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M/s Rama Vision Limited Versus CCE, Meerut I

2015 (4) TMI 735 - CESTAT NEW DELHI

Area based exemption - Notification No. 50/2003-CE - whether the appellant have expanded their installed capacity by more than 25% - Interest u/s 11AB - imposition of penalty under Rule 25 - Held that:- If the claim of the appellant is correct, they would be eligible for the exemption notification. The appellant in support of this claim rely upon the certificate dated 25 September 2003 given by M/s B.K. Arora and Associates. The Department, however, relies upon the report of Professor Arun Kumar .....

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er and has also observed that he could not find any facility for fabrication of the machinery which are claimed to have been fabricated by the appellant in their factory. The Commissioner has chosen to rely upon the opinion of Professor Arun Kumar on the ground that he is an independent authority and his report is a later report and only a Chartered Engineer s certificate cannot wish away the expert s report .

Since the Commissioner s conclusion is based on the expert opinion of Profe .....

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ngineer is not correct. - Impugned order is set aside - Decided in favour of assessee. - Excise Appeal Nos. 339 and 928 of 2006 alongwith Misc. Application Nos. 55489-55490 of 2014 - Final Order No. 51024-51025/2015 - Dated:- 26-3-2015 - Hon ble Shri Rakesh Kumar, Member (Technical) And Hon ble Shri S. K. Mohanty, Member (Judicial),JJ. For the Appellants : Ms. Surabhi Sinha, Advocate For the Respondent : Shri M. S. Negi, Authorized Representative (DR) ORDER Per. Rakesh Kumar :- The facts leading .....

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o 20 lakh CRTs per annum and while earlier there was only one line of production, after capacity expansion in 1997, the production lines increased to two. 1.2 On 10/06/2003 Notification No. 50/2003-CE was issued which provided for full duty exemption in respect of duty of excise leviable under Section 3 (1) of Central Excise Act, 1944 and the Additional Duties of excise leviable under Additional Duties of Excise (Goods of Special Importance) Act, 1987 [AED (GSI)] and under Additional Duties of E .....

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dertaken substantial expansion by the way of increase in installed capacity by not less than 25% on or after 07/1/03 and have commenced commercial production from such expanded capacity not later than 31/3/10. The appellant under their letter dated 26/9/03 addressed to the Jurisdictional Assistant Commissioner informed him that in order to achieve economy of scale of operation and reduce the manufacturing cost, they have expanded the installed capacity of their unit as per the advice of their te .....

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rtered Engineers, certifying that the appellant have installed additional equipment the details of which are given in the certificate and by this their installed capacity has increased to 30 lakh CRTs per annum. 1.3 The Department thereafter conducted inquiry with the appellant s employees and also sought the technical opinion of Professor Arun Kumar of the Department of Electronics and Computer Engineering in the Indian Institute of Technology, Roorkee. Professor Arun Kumar visited the appellan .....

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86,321/- for the period from 27/9/03 to 31/8/04 alongwith interest thereon under Section 11AB and also for imposition of penalty on them under Rule 25 of the Central Excise Rules. Thereafter another show cause notice dated 06/10/05 was issued for demand of duty amounting to ₹ 38,44,135/- for the period from 01/9/04 to 31/3/05 alongwith interest therein under Section 11AB and also for imposition of penalty under Rule 25 of the Central Excise Rules, 2002. 1.4 The above show cause notices wer .....

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account the fact that the company is under BIFR and for this reason also, their claim that they have spent money to expand their installed capacity is not believable. Against the above orders of the Commissioner, these appeals have been filed. 2. Heard both the sides. 3. Ms. Surabhi Sinha, Advocate, the learned Counsel for the appellant, pleaded that the appellant had undertaken expansion in the year 2003 based on the technical opinion of M/s Anurag Technologies, that on the basis of technical o .....

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dded, that the machinery/equipments added had been fabricated in the factory and only the inputs/components or raw materials for fabrication of the equipment/machinery had been procured in respect of which the invoices have been enclosed alongwith the reply to the show cause notice, that after completion of exercise of the substantial expansion, the necessary intimation had also been given to the District Industry Centre with request to issue the necessary certificate, but they have neither issu .....

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n on the point as to whether a factory has undertaken substantial expansion of installed capacity or not, as it is a subject of Mechanical Engineering, that in his opinion, he has not refuted the Chartered Engineer s certificate, that in view of this, the impugned orders totally relying upon the opinion of Professor Arun Kumar, of the Department of Electronics and Computer Engineering, IIT Roorkee, is not correct, that the appellant have also submitted data showing that on certain dates after th .....

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material is that the installed capacity should have increased by 25% or more on or after 07/1/03 and commercial production from such installed capacity should have commenced and that these conditions stand satisfied in this case. She also pleaded that Shri Sanjay Agarwal, DGM (Production) and Shri B.C. Sharma, Vice President (Production) in their respective statements have given details of the exercise of the expansion of the installed capacity which have not been disputed. She, therefore, plea .....

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own, which is not believable, that Shri B.C. Sharma, Vice President in his statement had stated that the capacity expansion has been undertaken to reduce the cost of production by increasing the productivity and also to avail the benefit of duty exemption, that Professor Arun Kumar in his report has given sufficient reasons for his conclusion that no investment has been undertaken, that the appellant s claim of enhancement of capacity of production is not backed by the certificate from the Distr .....

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ty and in fact their capacity utilisation was constantly decreasing which also creates serious doubts about their claim of having increased the installed capacity. He cited the judgment of the Tribunal in the case of Rana Casting Ltd. vs. CCE, Meerut reported in 2010 (257) E.L.T. 104 (Tri. Del.) wherein, it has been held that though the words substantial expansion had not defined in the notification, these words indicate that in order to qualify for exemption there must be some expansion or addi .....

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. He emphasised that the appellant s unit, at the most, have made only some minor changes so as to improve the efficiency and this exercise cannot be treated as substantial expansion for the purpose of this exemption notification. He also pointed out that the unit had been visited by IIT Professor Arun Kumar alongwith Shri Munish Agarwal, DGM (Production) of the appellant unit and Shri Munish Agarwal in his statement has stated that no changes have been made in the rating of the motors installed .....

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ce had given a list of the 11 new machinery which had been fabricated in the factory and this fact is not disputed by the Department. Beside this, there were 10 machines in which modifications had been done. She, therefore, emphasised that the substantial expansion in the installed capacity had been achieved by addition of new machine and not by merely improving the efficiency or by minor changes in the machinery. 6. We have considered the submissions from both the sides and perused the records. .....

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rkee. While the certificate of M/s B.K. Arora and Associates certifies that the appellant have expanded their installed capacity from 2 million CRTs per annum to 3 million CRTs per annum and this has been achieved by installing additional equipment as per the details given and by modification of certain existing machinery, Professor Arun Kumar in his report has doubted the correctness of the certificate of the Chartered Engineer and has also observed that he could not find any facility for fabri .....

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