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2015 (10) TMI 622 - AT - Central ExciseArea based exemption - Denial of exemption claim - expansion of installed capacity in respect of conductor unit - Held that:- The Conductor unit had been set up during Octo.2002 to December, 2002 period and there is no dispute that during this period a total 3000 metres had been manufactured out of which only 300 metres were cleared on payment of duty. However, production during Jan.2003 to March, 2003 increased to 46137 metres and during April, 03 to June, 2003 the same increased to 4,42100 metres. The appellant intimated to the Range Superintendent in their letter dated 7.11.2003 about commencing commercial production of ACSR conductors with effect from 1.4.2003. The process of commissioning of a manufacturing plant 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 part of a factory manufacturing a different commodity has to be treated as separate manufacturing unit. - a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than one manufacturing unit and each section or part of the factory would be independently eligible for exemption, as the duty exemption under Notification No.50/03-CE is unit-wise and not factory wise. Therefore, for determination of eligibility of cylinder unit, for exemption under Notification No.50/03-CE 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. - impugned order is not correct and the same is set aside. - Decided in favour of assessee.
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