9911796707
TMI Blog2018 (4) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... f the impugned order of the Commissioner wherein the benefit of Notification No.50/2003-CE has been denied for the period after 01.05.2016, consequential confirmation of duty demands, interest and imposition of penalties on both the assessee and its officials. Respondent Commissioner is in Appeal No. E/50204/2015 against the portion of the order of the Commissioner wherein the benefit of the exemption has been extended to the assessee for the period up to 01.05.2016 in view of the Circular dated 22.12.2010 and 17.02.2012 issued by the CBEC. 2.1. The brief facts of the case are that the Greenply set up a unit in Pantnagar (Rudrapur) in the year 2006 for the manufacture of plywood block board, plain particle board, laminated particle board, etc. This unit opted for exemption (area based) under Notification No.50/2003-CE and accordingly was granted the benefit and the goods were being cleared from this unit without payment of excise duty. 2.2. In the year 2007, Greenply envisaged to set up another unit in the same location within the same plot of Unit-I for the manufacture of Medium Density Fiber (MDF) Board. Accordingly, after conducting necessary feasibility study etc., Greenply s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot commence commercial production (in Unit II) on or before 31st March 2010 and hence not eligible for the exemption. The Ld. Commissioner, however, held that in terms of Circulars dated 22.12.2010 and 17.02.2012 issued by the CBEC, clearances of finished goods made by Unit-II can be treated as expansion of plywood plant (Unit-I) already under exemption since 05.05.2006 and the exemption to Unit-II is in tandem with Unit-I and the exemption period would be ten years from the date of commencement of production for Unit-I, i.e., 02.05.2006 and thus, granted exemption till 01.05.2016 for the clearances of Unit-II. The Commissioner also imposed penalty of Rs. 5 lakhs on Mr. Shobhan Mittal, Executive Director of Greenply and Rs. 5 lakhs on Mr. Martin Cameron, Production Head of Greenply, under Rule 26 of the CE Rules, 2002. 4. Hence these appeals by Greenply, its officials and Cross appeal by the Department. 5. The learned counsel for the appellants-assessee urges that Para-2 of Notification No. 50/2003 - CE provides that the exemption contained in this notification shall apply only to the following kinds of units, namely - (a) New industrial units setup in areas mentioned in Annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 04.06.2010 of Sh. Martin Cameron Production Head of Greenply. (o) Statement dated 04.06.2010 of Sh. S.B. Saha. (p) Statement dated 04.06.2010 of Sh. Shobhan Mittal, Executive Director of Greenply. (q) Statement dated 22.06.2013 of Sh. Shobhan Mittal (r) Production documents of the press division for the period 30.03.2010 to 02.04.2010. (s) Statement dated 16.07.2010 of Sh. Shobhan Mittal. (t) Statement dated 15.12.2010 of Mr. Michael Kaufmann, Site Manager of Diefenbaker, Germany. 8. All the aforementioned documents are undisputed and part of the records of the court below, clearly establish that the Unit-II of the appellant for manufacture of MDF Board etc., had commenced commercial production before 31st of March 2010. 9. The learned counsel further urges that the learned Commissioner in the impugned order has erred in rejecting all these evidences in a very perfunctory or flimsy manner without giving due consideration to the same. The learned Commissioner in the impugned order have erred in choosing to solely go by the state of affairs at the plant, as was prevalent during the period June, August and October 2010, when visits were made by the Departmental Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets of Unit-I to meet the required electric power load of Unit-II, does not disentitle the appellant Unit-II, as a new independent unit, to avail the benefit under the Notification. 12. The learned counsel further draws attention to the facts that the appellant had filed requisite declaration dated 9 March, 2010/16 March, 2010/18 March, 2010, with the Jurisdiction Authorities informing its intention to avail benefit of the said Notification. Further in compliance thus have started commercial production and also clearing its goods without payment of excise duty, before 31 March, 2010. The appellant also submitted to the Department an intimation letter on 31 March, 2010, informing the commencement of commercial production alongwith a copy of commercial invoice dated 31 March, 2010 raised on Raghuraji Agro Industries Pvt. Ltd. Faizabad Road, Akbarpur, Ambedkar Nagar for sale of Green Panelmax Plain A Exterior Grade I, Panelmax Laminated Flooring MDF - A Exterior Grade I, Panelmax Laminated MDF - A Grade IIA and Panelmax Veneered MDF - A Exterior Grade I total quantity of 690 pieces for an amount of Rs. 1,86,342/-. When the Department in follow-up investigation conducted, verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s new Unit-II could not have run in fully automatic mode, yet he did not completely rule out the possibility of running of plant in manual mode. He categorically opined that with the maximum load of 756 KW attained by the appellant during the period of claimed commercial production that is from 30 March, 2010 to 02 April, 2010, which even could not suffice the requirement of two main sections, refiner and dryer, which can only run on grid power, the appellant unit to could not have been operational during the period from 30 March, 2010 to 02 April, 2010 and that no MDF board could have been produced during the said period by the appellant. However during cross-examination before the Commissioner, the Chartered Engineer admitted that if the power available from the three DG sets is considered (which was not considered earlier), alongwith the power load available from UPCL grid, the commercial production under dispute, was feasible. The availability of alternate power from the three DG sets has not been considered by the Department leading to erroneous conclusions. 15. Further pursuant to the declarations filed by the appellants, a verification was ordered by the Assistant Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hows MDF boards being loaded into trucks for dispatch. Further in the Puja ceremony upon commencement of commercial production on 31 March, 2010, Shri N.C. Pant and Shri Pundir of SIDCUL also participated. In the photographs the Central Excise Officers from the Rudrapur Range are also visible. In the said photographs MDF boards are clearly visible stacked behind the officers standing in the front. Thus the commercial production having been commenced on 31 March, 2010, had been witnessed by the officers of the Department. 16. The fact that the inspecting officers at the time of Panchnama proceedings on 21 May 2010 also found stock of semi-finished goods/semi-finished MDF boards of the size 8'X4' and were part of the left over stock of the production during the period 30 March, 2010 to 02 April, 2010. Further there is no finding by the learned Commissioner that the clearances evidenced by the invoices dated 31 March, 2010, were farce and/or the stocks of semi finished goods found on 21 May, 2010 were not the production of the appellant. Further it is also not the case of the Revenue that these clearances dated 31 March, 2010 were not commercial in nature or in other words th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on "on or after 7th January 2003" with reference to the subject of expansion of the production capacity. Once it was specified that the units which had existed on 7th day of January 2003 had undertaken expansion in their production capacity would be entitled for the benefit, it would have obviously been understood that such expansion could have been either prior to or after 7th January 2003. The framers of notification have further specifically period that expansion has to be undertaken on or after 7th day of January 2003. Being so, the contention that the benefit under the clause 2(b) of the notification would apply even to the expansion which had commenced prior to 7th day of January 2003 cannot be accepted." 18. Per contra applying the ratio of the above, if an assessee undertakes commencement of commercial production prior to 31.03.2010, the exemption would be available. Since the Appellants undertook commencement of commercial production prior to 31.03.2010 by starting the process of wood chipping by producing wood chips, boiler firing (energy plant) producing steam, thermal oil and flu gas and defibrator prior to 31.03.2010, even if the first clearance of finished product wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that date but that is not only evidence to say that the commercial production commenced or not. 20. Since the Appellant has manufactured wood chips, steam, etc., which are commodities having classification under Central Excise Tariff and production of which cannot be disputed even on the ground of power consumption available only from UPCL, Appellant has commenced commercial production of specified goods under the Notification and thus eligible for exemption. Therefore, without prejudice, since manufacture of wood chips and steam etc., before 31.03.2010 is not disputed, production of MDF Boards (even after 31.03.2010) there is commencement of commercial production by the cut-off date i.e., 31.03.2010 and thus Unit-II is eligible for exemption for a period of 10 years. 21. Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) vide Memo dated 01.09.2010 has also acknowledged commencement of commercial production on 31.03.2010 by Unit-II and the Department apparently failed to get information therefrom. Appellant has also produced copy of certificate dated 09.11.2017 from District Industries Centre Udham Singh Nagar certifying the date of commencement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
