TMI Blog2015 (9) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... the same has been issued in context to area based Notification No. 56/2002-C.E., dated 14-11-2002, - Notification 56/2002-C.E. requires substantial expansion by way of increase in installed capacity whereas Notification 1/2010 speaks of substantial expansion by way of increase in the value of fixed capital investment in plant and machinery for the purposes of expansion of capacity or modernization and diversification. However, the benefit of the Notification would still be admissible to the respondents in case they satisfy the condition laid down under Para 8(b)(ii) regarding employment. Increase in employment - revenue contended that increase in labour is not attributable to investment but was done on account of regular need of the respondents - Held that:- , I find that the regular employee’s strength of the respondents has increased by much over 25% over the base employment on making new investment in plant & machinery, as such, they have fulfilled the criteria for admissibility of area based exemption to them, clause 8(b)(ii) of the notification. Assessee is entitled to area based exemption, under the notification. Accordingly, the impugned order is upheld and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electrical Industries Pvt. Ltd. [1997 (94) E.L.T. 449 (S.C.)] and K.R. Steel Union Limited [2001 (129) E.L.T. 273 (S.C.)]. (ii) That the definition of substantial expansion under para 8(b)(i) of the notification is same as has been defined in the Central Capital Investment subsidy scheme notified vide F. No. 1(11)2002-NER, dated 22-10-2002. That since the definition of substantial expansion in subsidy scheme is exactly same as that defined under para 8(b)(i) of the notification, therefore, one can look at the methodology of calculating the value of existing plant machinery from the subsidy scheme as both the notifications have been framed for the state of Jammu Kashmir with the same objective in mind. That the said methodology has been notified in para 7 of the subsidy scheme and the relevant portion reads as under :- Plant Machinery : In calculating the value of plant and machinery, the cost of industrial plant and machinery as erected at site will be taken into account which will include the cost of productive equipment, such as tools, jigs, dies and moulds, insurance premium and transport cost. From the above reading, it is clear that the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees at any point of time by the concerned industrial unit during the last five years. (vi) That the respondents have produced a certificate No. 9973/IND/3082-83, dated 17-5-2013 issued by the GM, DIC, Jammu where under Date of Production (DOP) has been certified as 2-11-2012 and the date of installation of additional machinery is 25-10-2012. That as per Labour Officer s certificate dated 22-10-2012 and as per records available with the unit the respondents was already having 12 employees during the month of October, 2012. That the respondents have also placed on record a certificate with regard to Employees Provident Fund Scheme, 1961, which shows that the unit had 12 employees on strength in the month of October, 2012 itself. That as per records, the respondents were having so called additional employees on roll even before the installation of machinery and start of commercial production from such machinery. That the increase in labour is not attributable to investment but was done on account of regular need of the respondents. That the above stated facts do not show any linkage between installation of additional machinery and increase of labour since the unit has increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment limit. (iv) That Revenue s view that manufacturer has increased employees during the month of October, 2012 whereas new machinery has been installed on 25-10-2012 and commencement of production on additional machinery is 2-11-2012, hence increase in labour is not attributable to investment (employees were kept before installation) is totally baseless. That they have increased the number of employees w.e.f. 18-10-2012 as per the certificate of the concerned Labour Officer, because after machinery has been procured and process of installation has been started, additional employees has to be appointed, because they have to be trained accordingly. Further it is submitted that employment of labour on the day of installation of machinery is not practical because, here permanent employees had to be appointed and not casual labour. 5. I have carefully gone through the case records, including the impugned order, grounds of appeal, records of personal hearing, submissions made in the cross-objections and copies of relied upon documents submitted by the respondents. The issue involved in the present appeal is admissibility of area based exemption under the notification to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyment provided by the industrial unit to daily wagers or casual employees. 5.1 The Notification provides for exemption to the units existing prior to 6-2-2010 in case either of the two conditions specified under Para 8(b) were satisfied. First I take up deliberations whether the requirements laid down under Para 8(b)(i) of the Notification had been met with by the respondents. The benefit under 8(b)(i) is admissible in case the respondents had undertaken substantial expansion by way of increase by not less than 25% in the value of fixed capital investment in plant and machinery for the purposes of expansion of capacity or modernization and diversification. The respondents have submitted copies of Balance Sheets for the financial years 2011-12 2012-13. I find that the adjudicating authority has taken into consideration depreciated value of ₹ 50.79 lacs for calculating increase in value of fixed capital investment in plant and machinery made by the respondents, while accepting expansion case of the respondents, and held that investment in Plant Machinery has gone up from ₹ 50.79 lacs to 66.72 lacs (precisely 31.36%). I observe that the notification only speaks o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common parlance, the term investment has been defined as a thing worth buying because it may be profitable or useful in the future (Oxford English Dictionary, 11th edition, 2004) or as the placing of money to gain profit (Bloomsbury English Dictionary, Reprint, 1985). (15) Speaking of investment in the context of the Income Tax Act, 1961, this Court observed in Commissioner of Income Tax, Lucknow v. Uttar Pradesh Cooperative Federation Ltd., AIR 1989 SC 915, quoting P. Ramanatha Aiyar s Law Lexicon (Reprint Edition 1987) that : The term invest is used in a sense broad enough to cover the loaning of the money but is not restricted to that mode of investment or loans made on commercial paper. The word invest has been judicially defined as follows: - To place property in business; to place it so that it will be safe and yield a profit. It is also commonly understood as giving money, for some other property (as) investing funds on lands and houses. Investment means in common parlance, putting out money on interest, either by the way of loan, or by the purchase of income producing property... (emphasis supplied) (Para 9). (16) In Inland Revenue Commissioners v. Des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s investment is more than 5 lakhs before the periods in question and since the investment continues to remain unchanged, the assessee is not entitled to exemption from payment of sales tax either under the Rules or under the notification. 5.3.2 I find that Hon ble Supreme Court, in a very clear term has held that expression investment in plant and machinery is not subject to the impact of depreciation in the value of plant and machinery. Therefore, applying the ratio of the judgment of the Hon ble Supreme Court mentioned in para 5.2, above and keeping in view the facts of the case which is before me for decision and my discussions above, I find merits in the revenue s appeal, so far as the condition as stipulated in para 8(b)(i) for availing exemption under the notification. 5.3.3 On this point the respondents in their cross-objection have contested this issue and have placed reliance on the C.B.E. C. Circular No. 772/5/2004-CX, dated 21-1-2004 in support of their contention. However, I find the above quoted Board s Circular is misplaced as the same has been issued in context to area based Notification No. 56/2002-C.E., dated 14-11-2002, where the wordings with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also not open to the department to challenge a certificate issued by another Govt., department, without any corroboration with evidence. 6.1 Having said that I may observe that in course of making the Notification operational in favour of an existing assessee, and to see whether the condition laid down in Para 8(b)(ii) was applicable until and unless it is proved otherwise, the certificate issued by DIC to the effect that the assessee had created such additional regular employment, would suffice. 6.2 As regards contention of the revenue that as per certificate dated 17-5-2013 of GM, DIC, Jammu whereunder date of production has been certified as 2-11-2012 and the date of installation of additional machinery is 25-10-2012; that as per Labour Officer s certificate dated 22-10-2012, the respondents was already having 12 employees during the month of October, 2012; that increase in labour is not attributable to investment but was done on account of regular need of the respondents. Before arriving at any decision on this point I would first like to discuss the relevant provisions which are reproduced as under :- 8(b)(ii) made new investments on or after the 6th day of Februar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al machinery and now total employees are 12. Further, the respondents have also produced copies of GM, DIC, Jammu and ongoing through the same I find that earlier the annual production capacity of finished goods i.e. Laundry Soap of the unit of the respondents, as per GM, DIC, Jammu s letter/certificate No. 9973-IND/11212-14, dated 19-11-2009 was 4992 M.T and it is evident that the same has been increased to 6489.6M.T., as per GM, DIC, Jammu s letter/Certificate No. 9973-IND/8316-18, dated 3-11-2012. It can be seen that there has been substantial increase in the annual production capacity of the unit of the respondents and it is also not in dispute that the respondents have made new investment in plant machinery, therefore, contention of the respondent for requirement of additional labour cannot be ruled out without any basis contrary to it. I find that the increase in labour was w.e.f. 18-10-2012 and the machinery installed was on 25-10-2012. This evident that the respondents had planned for substantial expansion, so as to fulfil the conditions of the notification. Further, the Notification nowhere specifies that labour has to be engaged only after installation of machinery, imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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