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2009 (8) TMI 1068

..... pellants in each case have crossed eligibility limit of 3 crores with respect to the value of plant and machinery and, therefore, are not eligible for exemption claimed is legally correct and sustainable - appeal dismissed - decided against appellant. - E/3308 and 4150/2004-EX(BR) - Final Order Nos. 713-714/2009-EX(PB) - 13-8-2009 - R.M.S. Khandeparkar and Shri M. Veeraiyan, JJ. Shri K.K. Anand and Bipin Garg, Advocates, for the Appellant. Shri Virender Choudhary, SDR, for the Respondent. ORDER Appeal No. E/3308/04 has been filed by M/s. Sulzer Processors Pvt. Ltd. against the order of the Commissioner No. 06/CE/JP II/2004 dated 6-4-04. 1.2 Appeal No. E/4150/04 is by Shri Ganesh Texfab Ltd. against the order of the Commissioner No. 09/C E/JP II/2004 dated 18-5-04. 1.3 Both these orders have been passed in pursuance of Tribunal s order of remand dated 9-4-02 and also involve common issues and therefore, being dealt with by this common order. 2. Heard both sides. 3.1 Relevant facts, in brief, in Appeal No. E/3308 are that the appellant filed a letter dated 3-5-01 declaring the value of investment of plant and machinery as Rs. 2,42,53,549/- supported by a certificate of chartered acco .....

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..... nt vide their Order F. No. 10/6/97-IP dated 10-12-97 have prescribed guidelines to identify a small scale undertaking or ancillary industrial undertaking for the purpose of ascertaining the need for supportive measures and in that context prescribed the method for calculating the value of plant and machinery. As per the above guidelines, the value of items like DG sets, transformers and air compressors and effluent treatment plant need not be included. They have enclosed the certificate of Chartered Accountant which has been prepared based on the guidelines prescribed in the said circular of the Central Government. And accordingly, the value of plant and machinery is less than Rs. 3 crores and, therefore, they are eligible for concession. The revised certificate was given subsequent to clarificatory amendment dated 20-9-01 by Notification No. 41/01. The inclusion of value of DG sets, transformers and air compressors, effluent treatment plant by the Cost Accountant who has been appointed by the Department is wrong. He relied on the decision of the Tribunal in the case of Ahmedabad Chemicals Pvt. Ltd. v. CCE, Baroda [1984 (16) E.L.T. 560] which is in the context of interpretation of .....

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..... ter from cost accountant and the same have not been supplied to them and thus there is violation of principles of natural justice. (d) He took us through the detailed cross examination of Shri L N. Gupta during the proceedings before the Commissioner and submitted that his report should not be relied upon. (e) Drawing our attention to the various provisions of AS 10 issued by the Institute of Chartered Accountant of India, it was submitted that only assets which are used directly in the manufacture of goods should be taken into account. He submits that the effluent treatment plant is not a must for manufacturing the final product. Similarly, the provisions of firefighting equipment and effluent treatment are in view of the statutory obligation and they should not be treated as plant and machinery for the purpose of extending the benefit claimed by them. And the certificate produced by them was clearly in terms of said standard. 6.1 Learned DR submits that the normal duty liability is based on the actual production and clearances of the appellants. By opting for the special scheme, the burden is on the assessee to prove that they fulfilled the conditions. The Notification No. 16/01 .....

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..... -3-01 or 1-5-01 exceeded Rs. 3 crore or not. According to the appellants the said values were below Rs. 3 crores in each case and they relied on the certificates of Charted Accountant produced by them. The department is relying on certificates of Cost Accountant appointed by them and holds that the value of plant and machinery in each case is more than Rs. 3 crores. 7.2 The difference in valuation is due to the fact that Charted Accountants on behalf of the appellants have followed the guidelines given by the Central Government in the order dated 10-12-97 for classifying the units as small scale undertaking or ancillary industry which was for the purpose of extending certain other benefits. At this stage it may be appropriate to reproduce the relevant portions of the said instructions : (b) In calculating the value of plant and machinery, the following shall be excluded, namely :- (i) The cost of equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores; (ii) The cost of installation of plant and machinery; (iii) The cost of research and development equipment and pollution control equipment; (iv) The cost of generation sets and e .....

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..... independent textile processor or on the date of making the application under Rule 96ZNA of the Central Excise Rules, 1944 or paragraph 7 of this notification, as the case may be, in the case of an independent textile processor commencing production for the first time in a new factory coming into existence after the 1st of May, 2001, shall not exceed three crore rupees, irrespective of whether such plant and machinery is in use or not, or in working condition or not, and the independent textile processor shall declare the original value of investment in such plant and machinery installed in his factory, on the dates mentioned above, in the prescribed format duly certified by a Chartered Accountant or Cost Accountant. The Commissioner of Central Excise may require any such documentary evidence as he considers appropriate in respect of such original value before granting the application. 8.2 If any additional plant and machinery is installed by the independent textile processor at any point of time, he shall intimate the same to the Commissioner of Central Excise within seven days of such installation and the original value of investment in plant and machinery together with the origin .....

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..... he company. We have not been shown that the exclusion claimed by the appellants relate to extra transformers. Similarly, we are not convinced that the DG sets should be treated as other than plant and machinery. The effluent treatment plant which are mandatory in certain industries cannot be treated anything other than the plant and machinery. 7.6 The certificates given by the CA on behalf of the appellants do not indicate that the valuation has been done in terms of AS 10 method. It merely mentions that they have taken into consideration the AS 10 norms. Nowhere, it is mentioned that the valuation has been actually done by adopting the said norms. The claims of the appellants are for excluding the value of items like DG sets compressors, effluent treatment plant machinery and these claim are merely based on the guidelines of the Central Government dated 10-12-97. We are not inclined to agree that the said guidelines are relevant for the purpose of interpreting this notification. 7.7 The decision of the Tribunal in the case of Ahmedabad Chemicals Pvt. Ltd. and K.B.I.C.C.F. Ltd. relate to interpretation of Notification Nos. 176/77, 89/79, 73/83 and 75/88 and the wording of said noti .....

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..... of Shri Ganesh Texfab Ltd., that the Cost Accountant did not visit the factory at all. We find that by the letter dated January 27th, 2007, they sought for clarification from the Cost Accountant. They have not mentioned that Cost Accountant has not visited the factory at all. As already noted, even during cross examination, when opportunity was available to them, no specific question as to his visiting or not visiting the factory was put to him. In these circumstances the submissions/objections lack foundation. 8.4 A submission has been made on behalf of Shri Ganesh Texfab Ltd., that there is no evidence that the Cost Accountant was appointed by the Chief Commissioner in terms of Section 14A. We find that the Commissioner was considering the matter afresh in the light of the direction of the Tribunal; the appellants have relied on the certificates of experts; therefore, we agree with the contention of revenue that it became necessary to appoint another expert to look into the value of plant and machinery. In the given circumstances the Commissioner, instead of deciding on his own the veracity of the views of the experts relied upon by the appellants, has rightly taken the view of .....

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..... ose of valuation should necessarily be done by the Cost Accountant. The clarification under Notification No. 41/01 on the contrary, specifies that the determining of the valuation shall be in accordance with the accounting standard issued by Institute of Chartered Accountant of India for fixed assets. Obviously, it would mean that the certificate to be issued by the Chartered Accountant or by the Cost Accountant on determination of valuation by applying the method as specified in the clarificatory notification. Clause 8 of Notification No. 32/01 clearly specifies that the certificate can be issued either by Chartered Accountant or Cost Accountant. In fact, the notification does not stop at this stage. It further states that the Commissioner of Central Excise may require any such documentary evidence as it considers appropriate in respect of the original value. Merely because the party has chosen to furnish the certificate from Chartered Accountant that may not be final word as to the valuation of plant and machinery. Obviously, such documentary evidence has to be in the form of certificate by the Chartered Accountant or Cost Accountant. Being so, we find no substance in the content .....

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