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TMI Blog2007 (4) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal, S/o Sri Jugminder Das R/o Govind Nagar, Kotdwar, Director of above unit. -- 50,000/- 3. 209-CE/APL/ MRT-I/06 dt. 20-9-06 Sh. Nishant Agarwal S/o Sri Virendra Agarwal R/o Jawahar Street, Najibabad, Director of above unit -- 50,000/- 4. 210-CE/APL/ MRT-I/06 dt. 20-9-06 Sh. Dinesh Agarwal S/o Sri Kesho Ram R/o 40/29, Civil Lines, Roorkee, Director of above unit -- 50,000/- 2. Briefly stated the facts of the case are that the appellants holding Central Excise Registration No. AABCC5681RXM001 were engaged in the manufacture of M.S. Ingots falling under Chapter Sub-heading 7206.90 of the schedule to the Central Excise Tariff Act, 1985. Vide letter dt. 8-8-03, they intimated to the Deputy Commissioner, Central Excise, Dehradun that they wanted to increase their plant capacity as per Notification No. 50/03 -CE dated 10-6-03 as amended. Vide letters dated 22-5-04, 5-6-04 18-6-04 they further intimated about receipt of different new machineries namely one Control panel with water stru. accessories, one 5 MT Induction Furnace with hydropower bus bar accessories, one Transformer Furnace 5TO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expansion for the purpose of exemption under Notification No. 50/03-C.E., dated 10-6-03. Following documents were submitted in support of their claim of exemption under Notification No. 50/03-CE dated 10-6-03 : - (i) Certificate dated 28-6-03 of Patwari. Patti-Sukhro, Tehsil Kotdwar duly countersigned by the S.D.M. Kotdwar certifying that M/s Charu Steel factory is situated in village Balbhadrapur (Industrial Estate) at Khasra No. 14. (ii) Certificate dated 23-12-04 of Shri Shakti Kumar, Chartered Engineer, regarding production capacity of the crucible in the unit. (iii) Certificate dated 7-1-05 of Shri Shakti Kumar, Chartered Engineer, regarding production capacity of new crucible in the unit. (iv) Block diagram of unit s production section, indicating position of old as well as new plant machinery installed in the unit. (v) Block diagram of unit s production section, indicating position of old furnace as well as new furnace installed in the unit. (vi) Chart showing details of plant machinery on account of substantial expansion as on 7-1-05. (vii) Copy of invoices in respect of capital goods purchased by the party for their unit s expansion. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority vide Order-in-Original No. 35 Joint Commissioner/MRT-I/2006 dated 30-4-06, denying benefit of Notification No. 50/2003-C.E., dated 10-6-03, confirming the duty demanded alongwith interest and imposition of penalty as detailed above. 9. Being aggrieved with the aforesaid Order-in-Original, the appellant filed these appeals mainly on the following grounds : - (1) The adjudicating authority has erred in not considering the pleas of the appellant in reply to show cause, the submissions made at the time of personal hearing and the purport and thrust of the case law cited. (2) The notification No. 50/2003-C.E., dated 10-6-2003 has to be construed on its own terms so as to effectuate its underlying purpose and object. It ought to have been borne in mind that the terminology substantial expansion was the skin of underlying economic thought to boost economic development and better being of local population in Uttaranchal by attracting there investments in industrial sector. The scope and mode of effecting substantial expansion in installed capacity could not be generalized nor the notification so provided as the manner of substantial expansion was industry specific and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty is not imposable on them in view of :- (I) 2005 (180) E.L.T. 209 (T) - Acon s Construction Product v. CCE, Chennai which was affirmed by Supreme Court in 2005 (184) E.L.T. 120 S.C., and (II) 2005 (190) E.L.T. 352 (T) - Fiber Foils Ltd v. CCE, Mumbai. Even otherwise, Rule 26 of Central Excise Rules 2002 is not attracted. Shri A.C. Jain, Advocate and Shri Pradeep Kumar Sharma, Senior Accountant appeared before me for personal hearing on behalf of the appellants and reiterated the submissions as made in the grounds of appeal. In brief they submitted that the instant case has been made based on Board s Circular 772/05/2004 dated 21-1-2004. They contested that the Circular is not law and the Notification is to be interpreted on its plain terms and that they fulfilled the requirement of the Notification by way of installation of Furnace of having capacity 5 TONS. Their production increased by 25%. They also submitted that case law of Ms Travancore Titanium relied by the department is not applicable in their case as the same pertains to project import. They invited reference towards Order-in-Original of Commissioner, Central Excise, Meerut-I in the case of Purshott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. (ii) industrial unit existing before the 7th day of January 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five per cent on or after the 7th day of January 2003, but have commenced commercial production from such expanded capacity, not later than the 31st day of March 2007. 15. Thus the exemption contained under Notification No. 50/2003-C.E., dt. 10-6-03 is applicable either to new industrial unit or existing units undertaking substantial expansion by way of increase in installed capacity by not less than 25%. With a view to ensure smooth implementation of exemption scheme, the Central Board of Excise Customs, vide Circular No. 772/5/2004-CX., dt. 21-1-2004, issued guidelines/clarifications to explain the scope of substantial expansion which are as under : - (a) Increase in installed capacity of an existing unit by not less than 25 % should be the result of installation of additional plant and machinery. Any increase in the installed capacity by means other than installation of additional plant and machinery would not qualify for the benefit of exemption under substantial expansion . (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Tribunal in the Case of M/s Travancore Titanium v. CCE - 2002 (148) E.L.T. 640 (T). 18. The appellant have submitted that in the Notification No. 50/2003-CE dated 10-6-03, manner of substantial expansion has not been mentioned/ explained. They effected increase more than 25% in the installed capacity, modernized their furnace and incurred capital investment of over Rs. 89 lacs, there was technically no other economical way for the appellant to effect substantial expansion of installed capacity except by way of installation of a new 5 Ton furnace and other requisite infrastructure equipment and that in a similar case of Ms Purshottam Industries Ltd, where machinery and equipment were replaced, Commissioner, Central Excise, Meerut-I vide Order-in-Original No. 09-17/Commr/MRT-I/06, dated 28-2-06 has accepted that substantial expansion has been done. 19. I find that in the impugned Order-in-Original, the adjudicating authority has himself admitted that: - (i) The appellants have replaced their 2 (two) 4.0 Ton capacity crucibles by two new 5.0 Ton capacity crucibles. (ii) Old Control Panel installed with 4.0 Ton crucible has been replaced with new one for 5.0 To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how the substantial increase in installed capacity was effected and the notification is to be interpreted on its plain terms. I find force in the appellants submission in view of Hon ble Supreme Court s decision in the case of CCE, Chandigarh v. Bhalla Enterprises - 2004 (173) E.L.T. 225 (S.C.) wherein it was held that The basic rule in interpretation of any statutory provision is that the plain words of the statute must be given effect to.......... In the case of CCE, Trichy v. Rukmani Pakkwell Traders [2004 (165) E.L.T. 481 (S.C.) = (2004) 11 SCC 801], it was held that It is settled law that exemption notifications have to be strictly construed. They must be interpreted on their own wording. Wordings of some other notifications are of no benefit in construing a particular notification................ The exemption contained under notification No. 50/2003-C.E., dated 10-6-03 is applicable to (ii) industrial unit existing before the 7th day of January 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five per cent on or after the 7th day of January 2003, but have commenced commercial production from such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular dated 21-1-2004, read together, signify that though the required increase in installed capacity of unit should be achieved by addition of plant and machinery, but if such increase is achieved by way of modernization, even then the unit would be deemed to have satisfied the conditions. Further as per Clause (d) of Para 3, as long as there is increase of 25% in the installed capacity, other criterion seems to have been met i.e. accretion in installed capacity by at least 25%. 26. From the aforesaid clarification, it cannot be concluded that substantial expansion could be judged only on the ground of installation of additional machinery. Rather it could also be judged from additional investment for modernization or for improving the quality of existing product, if it results in increase of installed capacity of units by not less than 25%. 27. In the light of above discussions and case laws, the appellants are entitled for exemption under Notification No. 50/2003-CE dated 10-6-03 with regards to achievement of substantial expansion. I further find support from the following case laws: - In the case of Rama Vision Ltd. v. CCE reported at 2006 (200) E.L.T. 465 (Del.), the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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