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2015 (7) TMI 264

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..... n the appellant s favour as it certifies that the commercial production had commenced on 31/03/2010. However, it is not clear from this certificate that this certificate had been given after actually visiting the plant on 31/03/2010 or only on the basis of the records. As regards the allegation that sale of 3.48 MT of Aluminium Coils had been shown to M/s Shirdi Sales on 31/03/2010, who were only a dealer in Particle Boards and whose Director, Shri Sanjay Bajaj on inquiry had stated that they had not placed any orders for these goods, the statement dated 31/05/2010 of the Director, Shri Sanjay Bajaj stating that he had not placed any orders for Aluminium Sheets is not an evidence in support of the allegation that the goods produced on 30/03/2010 were not of the desired quality and were of non-saleable and sub-standard quality. The crucial question to be decided for determining as to whether or not the commercial production had commenced on or before 31/03/2010 is whether the statement of Shri Dinesh Sharma is correct or whether the certificate given by the Board Secretary, Single Window Clearance Agency, Kala Amb, H.P., is correct. For this purpose, in our view, Shri Dinesh Shar .....

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..... n or after 31/3/10, the unit was visited by the Jurisdictional Central Excise officers on 04/5/10, by headquarters preventive on 06/4/10 and by the officers of Directorate General Central Excise Intelligence on 17/5/10. On scrutiny of the documents and the condition of the plant at the time of visit, it appeared that the manufacturing unit had not commenced commercial production on or before 31/3/10, in as much as at the time of visit, it appeared that installation/erection of the plant and machinery was under progress and had not been completed on or before the sunset date 31/3/10, the construction of furnace for melting and holding of aluminium ingots (raw material) was in progress, the casting machine which is necessary for production of Aluminium coils/sheets, was being assembled and there was no electricity connection. Though there was a DG set, the electricity produced by the DG set was being used for welding etc. and some of the important machinery was still lying in packed condition. On 06/4/10, statement of Shri Dinesh Sharma, Supervisor of the unit was recorded, wherein he, while stating that the unit had started production on 30/3/10 and on that day 5.5 M.T. of aluminium .....

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..... ty of equal amount on them under Section 11AC. The Commissioner confirmed this demand after adjusting the Cenvat credit in respect of the inputs. Against this order of the Commissioner, the appeal No. 52979/2014 has been filed. 2. Heard both the sides. 3. Shri Sudhir Malhotra, Advocate, the learned Counsel for the appellant, pleaded that the appellant had filed the required declaration for availing the exemption under Notification No. 50/03-CE on 23/3/10 with the Jurisdictional Central Excise Authorities, that for eligibility for exemption under Notification No. 50/03-CE, the new unit set up on or after 07/1/03 should have commenced commercial production on or before 31/3/10, that there is no definition of the term commercial production in the exemption notification and, therefore, it should be construed in the sense it is understood in common parlance, that the commercial production is the status when the manufacturing unit is ready to produce the product for sale in the open market to its buyers as against which the production during trial production phase may not up to the required standard for sale, that in the present case, the appellant had sold 3.48 MT of aluminium s .....

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..... ogress and the casting machine was being assembled, that there was no electricity connection and though there was a DG set, the electricity produced by the DG set was being used for welding etc., that some of the important machinery was still lying in packed condition, that manufacturing of aluminium sheets/coils from aluminium ingots is a continuous casting process and requires installation of critical machinery of casting furnace, holding furnace, casting unit and rolling unit, but these machines had either not been installed even by 1st week of April or the same were not in working condition, that Shri Dinesh Sharma, Supervisor of the appellant unit in his statement dated 06/4/10 has stated that though the unit had manufactured 5.5 MT of aluminium sheets on 30/3/10 with the help of DG set, the goods produced were not up to the mark and for this reason the appellant have contacted the Chinese machinery supplier who has advised for need to re-arrange the machinery on the production line, that this shows the functioning of the plant on 30/3/10 and 31/3/10 was only on trial basis, more so, when according to the admission of Shri Dinesh Sharma of the appellant company, the goods prod .....

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..... pellant are eligible for this exemption in terms of the conditions specified in para 2 of the notification. Para 2 of the notification reads as under :- The exemption contained in this notification shall apply only to the following kinds of units namely (a) new industrial units set up in the areas mentioned in Annexure II and Annexure III which have commenced commercial production on or after 7/1/03 but not later than 31/3/10; (b) industrial units existing before 07/1/03 in areas mentioned in Annexure II, which have undertaken substantial expansion by the way of increase in installed capacity by not less than 25% on or after 07/1/03, but have commenced commercial production from such expanded capacity, not later than 31/3/10 . 7. The appellant claim to be covered by para 2 (a) of the exemption notification i.e. they claim to be a new unit set up after 07/1/03 which had commenced commercial production on or before 31/3/10. This claim of the appellant is disputed by the Department. 7.1 The appellant in support of their claim for having commenced commercial production on or before 31/3/10 rely upon (a) certificate produced by District Industry Centre certifying th .....

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..... ts Director Shri Sanjay Bajaj in his statement dated 21/5/10 stated that they had not placed any orders for the said goods but they had been advised by the owner of the appellant company to receive the said goods for which they (the appellant company) would arrange some buyers. (6) Beside this, some photographs taken by the Investigating Officers on 17/5/10 have also been placed on record, which according to the Department show that even as on 17/5/10 the factory of the appellant unit was not in a position to commenced commercial production. 7.3 The appellant, on the other hand, heavily rely on certificate dated 15/7/2010 issued by Member, Secretary Single Window Clearance Agency, Kala and HP certifying that the commenced products had commenced on 31/3/10. 8. In terms of para 2 (a) of the exemption notification, the benefit of this notification to the new units set up on or after 07/1/03 would be available only if they had commenced commercial production on or before 31/3/10. Though the term commercial production is not defined in this notification, in our view, this term should be construed in contradistinction with the term trial production , as trial production is .....

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..... production or not. If the plant had been visited by the Jurisdictional Central Excise officers on 31/03/2010 and got surveyed by a Chartered Engineer and his opinion on the point of commissioning taken, there would have been no scope for dispute on this point. In this regard, the certificate dated 15/07/2010 given by the Member Secretary, Single Window Clearance Agency, Kala Amb, H.P., is in the appellant s favour as it certifies that the commercial production had commenced on 31/03/2010. However, it is not clear from this certificate that this certificate had been given after actually visiting the plant on 31/03/2010 or only on the basis of the records. 10. The Jurisdictional Central Excise officers instead of visiting the appellant s unit on 31/03/2010 visited only on 06/04/2010 and on the basis of the condition of the plant on that date have alleged that the commercial production had not been commenced on or before 31/03/2010. In this regard, the Department also heavily relies upon the statement of Shri Dinesh Sharma, Supervisor of the unit stating that though the production had been started on 30/03/2010 and on that day, 5.5 MT of Aluminium Coils had been produced, by opera .....

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