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2016 (1) TMI 521 - CESTAT NEW DELHI

2016 (1) TMI 521 - CESTAT NEW DELHI - 2016 (332) E.L.T. 741 (Tri. - Del.) - Area based exemption - substantial expansion by way of installed capacity by not less than 25% - Notification No. 50/2003-CE dated 10/6/03 - it was contended that production capacity of the both the units are to be counted as one - Held that:- prior to substantial expansion the Paper Board unit was having installed capacity of 15 TPD and Spiral Paper Tube unit was having installed capacity of 5 TPD, therefore, there was .....

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nd another for conductors unit and this Tribunal has considered the substantial expansion of both the units separately, therefore, following the precedent decision of this Tribunal and observation made by the learned Commissioner (Appeals) in the impugned order, we do not find any infirmity in the impugned order. - Decided against the Revenue. - Excise Appeal No. 864 of 2007 with CO No. 157 of 2007 - Final Order No. 53521/2015 - Dated:- 18-11-2015 - Shri Ashok Jindal, Member (Judicial) And Shri .....

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e facts of the case are that the respondent were engaged in manufacture of Paper Board and Spiral Paper Tube. The respondent informed to the Department on 29/3/2004 that they have undertaken substantial expansion of installed capacity in respect of Paper Board and shall be availing benefit of exemption under Notification No. 50/2003-CE dated 10/6/03. The installed capacity of the unit prior to 07/01/2003 was 15 Ton Per Day (TPD) or 4500 TPA in respect of Paper Board and 5 Ton Per Day of 1500 TPA .....

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n as expansion occurring in the notification means the installed capacity in relation to each and every item being manufactured by existing industrial relate. The show cause notice was adjudicated and it was held that respondent has undertaken substantial expansion by way of increase in installed capacity by more than 25%, therefore, the respondent is entitled for benefit of exemption notification cited hereinabove. The said order was challenged before the learned Commissioner (Appeals) who uphe .....

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ubmits that the claim of the respondent is that Paper Board Section and Spiral Paper Tube are two different units and they are not claiming benefit of exemption notification for Spiral Paper Tube Section, the said contention is not acceptable as per the exemption notification, in Central Excise Act, there is no term as unit. In fact, Central Excise Act recognize only factory and factory is a composite factory of two units, therefore, the substantial expansion has not been taken over by the respo .....

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) E.L.T. 201 (Tri. - Del.). Therefore, the impugned order is to be upheld. In that case also, the assessee is having two units in the same factory i.e. conductor unit and LPG Cylinder unit and this Tribunal has held that the installed capacity of the each unit is to be considered separately and the same has been considered by this Tribunal in that case. Therefore, the impugned order is to be upheld. 5. Heard the parties considered the submissions. 6. The contention of the learned AR is that the .....

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aper Board unit, the total installed capacity has been increased to 30 TPD which is more than 25% of the installed capacity prior to substantial expansion. On this ground itself, the Revenue has not case, but in the impugned order the learned Commissioner (Appeals) before allowing the exemption, has examined the issue of substantial expansion in detail and observed as under :- 6. The Department has preferred this appeal on the ground that the Notification No. 49/2003 and 50/2003 (supra) lays dow .....

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otification. The Circular issued by CBEC vide 772/5/2004-CX dated 21/01/2004 also corroborate the view of the Department. The party has controverted the grounds of appeal taken by the Department. Their initial submission may be summarized as under : (i) That they claimed exemption in respect of Paper Board Section only and opted to pay duty on Spiral Paper Tube Section notwithstanding the fact that as a result of substantial expansion carried out by them the overall installed capacity of their f .....

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has increased from 15 TPD to 25 TPD. This claim of the party is certified by the experts of Department of Paper Technology, IIT, Roorkee in their report dated 22/03/2005 as manifest from the Capacity Assessment Report available on record. (ii) That the appeal filed by the Department is time barred in terms of Section 35E of the Central Excise Act, 1944. In this regard, the party also quoted the provisions of Section 35E verbatim. They added that since no justifiable reasons have been brought fo .....

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of Order-in-Original. (iii) They also averred that benefit of Notification claimed by them is in accordance with law as the fact of substantial expansion carried out by them is undisputed in so far as Paper Board is concerned. The Department has not refuted at any stage the material fact that as a whole overall installed capacity of their unit has increased by more than 25% including Spiral Paper Tube Section also. Since they opted to pay duty on Spiral Paper Tube, therefore, the Department rai .....

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by them was in accordance with law. They averred that the impugned notification makes a distinction between a factory and an industrial unit. The word factory is a genus and industrial unit is a species comprising of various divisions of a factory. (v) That factory has been defined under Section 2 (3) of the Central Excise Act, 1944. All industrial units are to be considered as parts of the factory whereas a factory cannot be a part of industrial unit. Thus the Paper Board division of their will .....

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29 (Mad.). They further relied on the decision of Bombay High Court in the case of Devidayal Electronics & Wires Ltd. vs. Union of India reported in 1984 (16) E.L.T. 30 (Bom.), wherein factory was distinguished from an industrial unit. (vii) Further, in response to a query by TATA Motors, the CBEC vide their letter dated 21/03/2006 have also clarified that if a new assembly line or a production line is installed after 31/03/2007 and would commence production after that date, then benefit of .....

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ncluding Spiral Paper Tube Section also, they are otherwise eligible for exemption even considering their Paper Board unit and Spiral Paper Tube Unit as one industrial unit. They also relied the following case laws to support their contention that if overall capacity has been increased by 25% or more than there is no need to increase in installed capacity of all the Divisions/Sections : (a) CCE vs. Monabari Tea Estate - 2003 (154) E.L.T. 230 ; (b) CCE vs. Assam Polyester Co-op Society Ltd. - 200 .....

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ed by the Department, the written submissions of the party, copies of relevant documents available on record and the record of personal hearing. I find that the gist of the Department s appeal is that party has not carried out substantial expansion in their unit s each section or to say that though installed capacity of Paper Board Section has been enhanced by the party by more than 25%, yet they have made no increase in installed capacity of their Spiral Paper Tube Section. As regards to party .....

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inal was passed on 18/08/2005, whereas authorization for filing appeal against the order was made on 11/08/2006 by the Commissioner i.e. after a period of more than 11 months from the date of Order-in-Original. I however, do not accede to this averment of the party and to refute it would like to quote relevant extract of the sub-Section (2) and (3) of Section 35E of the Act ibid as under : (2) The Commissioner of Central Excise may, of his own motion, call for and examine the record of any proce .....

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Commissioner of Central Excise, as the case may be, shall, where it is possible to do so, make order under sub-Section (1) or sub-Section (2), within a period of six months, but not beyond a period of one year, from the date of the decision or order of the adjudicating authority. A perusal of sub-Section (2) and (3) leaves not an iota of doubt that order under sub-Section (1) or sub-Section (2) is to be made by the Commissioner, passing the review order, where it is possible, within a period o .....

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main uncontroverted in the instant case are that : (i) The party has carried out substantial expansion after 7th day of January, 2003. Further, the installed capacity of the unit prior to 07/01/2003 was 15 TPD or 4500 TPA in respect of Paper Board and 05 TPD or 1500 TPA in respect of Spiral Paper Tube. The party claimed that after expansion of the unit the installed capacity of Paper Board has increased from 15 TPD to 25 TPD. This claim of the party is certified by the experts of Department of P .....

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f there is overall increase of 25%, the same would meet the conditions of Notification No. 33/99 (Area Based Notification for Jammu & Kashmir). (iii) In the case of CCE vs. Assam Polyester Co-op Society Ltd. reported in 2003 (162) E.L.T. 350 it was held by the Hon ble CESTAT held that the Revenue in their memo of appeal has contended that there has been no expansion of installed capacity of weaving section. Weaving section, being an integral part of process of manufacture, the non-expansion .....

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has not disputed the fact that there is an overall increase of 25% in the manufacturing unit of the Respondents. As such even if the weaving section has not increased its installed capacity, the benefit cannot be denied to the respondents. Revenue s appeal is rejected. The case is against the department. (iv) CCE vs. Hindustan Coca Cola Beverages Ltd. reported in 2004 (169) E.L.T. 154 the Hon ble CESTAT had held that Notification No. 32/99-CE, dated 08/07/1999 granted benefit to the units situa .....

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25%, we are of the view that the benefit of the Notification in question has been rightly extended to the respondents. Accordingly, the Revenue s appeal is rejected. (v) CCE vs. MKB (Asia) Pvt. Ltd. reported in 2003 (158) E.L.T. 616, the Hon ble CESTAT had held that the Revenue s main grievance is that the appellate authority has taken into consideration the overall increase in the installed capacity of the unit but has not considered the increase in the separate key area/section of the unit. It .....

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t Expansion of Notification No. 33/99-CE - Bottle washer and filter installed in aerated water bottling plant Commissioner accepted the reliance of respondent stating that there has been substantial expansion of the industrial unit by of increase in installed capacity As per the notification there should be substantial expansion in industrial unit and the expansion should not be regarding to any individual section of the unit or machinery in the unit Benefit of exemption available. Appeal reject .....

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n increase of 25% in the overall installed capacity, but not in each and every wing of the different manufacturing units. We find that the Notification in question talks about the overall increase of 25% in the installed capacity and does not require that each and every section should be upgraded by 25%. In this view of the matter, we do not find any merits in the Revenues appeals and reject all of them . In view of the ratio of the above decisions and nothing contrary to them on record, I find .....

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is to be held that a factory is different than that of an industrial undertaking. All industrial units can be considered as parts of the factory whereas a factory cannot be a part of industrial unit. Also Board (CBEC) vide its letter dated 21/03/2006 (available on record) have also clarified that if a new assembly line or a production line is installed after 31/03/2007 (i.e. after sun set clause or the ultimate dead line or availing exemption) and would commence production after that date, then .....

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