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2023 (11) TMI 410 - AT - Central ExciseArea Based Exemption - undertaking substantial expansion for installed capacity by more than 25%. It is alleged that by clearing their goods without payment of central excise duty, the appellants have attempted to evade the payment of excise duty by mis-declaring the facts about substantial expansion of their units so as to wrongly fit in the requirement of the exemption notification. HELD THAT - A look at Circular No. 772/5/2004-CX. dated 21.01.2004 makes it clear that emphasis was given to factual increase of 25% capacity by installation of additional plant and machinery. The enhancement post cutoff date is reported to have increased the installed capacity by more than 25%. To put it in other words, while using the word additional plant and machinery , in the circular, it has not been insisted that the existing plant and machinery should remain. What has been held out, is that such additional plant and machinery or the parts thereof, irrespective secondhand should be brought in due to which installed capacity of a manufacturing unit stands extended by more than 25%. The circular, makes it abundantly clear that the additional plant and machinery mentioned therein though may not be in addition to existing equipments but it should signify something new brought in the manufacture process, which in turn, increases the installed capacity more than 25%. Hon ble High Court of Uttarakhand in the case of COMMISSIONER OF CUS. C. EX. VERSUS UTTARANCHAL IRON ISPAT LTD. 2010 (12) TMI 491 - UTTARAKHAND HIGH COURT , wherein it was held that by making the modification of already existing machinery if the installed capacity gets increased by more than 25%, the assessee shall be entitled to the benefits of Notification No.50/2003-CE dated 10.06.2003. This Tribunal in another decision in the case of ASSAM PETROCHEMICALS LIMITED VERSUS COMMISSIONER OF C. EX., SHILLONG 2004 (2) TMI 191 - CESTAT, KOLKATA , held that in case of existing manufacturing units, the date on which the enhanced capacity of the unit is installed, should be the relevant date. Reverting to the facts of the present case, it is observed that the department has raised the demand of duty on the premise that since the expansion programme was undertaken by the appellants prior to 07.01.2003, the appellants unit is not entitled for the exemption of Notification No. 50/2003. Whereas, the case of appellant is that although the expansion programme was inititated before 07.01.2003 however the installed capacity of more than 25% was got enhanced after 07.01.2003. Hence, the benefit of notification is definitely available to the appellant - There appears no evidence as produced by the department that those parts got installed prior cutoff date or that same contributed to enhancement in the installed capacity by any percentage. The fact of the present case is that the appellants factory never remained shut for the maintenance and enhancement of installed capacity. Also it is the minimum rather negligible apparatus which were procured prior to the relevant date. The installed capacity got enhanced post relevant date i.e. 07.01.2003 to the extent beyond 25% (per cent). Hence it is held that decision of M/S VISHVAKARMA PAPER AND BOARDS LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, 2010 (4) TMI 641 - UTTARAKHAND HIGH COURT has wrongly been relied upon by the adjudicating authority. Thus, the benefit of clause 2(b) of Notification No. 50/2003 is wrongly denied to the appellant. The findings in order under challenge are liable to be set aside with respect to this aspect. Inclusion of area (khasra) of appellant in the notifications - HELD THAT - The notification extends exemption to such goods as notified in annexure - I thereof and cleared from such units as are located in Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or the scheme area as the case may be. The unit of appellant exist in Ranipur, Haridwar is admittedly included in annexure - II of the notification. It is also an admitted fact that Rawli, Mehdoodpur, Ranipur is an integrated industrial park - appellants were not eligible for the duty exemption in terms of the said notification. Denying eligibility despite holding appellant s area to be covered under notification is absolutely a wrong finding. Due to this apparent contradiction also, the order is liable to be set aside. The findings in order under challenge that benefit of impugned notification could not be extended to the appellants as their unit is not located in an existing industrial area are not sustainable - The order under challenge is hereby set aside - Appeal allowed.
Issues Involved:
1. Eligibility for exemption under Notification No. 50/2003-CE based on substantial expansion of installed capacity. 2. Inclusion of the appellant's factory location in the notified industrial area. Summary: Issue 1: Eligibility for Exemption Based on Substantial Expansion The appellant, engaged in manufacturing flock fabrics, claimed exemption under Notification No. 50/2003-CE, asserting substantial expansion of their installed capacity by more than 25% after the cutoff date of 07.01.2003. The department contested this, arguing that the expansion program commenced prior to this date. The adjudicating authority initially rejected the appellant's claim, relying on the report of Shri D.K. Jain, which concluded that the expansion started before the cutoff date. Upon remand, the Tribunal directed consideration of the IIT Roorkee report, which confirmed that the installed capacity increased by 33% after the cutoff date, corroborating the appellant's Chartered Engineer's certificates. The Tribunal found that the IIT report and the Chartered Engineer's certificates sufficiently proved the substantial expansion occurred post-07.01.2003, thereby qualifying the appellant for the exemption. The Tribunal held that the adjudicating authority wrongly relied on the report of Shri D.K. Jain, which lacked detailed reasoning and failed to counter the IIT report's findings. Issue 2: Inclusion of Factory Location in Notified Industrial Area The appellant's factory, located in Khasra Nos. 786, 787, and 792/1 in Village Ranipur, was claimed to be part of an industrial area as per Notification No. 50/2003-CE. The adjudicating authority initially acknowledged the inclusion of these Khasra numbers in the notification but later contradicted this by denying the exemption, stating the area was not notified at the time of availing the exemption. The Tribunal found this contradictory and held that the Government Order dated 02.04.2004, which included the appellant's location in the industrial area, took effect from the date of the notification. Thus, the appellant's factory was indeed located in a notified industrial area, making them eligible for the exemption. Conclusion: The Tribunal set aside the adjudicating authority's order, concluding that the appellant met the criteria for exemption under Notification No. 50/2003-CE due to substantial expansion post-07.01.2003 and the inclusion of their factory location in the notified industrial area. Consequently, the appeals were allowed.
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