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TMI Blog2018 (2) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... ial units. The Revenue has heavily relied on the CBEC circular No.939/29/2010-CX dated 20.10.2010. In that circular where the industrial unit manufacturer a new product by installing fresh plant, machinery or capital goods after the cut-off date, the said circular will apply. Admittedly, the appellant has started their production before the cut-off date, therefore the said circular has no relevance. The appellant has started three different units on the same plot of land and having separate plant and machinery, separate, inputs, manpower, finances and are manufacturing different products, therefore, all the three units cannot be considered as one unit. In fact in the factory, there are three different units, therefore the Unit No.III is separate from Unit No.I is entitled for exemption under N/N. 50/03-CE. Appeal allowed - decided in favor of appellant. - E/Stay/51850/2015 in Appeal No E/52955/2015 - A/62164/2017-EX[DB] - Dated:- 11-12-2017 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Shri B.L. Narsimhan, Advocate for the appellant Shri Satyapal Singh, AR for the respondent ORDER Per: Ashok Jindal The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing section of a factory qualifies as distinct industrial unit for the purpose of said Notification. He relied on the following case laws: (1) Devidayal Electronics and Wires Ltd. another Vs. UOI-1984 (16) ELT 30 (Bom.) (2) CCE Vs. Himalayan Co-op Milk Product Union Ltd.-2000 (122) ELT 327 (SC) (3) CCE Vs. Reckitt Colman India Ltd.-1997 (92) ELT 457 (SC) (4) Tirupati LPG Industries Ltd. Vs. CCE, Meerurt-I-2015 (324) ELT 201 (Tri.-Del.) (5) CCE, Meerut-II Vs. Prakash Straw Board Pvt.Ltd.-2016 (332) ELT 741 (Tri.-Del.) (6) Rollatainers Ltd. Vs. CCE, Delhi-III-2004 (170) ELT 257 (SC). (7) Victoria Automotive INC Vs. CCE, Dehradun-2017-VIL-947-CESTAT-DEL-CE (8) CCE, Chandigarh Vs. Dharmpal Premchand Limited-2017 (TIOL-4060-CESTAT-CHD. 4. He further submits that unit No.III came into existence with an independent civil structure, separate facilities, unique production line, independent workforce, separate plant and machinery, different raw materials, prior to sunset date 31.03.2010. The ground plan of the factory evidencing the layout of unit No.I and unit No.III are separate. Therefore, unit No.III is distinct unit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the adjudicating authority deals with only installation of additional plant and machinery and not of setting up of a new unit itself and hence reliance placed by the Revenue on the said circular is legally incorrect. 6. On the other learned AR relied on the CBEC circular relied on the 939/29/2010-CX dated 22.12.2010 and 960/03/2012-CC dated 17.2.2012. He supported the impugned order and submitted that there was no separate sub-station, electrical control board, generator set, water source, effluent treatment plant, sewerage system for different units. Moreover, the claim of the claim of the appellant is that they were having three different units and the Commissioner denied the exemption. The appellant was manufacturing all the goods in the same factory, it cannot be termed as separate unit. 7. Heard the parties and considered the submissions. 8. On careful consideration of the submissions of both sides, we find that the following issues emerge: Whether in the facts and circumstances of the case, the benefit of Notification No.50/03 dated 10.6.2003 can be denied to the unit No.III on the ground that the unit No.III was not an independent industrial unit but an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50/2003 dated 10/06/2003:- 1. We hereby declare that we intend to avail of the exemption under Notification 50/2003-CE dated 10/06/2003 from the first clearances during the current financial year and we also declare that we shall not withdraw the option to avail the exemption during the remaining part of the financial year. 2. We also submit the following particulars:- a) Name address of the Manufacturer :M/s WIPRO LIMITED Plot No.77 EPIP Phase-I, Jharmajri Tehesil :Nalagarh, Disst. Solan (H.P.) b) Location/ Location of Factory / Factories :Plot No.77 EPIP Phase-I, Jharmajri Tehesil :Nalagarh Disst.Solan (H.P.) c) Descriptions of inputs Used in manufacture of Specified goods :Noodles, Perfumes, oils/fatty acid, Caustic soda, Tale, Kaolin, Color etc. d) Descriptions of the Specified goods Produced :Toilet Soap e) Date on which option Under this notification Has been exercised : It will be informed in due course since the date of commercial production is not yet finalized. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machal Pradesh Subject: Compliance with conditions enumerated under notification 76/2003-CE dated 05/11/2003 to claim CE exemption under Notification No.50/2003 dated 10/06/2003 Dear Sir, We wish to inform you that we shall be shortly commencing the production and clearance of excisable goods from our factory. As prescribed unde CE Notification No.76/2003, we are making the following declarations in order to claim CE exemption under Notification No.50/2003 dated 10/06/2003:- 1. We hereby declare that we intend to avail of the exemption under Notification 50/2003-CE dated 10/06/2003 from the first clearances during the current financial year and we also declare that we shall not withdraw the option to avail the exemption during the remaining part of the financial year. 2. We also submit the following particulars:- a) Name and Address of the Manufacturer M/s Wipro Limited, Plot No.77, EPIP Phase I, Jharma Tehsil Nalagarh, DisttSolan (H.P.) b) Location/ Location of Factory/ Factories M/s Wipro Limited, Plot No.77, EPIP Phase I, Jharma Tehsil Nalagarh, DisttS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods specified in the Schedule appended hereto, other than the goods specified in the Annexure appended hereto, and cleared from a unit located in the Industrial Growth Centre of Industrial Development Centre or Export Promotion Industrial Part or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area as the case may be, specified in [Annexure-II and Annexure-III] appended hereto, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts: Provided that the exemption contained in this notification shall apply subject to the following conditions, namely:- (i) The manufacturer who intends to avail of the exemption under this notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year; (ii)The manufacturer shall, while exercising the option under condition (i), inform in writing to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (supra), the Hon ble Apex Court had an occasion to examine the issue and relying on the decision of Bombay High Court in the case of Devidayal Electronics Wire Ltd. wherein the Apex Court has observed as under: 6. The Tribunal while allowing the appeal followed a decision of Bombay High Court reported in 1984 (16) E.L.T. 30 (Bom.) - Devidayal Electronics Wires Ltd. and Another v. Union of India and Another. The similar notification in respect of an earlier year was under consideration before the Court. It has been noticed that two words have been used in the Notification namely, the factory and industrial unit . The two expressions would be presumed to have been used for different meaning. It was held that industrial unit would mean something other than the factory, which would be a separate isolate part of the plant which is exclusively used for manufacture of goods for which exemption is claimed. Learned counsel for the appellants tried to distinguish the case on facts. We, however, find that in principle what has been held in Devidayal (supra) as followed by the Tribunal, cannot be said to be an incorrect view. The factual deviation would be a matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Notification says .. the capital investment made from time to time on plant and machinery installed in the industrial unit in which the said goods under clearance are manufactured .... . The expression said goods is not used in the Notification interpreted in the case of Golden Press (supra). The said goods signifies or identifies the goods which are covered under Item 68 in respect of which exemption has been granted. But the word said is not used in the Notification under consideration in the case of Golden Press (supra) as indicated above says ... industrial unit in which the goods under clearance are manufactured . . The goods have not been specified by using the expression said goods . In the Notification dated 19-6-1980, as already indicated earlier, the goods falling under Item 68 are to be referred as said goods . Therefore, in our view it will not be possible to take into consideration the value of investment of all the plants and machinery manufacturing different items viz. goods other than the said goods . 7. In our view the Tribunal rightly preferred the view taken in the case of Devidayal (supra). The factual hurdles like a common genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used in the sense in which the Excise Department understands it. 4. Having regard to the facts of the case, we do not find any infirmity in the order of the Tribunal. 5. We were also referred to a number of decisions in which the Central Excise Tribunal has consistently followed the same view. Two of the cases came to this Court in appeal where this Court did not interfere with the orders passed by the Central Excise Tribunal [1. CCE v. Prem Cables Pvt. Ltd. - 1989 (43) E.L.T. 739 (Tribunal) - Affirmed by this Court in 1997 (83) E.L.T. A-46. 2. Texspin Engg. Mfg. Works v. CCE, Final Order No.204/86-D, dated 11-4-1986 - Affirmed by this Court in 1990 (50) E.L.T. A57. Our attention was also drawn to a judgment of the Bombay High Court in Devidayal Electronics Wires Ltd Anr. v. Union of India Anr. - 1984 (16) E.L.T 30 (Bom.)], where a similar view has been taken. The learned Addl. Solicitor General has contended that these cases were decided under different Notifications. The contention of the assessee is that this view of the Bombay High Court has been consistently followed by the Tribunal in many other notifications also. 16. Further, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue was again examined by this Tribunal in the case of Prakash Straw Board Pvt.Ltd. (supra), wherein this Tribunal has followed the decision in the case of Tirupati LPG Industries Ltd. observed as under: 7. We further find that in the case of Tirupati LPG Industries Ltd. v. CCE, Meerut-I (supra), the assessee was having two separate units in their factory one for manufacturing of LPG cylinder and another for conductors unit and this Tribunal has considered the substantial expansion of both the units separately, therefore, following the precedent decision of this Tribunal and observation made by the learned Commissioner (Appeals) in the impugned order, we do not find any infirmity in the impugned order. 18. From the above discussion, we find that it is clear that the factory and unit are two different connotations and a factory can have three different industrial units. The Revenue has heavily relied on the CBEC circular No.939/29/2010-CX dated 20.10.2010. In that circular where the industrial unit manufacturer a new product by installing fresh plant, machinery or capital goods after the cut-off date, the said circular will apply. Admittedly, the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. v. Commissioner of Income-tax, Karnataka, reported in (1980) 12 ITR 11 at page 21 wherein it has been held that, The fact that there was common management or the fact that separate accounts had not been maintained, would not also lead to the conclusion that they were not separate undertakings. Even if separate account is not maintained the investment on each of the units can be reasonably determined with the material which the assessee may make available to the department. We are, therefore, of the view that the finding of the Tribunal that the assessee was not entitled to relief under section 84 and deduction under section 80J of the Act, during the assessment years in question is erroneous. 21. We also take note of the fact that in the case of Rollatainers Ltd. (supra), the Hon ble Apex Court has examined the issue and observed as under: 8. Simply because both the factories are in the same premises that does not lead to the inference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is a passage in between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd both the sides and perused the appeal records. We note that the impugned order elaborately examined the identity of the appellants factory as a whole with various statutory Government authorities and utility agencies. We note that such appreciation is not directly relevant to examine the application of exemption under Notification No.50/03. In fact, the appellant also did not contest the fact that they have only one factory in the said location. They only pleaded that in the said factory there were two identifiable manufacturing units involved in the manufacture of different types of products in different production lines. We note that there were certain factual errors recorded by the original authority while examining the dispute. He records that the excise registration and the declaration filed under Notification No.50/03, covered entire premises. We note that in the intimation dated 21.04.2008, the appellant categorically displayed a site plan clearly demarcating Unit-I Unit-II with a specific remark. Similarly, the original authority records that the term unit used in the said notification refers to the said factory . The original authority records that it does not matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ylinder unit is totally incorrect, as held by Apex Court in the case of Reckitt Colman of India Ltd. (supra) each section or part of a factory manufacturing a different commodity has to be treated as separate manufacturing unit. The same view has been expressed by the Apex Court in the case of Himalayan Co-op. Milk Product (supra) and also Hon ble Bombay High Court in the case of Devidayal Electronics Wires (supra). Therefore, a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than one manufacturing units and each section or part of the factory would be independently eligible for exemption, as the duty exemption under Notification No.50/2003-C.E. is unit-wise and not factory-wise. Therefore, for determination of eligibility of cylinder unit, for exemption under Notification No.50/2003-C.E. the capacity expansion of 25% or more has to be seen in respect of this unit only and not the capacity expansion of the entire factory as a whole. In view of this, the impugning order denying benefit of exemption in respect of cylinder unit is also not correct. 10. In Devidayal Electronics Wires Limited (supra) while in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor would be the date of commencement of production in the industrial unit. A unit is treated as existing unit if the commercial production has started prior to 07.01.2003 and is treated as a new industrial unit if the commercial production has started after 07.01.2003. 9. We find that in order to distinguish the factory and the industrial unit, the Ld. Commissioner (Appeals) has correctly followed the ratio of the Hon ble Apex Court decision in the case of Tencon Industrial Corporation Vs. CCE, Bombay -I- 2003 (156) ELT 164 (SC) wherein it was held that where a factory produced more than one excisable goods production is by one unit and as such the clearances cannot be clubbed together. He also correctly followed the decision of CCE Vs. Himalayan Cooperative Milk Product Union Ltd. - 2000(8) SC 642 wherein it was held that the Industrial Unit is a separate isolated part of the plant which is exclusively used for the manufacture of goods for which exemption is claimed. 10. In the specific context of area based exemption, similar issue came up before this Tribunal in the case of Tirupati LPG Industries Ltd. Vs. CCE, Meerut-I - 2015 (324) ELT 201 (Tri. Del.) wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he various machinery is run on trial/test basis and if the production is not of the desired quantity and of 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. 8.5 In this case from the production figures of conductor unit during Oct., 2002 - Dec., 2002 period, Jan, 2003 to March, 2003 period and from April, 2003 to June, 2003 period, it is clear that production during period prior to April, 2003 was only trial production, and there is merit in the Appellant s plea that their commercial production started in April, 2003 and accordingly this unit would be eligible for exemption from July, 2003 when the necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or part of the factory would be independently eligible for exemption, as the duty exemption under Notification No.50/2003-C.E. is unit-wise and not factory-wise. Therefore, for determination of eligibility of cylinder unit, for exemption under Notification No.50/2003-C.E. the capacity expansion of 25% or more has to be seen in respect of this unit only and not the capacity expansion of the entire factory as a whole. In view of this, the impugned order denying benefit of exemption in respect of cylinder unit is also not correct. 24. In view of above analysis, we hold that the appellant has started three different units on the same plot of land and having separate plant and machinery, separate, inputs, manpower, finances and are manufacturing different products, therefore, all the three units cannot be considered as one unit. In fact in the factory, there are three different units, therefore we hold that the Unit No.III is separate from Unit No.I is entitled for exemption under Notification No.50/03-CE. 25. With these terms, the impugned order is set aside and the appeal is allowed with consequential relief, if any. The stay application is also disposed of. (pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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