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TMI Blog2015 (10) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... ant starts after completion of erection installation. During commissioning, various machinery is run on trial/test basis and if the production is not of the desired quantity and if the desired quality, the necessary adjustments are made. The running of a plant during its commissioning is only a trial run meant to make the necessary adjustments in the machinery and calibrate them to optimise their productivity. Commercial Production starts only when the commissioning i.e. trial run is complete. Though during trial run, there may be some production and the manufacturer may have sold the same, the plant cannot be said to have commenced commercial production during that phase. The plant can be treated as having commenced commercial production only after completion of trial run i.e. commissioning. The only ground on which the exemption is sought to be denied, is that expansion of 25% or more of installed capacity should have been in both units i.e. in conductor unit also. In our view, this ground for denial of exemption to cylinders unit is totally incorrect as, as held by apex court in the case of Reckitt Colman of India Ltd. (1997 (4) TMI 79 - SUPREME COURT OF INDIA) each section or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 [AED (GSI)] and Additional Duties of Excise (Textiles and Textile Articles) Act, 1978[AED(T&TA)]. This exemption notification was amended by Notification No.27/05-CE dt.19.5.05 by which in addition to some changes, Annexure III was also added. The exemption notification No.50/03-CE, as amended by Notification No.27/05-CE was applicable to two types of units (1) - new industrial unit set up in the area specified in Annexure II and III which have commenced their commercial production on or after 7.1.2003 but not later than 31.3.2010;(2)- industrial units existing before 7.1.2003 but which have undertaken substantial expansion by way of increase in installed capacity by not less than 25%, on or after 7.1.2003 and have commenced commercial production from such expanded capacity not later than 31.3.2010. 1.3 There is no dispute that the goods manufactured by the appellant company are not in the negative list of annexure I. 1.4 According to the appellant -regular production of ASCRS conductors started in April, 2003. On 11.7.2003, the appellant company intimated to the Range Superintendent that they have started commercial production of conductors from 1.4.2003 and they want to avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty demands totalling ₹ 65,70,41,629/- were confirmed alongwith interest and besides this, penalty of equivalent amount was also imposed on the appellant company under section 11AC and penalty of ₹ 10,000/- each were imposed on each Shri Gyan Chand Goyal Shri Arun Goyal and Shri Ankit Garg under Rule 26 of the Rules. This penalty of ₹ 10,000/- was imposed on each directors by each of the four Orders-in-Original. Against these orders of the Commissioner, these 16 appeals have been filed. 2. Heard both sides. 3. Shri B.L.Narsimhan, Advocate, learned Counsel for the appellants, pleaded that both manufacturing units - ACSR unit and LPG cylinder unit are situated in the same factory, that the cylinder unit started manufacture in 2001 and became eligible for exemption under Notification No.50/03-CE by way of capacity expansion by more than 25% with effect from 6.1.2004, as while initial capacity of this unit was 3,68,440 LPG cylinders per annum by January, 2004 it had increased to 552460 cylinders per annum, that this capacity expansion is supported by chartered engineers certificate and had been achieved by addition of new machines, viz. five Mig Welding Machines, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003. With regard to the cylinder unit, he pleaded that both units conductor division as well as cylinder division have to be treated as one factory and for duty exemption under Notification No.50/03-CE to the cylinder unit, capacity expansion by 25% or more should have taken place in both the divisions i.e.in the cylinders unit as well as in the conductor unit. He, therefore, pleaded that there is no infirmity in the impugned order. 5. We have considered the submissions made from both sides and perused the records. 6. It is not in dispute that both divisions conduction division and cylinder division are located within the same factory compound and the goods being manufactured - ACSR conductors and LPG cylinders are not in the negative list of Annexure I and are covered for exemption. The first point of dispute is as to whether the Khasra Nos. on which the manufacturing units are located are notified in the annexure II of the notification and the second point of dispute is as to whether the conductor unit and LPG cylinder unit are independently eligible for exemption under this notification. 7. As regards, the first point of dispute, the factory in which both the units are locate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Existing Industrial Estates /Region of District Dehradun "Selakui Industrial region" of tehsil vikasnagar is mentioned against S.No. 11 and against Selakui Industrial Region among the khasra numbers, the khasraNos 235 to 257 are mentioned. Therefore the factory of the appellant unit has to be treated as located in the notified Industrial area and therefore eligible for exemption even during the period prior to 19/5/05. By notification No. 27/05-CE dated 19.5.05, against S.No 11 of the list of existing Industrial areas of District Dehradun given in Annexure II, only the name of the village mentioned in 3rd column against "Selakui Industrial Region" was changed from "Selakui" to "Village Selakui, Central Hope Town and Camp Road" The amendment by notification No. 27.05-CE dated 19.5.05, by which the name of the village in which the Industrial Area "Selakui Industrial Region" falls was changed, is in our view, only a clarificatory amendment. Though, by the amending notification dated 19.5.05, some minor changes were made, the Khasra No. 235 to 243 still remain covered under this Industrial Area. For the purpose of this exemption notification, what is relevant is as to whether the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot concerned with sunset clause introduced by Notification No.27/05-CE dt.19/5/05 but are concerned withthe "sunrise clause" i.e. which industrial unit are to be treated as new industrial unit eligible for this exemption when this exemption notification was issued on 10/6/03. 8.2 Para 2(a) of the Notification No.50/03CE dt.10/6/03, as the same stood during the period prior to its amendment on 19/5/05- covered- "new industrial units which have commenced their commercial production on or after 7th January, 2003". 8.3 The word "new ", as per Chambers' 21sth Century Dictionary means - "recently made, brought, built, ---- ,etc. recently discovered, never having existed, before, just invented, - recently arrived, installed" and as per Little Oxford Dictionary, 7th Edition, the word "new" means - "of recent origin or arrival; made, discovered or acquired or experienced for the first time, unfamiliar -" In our view, in the context of this notification, the work 'new' must be construed as not existing earlier. 8.4 Now, the new industrial unit cannot be the one commencing commercial production on or before after 10/6/03, the date of issue of exemption notification - as, if this meaning is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving commenced commercial production only after completion of trial run i.e. commissioning. 8.5 In this case from the production figures of conductor unit during Oct 02- Dec02 period, Jan 03 to March 03 period and from April 03 to June 03 period, it is clear that production during period prior to April, 03 was only trial production, and there is merit in the Appellants plea that their commercial production started in April 03 and accordingly this unit would be eligible for exemption from July 03 when the necessary declaration filed with the Assistant Commissioner. 9. As regards, the cylinder unit, this unit had started production sometime in 2001 and this unit undertook expansion of installed capacity only in December, 2003 which was completed on Jan.2004, as result of which, installed capacity for production of cylinders increased to 552460 per annum from the earlier capacity of 368440 per annum. It is not in dispute that the capacity expansion was achieved by adding certain machinery, namely, five Mig Welding Machines, one Deep Drawing Hydraulic Press of 200 tons, one Trimming machine, one Foot Ring Forming machine, two Rotary Shearing Machines, two Auto Welding machines and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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