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TMI Blog2015 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 5,27,66,984/- confirmed by the appellant in the impugned order. Thus, the Department's allegation that there was no production by the appellant unit during March, 2010 and that the appellant have made only bogus entries regarding production during March, 2010, in their records is not compatible with the Commissioner's order confirming duty demand of ₹ 90,805/- in respect of the clearance of 30.40 Mts. of M.S. Ingots during March, 2010. When the Department has not disputed the procurement of raw materials during March, 2010 and its consumption and there is no evidence to prove that the sale of about 30 MTs. of M.S. Ingots during the last week of March, 2010 was false and when the Commissioner has confirmed the duty demand on 30.4 MTs. of M.S. Ingots cleared during the month of March, 2010, and thereby accepting the appellant's claim of having commenced production during March, 2010, the Department, merely on the basis of its own interpretation of Electronic Load Survey Report for 30.03.2010 and 31.03.2010 cannot allege that the appellant unit had not commenced commercial production on or before 31.03.2010. - Even though, there is minor discrepancy, between the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on 30th day of March, 2010. On this basis, they are claiming the duty exemption under this exemption notification. There is no dispute that the appellant company under their letter dated 26.03.2010 had filed the required declaration for availing exemption notification no.50/03-CE dated 10.06.2003, wherein they had declared the product to be manufactured by them and that they intended to start commercial production on or before 31.03.2010. 1.2 According to the department, an information was received that the appellant were wrongly availing this exemption notification inasmuch as they had failed to commence commercial production on or before 31.03.2010 and had actually commenced commercial production only after 31.03.2010 and hence, they were not eligible for exemption under this notification, but were still availing exemption. The departmental officers accordingly visited the appellant's unit on 7.1.2011. In course of inquiry with the Director of the Appellant Company, Shri Sompal Singh, the officers learnt that the land for the unit had been purchased from UPSIDC in 2006, that the units is manufacturing M.S. Ingots from steel scrap and sponge iron, that there is only one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 30.03.2010 and the production of 17.52 MTs was shown on 31.03.2010. The Department was of the view that the appellant had not commenced commercial production as looking to the records of the operation of the furnace, it could not be said that the unit had commenced commercial on or before 31.03.2010. In course of subsequent inquiry, it was learnt that since the power consumption of the furnace installed for production of M.S. Ingots varies from 600 units to 1200 units PMT, it was not possible to produce 11 MT of M.S. Ingots by consuming 340 units of power. On inquiry, it was also found that the concerned officers of the appellant company accepted that there was no production of M.S. Ingots on 29.03.2010, but they claimed that the same has been wrongly shown in the records. However, in respect of the operation of the furnace on 29.03.2010 and 31.03.2010, while the appellant company claimed that they had manufactured 29 MT of M.S. Ingots, according to the department, from the mode of the operation of the furnaces and power consumption, it was not possible to manufacture the quantity of M.S. Ingots claimed to have been manufactured by the appellant and according to the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plot on which the factory is located, is specified in the notification no.50/03-CE and the goods manufactured are also covered for exemption under this notification, that during the last week of March, 2010 the appellant unit had received 100.260 MTs of M.S. Scrap, 236.50 MTs of Sponge Iron and 47 MTs of Silco Magnese, that power consumption on 29.3.2010, 30.03.2010 and 31.03.2010 was 340 units, 6052 units and 30420 units respectively and the production recorded on 30.03.2010 and 31.03.2010 was 11.675 Mts. and 17.52 MTs. respectively, that there was no production on 29.03.2010, thought earlier, some production had been shown by mistake on this date also, that the induction furnace had been installed by an engineer of IIPL, that as per statement dated 15.3.2011 of Shri Tarun Sangal of IIPL, he had received the order for supply of the furnace in November, 2009 and had supplied the goods in seven consignments under invoices on 19.2.2010 to 20.05.2010 and that the furnace supplied is 3000 KW dual Mode with two crucibles and one standby crucible each of 6 MT. capacity, that the panel in dual mode can operate two crucibles of 6 MT. each simultaneously, that the equipment was commissioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn claim that 600 units to 1500 units are required for manufacture of one MT. of M.S. Ingots, as per the appellant's record of power consumption of 334 units on 29.03.2010, production of 11 M.T. of M.S. Ingots on that day was impossible and subsequently, even the appellants themselves accepted that on 29.03.2010 there was no production and claimed that this production had been wrongly recorded. He pleaded that the power consumption for 30.03.2010 was 6052 units and on the basis of the appellant's own norm of power consumption, production of 11.67 MTs. recorded for this date was impossible, that -- similarly, production of 17.52 MTs recorded for 31.03.2010 is impossible looking to the period for which the furnace was operated; that initial heating of the furnace takes 14 hours and hence the production of 11.675 MTs. shown on 30.03.2010 and production of 17.52 Mts. was of 31.03.2010 is impossible, that even as per the opinion of M/s. Rajeev Jain and Associates, Chartered Engineer, on the basis of the power consumption on 29.03.2010, no production was possible and on the basis of the power consumption on 30.03.2010, (about 6000 units) production of only 4.152 MTs was pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive list of the items specified in Annexure-I of the notification and the Khasra No. of the Plots on which the unit is located are specified in Annexure-II of the notification. There is also no dispute that the appellant under their letter dated 26.3.2010 had filed the necessary declaration to the jurisdictional Central Excise Authorities informing that they will commence commercial production on or before 31.03.2010. The dispute is only in respect of the eligibility of the appellant unit for exemption in terms of conditions as prescribed in para-2 of the exemption notification. In this regard para-2 of the exemption notification is reproduced below:- 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) New industrial units set up in areas mentioned in Annexure-II and Annexure-III, which have commenced commercial production on or after the 7th Day of January, 2003, but not later than the 31st day of March, 2010; (b) Industrial units existing before the 7th day of January, 2003 in areas mentioned in Annexure-II, but which have undertaken substantial expansion by way of increase in installed capacity by not less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents are made and defective parts or components, if any found, are replaced. The commercial production starts only when the commissioning i.e. trial run is complete and the plant is in a position to start the manufacture of the goods of the desired quality and according to its installed capacity. In our view, the date of commencing of the commercial manufacture is the date of commissioning of plant when the newly commissioned plant had been run and some goods of the desired quality had been produced. However, once the plant is commissioned, it is not necessary that from the day one it must start manufacture at its full installed capacity, as the quantum of the goods produced would depend upon the supply orders which the manufacturer may have at that time or the quantity of the goods which the manufacturer expects to be sold at that time. Thus, in the present case the point which is to be decided as to whether the commissioning of the plant was complete i.e. whether the plant of the appellant was in position to start production of the desired quality of M.S. Ingots according to its installed capacity and whether some production had been made on or before 31.03.2010. 8. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made only bogus entries regarding production during March, 2010, in their records is not compatible with the Commissioner's order confirming duty demand of ₹ 90,805/- in respect of the clearance of 30.40 Mts. of M.S. Ingots during March, 2010. 9. Moreover, the appellant had filed the declaration regarding availment of this exemption on 26.03.2010 and it was possible for the jurisdictional central excise officers to immediately visit the unit to verify as to whether at that point of time they were in position to start the commercial production or not. But the unit was visited only in Jan. 2011. In our view, merely on the basis of the load survey report for 30.03.2010 31.03.2010, it would not be correct to conclude that there was no production of M.S. Ingots on these dates. While the Engineer of IIPL which had supplied the induction furnace has given a certificate that the equipment supplied by them was commissioned in two installments - one inverter and three crucibles were commissioned on 30.03.2010 and second inverter was commissioned on 29.03.2010 and that on 30.03.2010, the plant was in position to start commercial production. Further, Department's side except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been commissioned on or before 31.03.2010 i.e. whether on or before 31.03.2010, a plant was in a position to manufacture the finished product of the desired quality and according to its installed capacity and some production had been made and as discussed above, on this point, there is no evidence produced by the Department to refute the Appellant's plea based on certificate of the furnace suppliers, IIPL and Chartered Engineer's certificate, that the furnace had been commissioned on 30.03.2010. Moreover when the Department does not dispute that on 30.03.2010 and 31.03.2010 there was power consumption of about 36000 units and there was raw material consumption sufficient to produce the quantity of M.S. Ingots claimed to have been produced and there was clearance of about 30 M.T. of M.S. Ingots on 30th 31st March, 2010 on which the duty has been demanded, the Department can not allege that there was no production of M.S. Ingots on or before 31.03.2010. Even though, there is minor discrepancy, between the production recorded on 30.03.2010 31.03.2010 of about 29 MT and the goods sold upto 31.03.2010 - 30.40 M.T., the fact remains that on 30.03.2010, the furnace had been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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