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TMI Blog2018 (6) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... nit and the same unit has started new manufacturing line in the same premises and this Tribunal held that the new unit is entitled for exemption from the date of start of commercial production - Admittedly, in this case, M/s. LPT started a new unit for manufacturing of mobile batteries, mobile chargers and accessories by installing new plant and machinery - Therefore, in the light of decision of Wipro Enterprises Limited, M/s. Luminous Power Technology Pvt. Limited (M/s. LPT) is entitled for exemption under N/N. 50/2003-CE dated 10.06.2003 from 27.03.2010 to 26.03.2020. Appeal allowed - decided in favor of appellant. - E/52938/2015-DB - Final Order No. 62402/2018 - Dated:- 22-1-2018 - Mr. Ashok Jindal, Member (Judicial) and Mr. Devender Singh, Member (Technical) Shri B.L. Narsimhan, Advocate for the Appellant(s) Shri G.M. Sharma, A.R. for the Respondent(s) ORDER Per : Ashok Jindal The appellant is in appeal against the impugned order wherein exemption sought by the appellant under area based exemption Notification No. 50/2003-CE dated 10.06.2003 from 27.03.2010 to 26.03.2020 and it was allowed only upto 24.11.2013. 2. The facts of the case are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas. Pursuant to this policy, various incentives and exemptions were introduced under various taxing laws such as 100% Central Excise exemption for 10 years, Income Tax exemption and so on. The Notification No. 50/2003-CE dated 10.06.2003 is one of such exemptions introduced in furtherance of the given industrial policy. He submits that an eligible unit is entitled to avail benefit of the exemption benefit in respect of eligible goods being cleared by it, provided the necessary procedural formalities are complied with. It is specifically emphasized in Circular dated 17.02.2012 that the exemption is extended to a Unit . Thus, the said notification contains two distinct and independent sets of qualifying criteria, pertaining to the eligibility of a unit and eligibility of goods. It is his submission that the unit, set up by M/s. LPT is a new industrial unit, because: (a) The Deputy Director of Industries acknowledged that a new unit was set up by M/s LPT for manufacturing mobile batteries, mobile chargers and its accessories. (b) M/s LPT obtained a fresh Central Excise registration for the manufacture of cell phone batteries, chargers and accessories thereof. (c) M/s LPT e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing decisions:- (i) Devidayal Electronics and Wires Ltd Another v. UOl - 1984 (16) ELT 30 (Born.) (ii) CCE v. Himalayan Co-op Milk Product Union Ltd - 2000 (122) ELT 327 (SC) (iii) CCE v. Reckitt Colman India Ltd - 1997 (92) ELT 457 (SC) (iv) Tirupati LPG Industries Ltd v. CCE, Meerut-l - 2015 (324) EL. T. 201 (Tn. - Del.) (v) Wipro Enterprises Limited v. CCE, Shimla - Final Order No. 62164/2017 - Amalgamation irrelevant for Exemption 4. It is submitted by the ld. Counsel that the reliance placed on the order of the Hon ble High Court is erroneous and misconceived for 3 reasons:- (i) The Hon ble High Court order dealt with the amalgamation of M/s LPT with M/s LEPL, the unit was a new unit and came into existence only subsequent to the amalgamation. The new Unit was not a subject matter of the order of the High Court and thus, reliance cannot be placed on it. (ii) Even though all the exemptions, no-objection certificates, licenses, etc. have been transferred to M/s LPT does not imply that M/s LPT is stripped of the right to claim independent exemptions, noobjection certificates and the like. Moreover, the exemption number allotted to the new unit is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shifted to another premises. Thus, the unit which was in existence ceased to exist. New machinery was bought to set up a new plant for the manufacture of mobile phone batteries and invertors. The new unit established by M/s LPT qualified to be an eligible unit under the said Notification. In view of the above submissions, ld. Counsel submits that the impugned order is to be set-aside. 5. On the other hand, ld. Counsel opposed the contention of the ld. Counsel and submits that M/s. LEPL amalgamated with M/s. LPT and on amalgamation all the properties of M/s. LEPL become the property of M/s. LPT. As M/s. LEPL was having exemption since 25.11.2003 and as per the notification such exemption is available for ten years therefore, the appellant is entitled for exemption only till 24.11.2013 as it is only a transfer of business and therefore, the impugned order is to be upheld. 6. Heard the parties and considered the submissions. On consideration of the submissions made by both sides, we find that following facts are not disputed:- (a) M/s. LEPL for short was an industrial unit at Plot No. 191-C, Industrial Area (SFS) Baddi (H.P.) for manufacturing Invertors, UPS and Transform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that unit No.III is just an addition to the existing Unit and it cannot be considered as an independent unit. The appellant protested the said letter and started paying duty on the products cleared from unit No.3 post 18.8.2004 under protest. The Commissioner (Appeals) affirmed the order by denying the exemption to unit No.III. Aggrieved with the said order, the appellant is before us. In the said case, this Tribunal observed as under:- 9 . In this case, we find that, all the units are set up in the same plot of land. The appellant initially started production from 18.8.2004 and filed due declaration in terms of the notification. Further, the appellant started manufacturing certain new products in 2007 and 2010 due declaration to that effect filed. For ease of convenience, regarding manufacturing of final product, commencement, and declaration filed by the appellant, a chart has been framed which is as under: Unit Final Product Date of commercial production Declaration filed Under Notification on Unit I Toilet soaps, glucose powder and liquid detergent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Thanking You, Yours Sincerely For WIPRO LIMITED Authorized Signatory CC: Superintendent, Central Excise, Range III, Baddi, Distt. Solan (H.P.) WIPRO Applying Thought Date: 28 th July, 2007 Baddi/FAGP/File-01 To, The Assistant Commissioner, Central Excise, Pantaghati, Shimla, Himachal 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 follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring 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, DisttSolan (H.P.) c) Description of inputs Goods used in manufacture of specified goods. As per Annexure- 1 d) Description and Chapter ID of the specified goods produced Specified Goods Chapter ID Santoor Hand Wash - 3401 20 00 Fabric Conditioner - 3402 90 99 Shower Gel - 3401 30 90 Hand and Body Lotion - 3304 99 30 Shampoo - 3305 10 90 e) Date on which option under this Notification has been exercised 5 th March 2010 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, with a copy to the Superintendent of Central Excise giving the following particulars, namely:- (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of inputs used in manufacture of specified goods; (d) description of the specified goods produced; (e) date on which option under this notification has been exercised; (iii) The manufacturer may, for the current financial year, submit his option in writing on or before the 30th day of November, 2003.] 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) new industrial units which have commenced commercial production on or after the 7 th day of Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial 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 matter on facts of each case. The other case which the Tribunal has referred to is reported in 1987 (27) E.L.T. 273 (A.P.) - Golden Press v. Deputy Collector of Central Excise, Hyderabad and Another . In this case a notice was issued on the manufacturer of cartons as to why penalty be not imposed since the goods manufactured were removed without payment of duty. It was pleaded that cartons were exempted under a notification exempting all products of printing industry. The Court, however, held that cartons though may be printed, cannot be held to be product of printing industry. They will be relatable to packaging industry. Hence, the benefit, as pleaded, was not admissible. Insofar as the other arguments raised about the value of the investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 generator may be in use by different units in the factory complex as indicated in the case of Golden Press (supra) can well be worked out by devising proper method while apportioning the value of different plants proportionately. In no way such hurdle, as posed, would change the meaning of a Notification which on the face of it and by the plain language used therein has unambiguous and clear meaning. 8. Such Notifications by which exemption or other benefits are provided by the Government in exercise of its statutory power, normally have some purpose and policy decision behind it. Such benefits are meant to be provided to the investors and manufacturers. Therefore, such purpose is not to be defeated nor those who may be entitled for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 case of Tirupati LPG Industries Ltd. (supra), the Apex Court had an occasion to examine the issue and observed as under: 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. 9. As regards, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 started their production before the cut-off date, therefore the said circular has no relevance. Further, during the course of the arguments, learned AR relied on the circular No.960/03/2012-Cx dated 17.2.2012. 19. We have examined the said circular and para 2 of the circular which reads as under: 2. References have been received from field formations as well as from trade and industry seeking clarification regarding admissibility of benefit under area-based exemption Notification No.49/2003-CE and Notification No.2003-CE both dated 10.6.2003, in the following situations: a. When there is a change in the ownership of a Unit already availing of the benefit of an area-based exemption Notification: b. When a Unit availing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 and they are not complimentary to each nor they are subsidiary to each other. The end product is also different, one manufactures duplex board and the other manufactures paper. They are separately registered with the Central Excise Department. The staff is separate, their management is separate. It is also not the case of revenue that end product of one factory is raw material for the other factory. From the above facts it is apparent that there is no commonality between the two factories, both are separate establishments run by separate Managers though at the apex level it is maintained by the appellant company. There are separate staff, separate finished goods. Simply because both the factories may have common boundaries that will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 matter for Central Excise purposes as to by which name - whether by name of plant, unit or the like, each set is described. Since each unit cannot be described as a factory, he proceeded to hold that the whole premises should be considered as single entity and exemption was accordingly denied. While examining the decision of Bombay High Court in Devidayal Electronics Wires Ltd, 1984(16) E.L.T. 30 (BOB.), the original authority erred in not examining the provisions of Notification No.50/03. 7. He records, incorrectly, that the word industrial unit has not been used in the said notification. Whereas we note that para 2 of the said notification which talks about application of exemption to different kinds of units clearly states that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory-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 interpreting the provisions of Notification No.74/1978-CE, the Hon ble Bombay High Court held as below: 5. The Notification uses the word factory and it used the words industrial unit . It must, therefore, be assumed that the words were intended to bear different meanings. Put differently the words industrial unit must mean something other than factory . 11. The above-said decision has been noted by the Apex Court with approval. It was observed by the Apex Court that the word/expressions- factory and industrial Unit - when used in the same notification would be presumed to have been used for different meaning. It was held that industrial unit would mean something other than factory, which would be a separate isolated pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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.) wherein there was an LPG cylinder unit, which started production in 2001 and later in the same compound another unit for ACSR conductors was set up and had trial production in October, 2002 to December, 2002. While deciding the issue of date of onset of commercial production, the Tribunal treated the two units as separate industrial units. Relevant extracts of the judgment of the Tribunal are reproduced below:- 8.4 Now, the new industrial unit cannot be the one commencing commercial production on or before after 10-6-2003, the date of issue of exemption notification - as, if this meaning is adopted, the condition of commencing commercial production on or after 7-1-2003 would become redundant. Therefore, the word new has to be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 declaration filed with the Assistant Commissioner. We also find that the above mentioned decision was followed by this Tribunal in the case of Prakash Straw Board Pvt. Ltd. Vs. CCE, Meerut-II - 2016 (332) ELT 741(Tri. Del.) The ratio of the judgment in the case of Tirupati LPG Industries Ltd. is squarely applicable to the facts of the present case. Hence, following the same, we find no infirmity in the order of the Ld. Commissioner (Appeals) in relation to Pan Chatni and Scented Elaichi. 11. As for the expansion of the unit manufacturing Scented Supari, the Ld. Commissioner (Appeals) has correctly followed the above mentioned Honble Apex Court decision while allowing the benefit of substantial expansion. We also find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing 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. 8. We further find that the facts of this case are on better footing then the case of Wipro Enterprises Limited wherein the unit was a manufacturing unit and the same unit has started new manufacturing line in the same premises and this Tribunal held that the new unit is entitled for exemption from the date of start of commercial production. Admittedly, in this case, M/s. LPT started a new unit for manufacturing of mobile batteries, mobile chargers and accessories by installing new plant and machinery. Therefore, in the light of decision of Wipro Enterprises Limited (supra) we hold that M/s. Luminous Power Technology Pvt. Limited (M/s. LPT) is entitled for exemption under Notification No. 50/2003-CE dated 10.06.2003 from 27.03.2010 to 26.03.2020. With ..... X X X X Extracts X X X X X X X X Extracts X X X X
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