the historical capacity expansions and certifications, the tribunal determined the validity of the claimed capacity increase to 33000 MT, leading to the appellant's eligibility for the exemption. The decision emphasized the importance of accurate capacity declarations and supported the appellant's position based on the evidence presented.