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TMI Blog2023 (11) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... .f. 10.09.2003. The following documents were annexed with the said application: (a) Copy of Audited Balance Sheet (as on 31.03.2002 and 3.03.2003). (b) Statement of Plant & Machinery for Expansion capitalized. (c) Chartered Engineer Certificate dated 09.09.2003, certifying that machines have been installed and commissioned and copy of various invoices in respect of procurement of Capital Goods. (d) Chartered Accountant's certificate dated 10.09.2003 showing investment made in Plant & Machinery. (e) Certificate dated 20.10.2003 of Tehsildar in respect of Khasra Nos. 3. On being enquired few more documents, as demanded, were provided by the appellants. However, the department took the view that in terms of the aforesaid Notification No. 50/2003-CE and the Board's Circular No.772/5/2004-CX dated 21.01.2004, the party did not appear to have fulfilled the conditions stipulated in the said notification. It was observed from the letter dated 10.09.2003 that the expansion of plant and machinery has been capitalized from 09.04.2002 to 08.09.2003 and as such the expansion started prior the cutoff date of the Notification i.e. 07.01.2003. Apart from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; De novo adjudication was directed after considering the said notification and the said report. Pursuant to the directions of the said remand that the order under challenge bearing no. 20/2010 dated 29.10.2010 was passed again confirming the proposals of the above tabled Show Cause Notices. Being aggrieved, the appellant is before this Tribunal. 5. We have heard Shri Jitin Singhal, learned Advocate for the appellant and Shri O.P. Bish, learned Authorized Representative for the department. 6. Learned counsel for the appellant has submitted that the substantial expansion has been made by the appellant in accordance with the provisions of Notification No. 50/2003-CE dated 10.06.2003. It is submitted that Chartered Engineer's certificate dated 20.03.2004 issued by Sh. Akhilesh Jain and his statement recorded by the department on 26.10.2004 clearly establishes that substantial expansion in the installed capacity by more than 25% was undertaken after 07.01.2003. The installed capacity finally got commissioned on 10.09.2003. It is submitted that department has chosen to not rely on statement of Sh. Akhilesh Jain as it is against the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that the manufacture of flock fabric is an integrated process involving nine stages in line. Hence all such operations are to be performed in a continuous process. If the capacity of any of these operations is not increased, the installed capacity of the plant cannot be increased by such percentage as is required by the Notification No. 50/2003. Emphasis has been laid to the fact that expansion of capacity is dependent on date of commissioning of the equipments required in these continuous processes and since the date of commissioning of flock fabric brushing with the process of brushing got commissioned in July, 2003 and process of printing in post finishing got commissioned in July, 2003 and the process of boiler in flock fabric drying got commissioned in September, 2003, therefore the enhanced installed capacity of the plant was achieved in September, 2003 after commissioning of boiler. 6.5 Learned counsel finally submitted that the report from IIT, Roorkee shows that though the capacity enhancement started prior 07.01.2003 but the same got installed after the said cutoff date as the erection and commissioning of the capacity of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty with respect to two stages namely flock fabric brushing and post finishing has not been mentioned to have been enhanced after 07.01.2003. Learned DR further impressed upon that there is no procurement installation and commissioning of any boiler in the appellant factory after 07.01.2003. Hence, the report has wrongly linked the commissioning of boiler as an effective enhancement post the cutoff date (07.01.2003) of the notification dated 10.06.2003. The report is silent about the expansion in 5 out of 9 stages of the appellant's process of manufacturing the flock fabric. Hence, the report extends no benefit to the appellant for being covered under Notification No. 50/2003-CE dated 10.06.2023. Learned DR has relied upon the decision of Hon'ble High Court of Uttarakhand in the case of Vishvakarma Paper and Boards Ltd. Vs. Commr. of C. Ex., Meerut-II reported as 2010 (255) E.L.T. 328 (Uttarakhand). Impressing upon no infirmity in the order under challenge, same is accordingly prayed to be upheld and both the appealsare prayed to be dismissed. 8. Having heard both the parties with respect to both the appeals at length, perusing the entire r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-'A' showing detailed List of Plant & Machinery capitalized from 09.04.2002 to 08.09.2003 certifying that after the installation of additional plant & machinery, the installed capacity is increased by 12.00 lac linear meter per year (finished fabric weight 340 gms per linear meter) totaling to 48.00 lac liner meter per year (finished fabric weight 340 gms per linear meter). He has also certified that at present the appellants have also started to produce base fabric (textile). (b) Letter dated 17th February, 2004 (c) Declaration dated 09.12.2003, wherein appellants have certified themselves that after expansion, installed capacity of Flock Fabric has been increased, from 36 lac linear meters (finished fabric weight 340 gm/linear meter) to 48 lac linear meter (finished fabric weight 340 gm/linear meter) i.e. by more than 25% after complete commissioning of the capacity which happened after 07.01.2003, the cutoff date in the Notification No. 50/2003. (d) Chartered Engineer's certificate dated 20.3.2004 showing therein stage-wise assessment of installed capacity before and after expansion of plant and machinery used in the process of manufacture of flock fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the notification, there seems no ambiguity and the plain reading of the same suggests that the benefit of notification is available to the unit existing prior 07.01.2003 if increase in its installed capacity by 25% or more has been effected after 07.01.2003. Hon'ble Supreme Court in the case of Compac Private Limited Vs. CCE Vadodara held that the notification has to be construed in the terms of the language used therein. It is well settled that unless literal meaning given to a language leads to anomaly or absurdity, the golden rule of literal interpretation shall be followed. The Hon'ble Apex Court in another case of CCE Chandigarh Vs. Bhalla Enterprisesheld that the basic rule in the interpretation of any statutory provision is that the plain words of the statute must be given effect to. Similar view was taken by the Hon'ble Apex Court in the case of CCE TrichyVs.Rukmani Eakkwell Traders reported as (2004) 11 SCC 801 SC. Relying upon the same we hold that the plain interpretation of clause 2(b) of Notification 50/2003-CE dated 10.06.2003 makes it clear that the exemption notification is available to the industrial unit existing before 07.01.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have increased the installed capacity by more than 25%. To put it in other words, while using the word "additional plant and machinery", in the circular, it has not been insisted that the existing plant and machinery should remain. What has been held out, to our opinion, is that such additional plant and machinery or the parts thereof, irrespective secondhand should be brought in due to which installed capacity of a manufacturing unit stands extended by more than 25%. The circular, makes it abundantly clear that the additional plant and machinery mentioned therein though may not be in addition to existing equipments but it should signify something new brought in the manufacture process, which in turn, increases the installed capacity more than 25%. We draw our support from the decision of Hon'ble High Court of Uttarakhand in the case of Commissioner of Customs & Central Excise Vs. Uttaranchal Iron & Ispat Ltd. reported as 2011 (266) ELT 331, wherein it was held that by making the modification of already existing machinery if the installed capacity gets increased by more than 25%, the assessee shall be entitled to the benefits of Notification No.50/2003-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty on the premise that since the expansion programme was undertaken by the appellants prior to 07.01.2003, the appellants' unit is not entitled for the exemption of Notification No. 50/2003. Whereas, the case of appellant is that although the expansion programme was inititated before 07.01.2003 however the installed capacity of more than 25% was got enhanced after 07.01.2003. Hence, the benefit of notification is definitely available to the appellant. The same is otherwise apparent from the certificate given by their Chartered Engineer ShriAkhilesh Jain dated 10.09.2003 and 17.02.2004 and also from the certificate issued by the appellants' Chartered Accountant dated 20.03.2004. We observe from these reports and certificate that no plant and machinery was procured prior 07.01.2003 except few basic parts of one or the other machinery. Installation whereof is reported to be after 07.01.2003. The IIT report is observed to be in corroboration of these reports and certificate. The documents and reports including IIT report on record shows that purchases prior cutoff date of the notification i.e. prior 07.01.2003 were only few parts of plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Softening Plan 12.03.2003 31.03.2003 31.03.2003 06 19636.36 50% Drying 02 12727. 27 1. Fluid Bed Dryer 2. Chain Pulley Blok 11.04.2002 07.01.2003 03 19090.90 50% Sieving 02 13636.36 1. Sieving Machine 31.03.2003 04 27272.27 100% Coating 01 900 rpm 1. Coating head rolls 2. Visco meter 3. Weighing machines 4. Electronics System for foaming machine 5. Motors 6. Softwater foaming machine 7. Humidifires 8. Water Softning Plant 09.08.2002 06.08.2002 22.10.2002 07.01.2003 11.05.2003 04.07.2003 08.06.2003 05.05.2002 29.05.2003 31.03.2003 01 1400 rpm 55% Flock Dosing 01 12000 at 600 Meters/ Hr feed rate 1. L.T. Panel (electric panels) 2. Vacuum cleaner 3. Humidifiers 25.06.2002 05.04.2002 03.06.2003 01 16000 at 800 Meters/Day feed rate 33% Flock fabric drying a. drying (21 chambers) b. Boiler c. cooling 12000 at 600 Meters/ Hr feed rate 1. Harish Stenter 2. Dyring Range 3. Inter Lock machine 4. Trolleys 5. Fuel Pump 6. Ceramic Fir Bricks 7. Chimmi 8. Valves 9. Oil Thermia 10 Thermic Fluid Heater 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e report clarifies that question of enhancement of the installed capacity at drying stage also that too to the extent of more than 25% prior 07.01.2003 does not arise. A boiler, which enabled the drying activity, was apparently installed in September, 2003. Therefore it is clear that the installed capacity of drying stage got completed in September, 2003, i.e. beyond the cutoff date of the impugned notification. Similarly at the Sieving stage, machines got added after 31-3-03 i.e. the entire capacity of sieving activity got enhanced after the requisite cutoff date. At the Coating stage, many machines were added during 5-5-02 to 8-6-03. Though some procurement was prior the cutoff date but those have been reported to be less than 25% enhancement of installed capacity. It is clearly reported that the post cutoff date installations have enhanced the capacity of coating stage machinery by more than 33%. As apparent from the percentage given in the IIT Roorkee report, it is clear that procurement post 07.01.2003 enhanced the installed capacity by more than 25%. 10.9 We observe that two professors of IIT Roorkee have prepared the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held above that it is not the procurement of capacity (plant and machinery) but the installation/commissioning of same which is relevant for being called as "Expansion of Installed Capacity". The report of Shri D.K. Jain is therefore held to have wrongly relied upon by the adjudicating authority below. No document is brought on record to counter/falsify the said findings of IIT Roorkee report which are in very much corroboration to the earlier report of Shri Akhilesh Jain, the appellant's Chartered Engineer. The report of Shri D.K. Jain though is subsequent to the report of Shri Akhilesh Jain but is silent on all these aspect. The report relied upon by department has nothing to falsify the report of IIT Roorkee. 10.11 Moreover, the enhancement in capacity is not relevant, it is enhancement in such capacity which is installed and that it should have commenced production latest by 31.03.2010. There is no denial to the fact the appellants started production w.e.f. 10.09.2003 out of the said enhanced capacity. There is nothing in Shri D.K. Jain's report to falsify that enhanced capacity got installed much after 07.01.2003.&nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003 did not contribute the more enhancement in installed capacity. The capacity procured after 07.01.2023 is proved to be the enhancement in the installed capacity of the appellants unit by more than 25%. Whatever procured before 07.03.2003 did not contribute to more enhancement in installed capacity of appellant's unit. The capacity procured after 07.01.2003 (minus more procured prior) is proved to be the enhancement in the installed capacity of the appellant's unit by more than 25%. 10.14 The another finding in the order under challenge is that the IIT Professors had taken the project more than three years later than the relevant date. But this is also observed to be wrong finding as department's own assessor Shri D.K. Jain had also conducted the survey after one year of the expansion of installed capacity in the unit by the appellant. Above all once there is an admission of the department that there was a substantial expansion in the capacity, it was the burden of the department to prove that the capacity procured prior 07.01.2003 was substantially enough to increase the installed capacity by more than 25%. On the contrary, there is suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and enhancement of installed capacity. Also it is the minimum rather negligible apparatus which were procured prior to the relevant date. The installed capacity got enhanced post relevant date i.e. 07.01.2003 to the extent beyond 25% (per cent). Hence it is held that decision of Vishwakarma Paper & Board Ltd (supra) has wrongly been relied upon by the adjudicating authority. 10.17 In the light of entire above discussion about first aspect of remand order / first conclusion of Shri D.K. Jain report, it is held that benefit of clause 2(b) of Notification No. 50/2003 is wrongly denied to the appellant. The findings in order under challenge are liable to be set aside with respect to this aspect. B. Second aspect of remand order, the inclusion of area (khasra) of appellant in the notifications: We observe that the notification extends exemption to such goods as notified in annexure - I thereof and cleared from such units as are located in Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or the scheme area as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olutely silent about Annexure II of the notifications which relates to location of the assessee's unit. Above all it is apparent that Government Order dated 02.04.2004 has taken effect from the date of impugned notification dated 10.06.2003. The judgment is purely about the meaning of substantial expansion of installed capacity as discussed above. Also it does not appeal to the reasonable prudence that just three Khasra Nos. of the village mentioned in the notification as industrial park will be out of the scope of the industrial park. The Tribunal also, while remanding the matter of fresh consideration, has observed that due to Government Order dated 02.04.2004, the unit of the appellants fall in the area mentioned in Annexure-II of the notification. 10.19 Thus we hold that the findings in order under challenge that benefit of impugned notification could not be extended to the appellants as their unit is not located in an existing industrial area are not sustainable. Hence, the findings on the second aspect of remand order/second conclusion of Shri D.K. Jain report is held as presumptive and baseless, hence are held liable to be set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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