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M/s Lakhani Footwear Pvt. Ltd. Versus Commissioner of Customs (CE&ST)

2016 (4) TMI 266 - AUTHORITY FOR ADVANCE RULINGS

Availability for benefit of Notification No. 50/2003-C.E. dated 10.06.2003 - Area based exemption - expansion of an eligible unit after the cut off date of sun set clause - Goods manufactured from the unit established from expansion of the existing unit - Manufacture of footwear - Premises where the benefit of Notification No. 50/2003-CE dated 10.6.2003 is already being availed and where the applicant proposes to effect the substantial expansion, are the same and one premises - Revenue submitted .....

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production of new products after the cut-off date. In the instant case, applicant proposes to manufacture shoes of different brand and design by installing fresh plant/machinery. Further, the contention of Revenue that the applicant proposes to take separate factory license, ESI No. and PF Codes for expanded Haridwar Plant II, therefore, it will not fall under the category of existing unit, is not correct. Relevant Notification No. 50/2003-CE, as also CBEC Circular dated 22.12.2010 and 17.02.20 .....

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such cases, the exemption should continue to be available from the residual period of exemption. Here, the applicant proposes to effect expansion wherefrom the new unit had started commercial production w.e.f. 26.03.2010. Therefore, in view of Circular dated 17.02.2012, applicant is eligible for said exemption. - Decided in favour of appellant - Ruling No. AAR/CE/ 09/2016, Application No. AAR/44/CE/24/2014 - Dated:- 19-3-2016 - V S Sirpurkar, Chairman, S. S. Rana, Member And R. S. Shukla, Member .....

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t thus there would be substantial expansion by 25% which qualifies as substantial expansion as per Board s Circular No. 772/5/2004 CX. dated 21.1.2004; that for this Haridwar Plant-II, applicant would obtain separate factory license and E.S.I., PF Code; that applicant proposes to separate existing works with the proposed Haridwar Plant-II by putting a wall in between the two. The existing works shall be named as Lakhani Footwear Pvt. Ltd and the expanded capacity where they would put the additio .....

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on is taking place in the same plot. 2. Applicant submits that Central Board of Excise & Customs (CBEC) has clarified by its Circular No. 939/29/2010-CX dated 22.12.2010 that units which are already enjoying the duty exemption can produce new articles after the cutoff date using the same plant and machinery or by installing a new plant and machinery or capital goods and the provisions of Notification No. 50/2003-CE do not place a bar or restriction on an addition / modification in the plant .....

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adjacent to its existing premises by installing new plant / machinery and in so coming to the conclusion has reiterated the clarification in Circular No. 939/29/2010-CX dated 22.12 2010. Further, the expansion and installation of the plant and machinery is taking place in the same Khasra No. 72 & 74 for which ten year exemption has already been granted and is being availed. When even extending to adjacent plot of land is allowed, there is no reason why similar expansion within the same Khas .....

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. 50/2003-CE dated 10.6.2003 is already being availed and where the applicant proposes to effect the substantial expansion, are the same and one premises i.e. Plot No.11, Sector 11, SIDCUL, Haridwar; that the applicant proposes to divide existing plot into two parts by putting a wall; that after completion of Civil work at the proposed vacant space, they will name it as Haridwar Plant-II ; that the applicant also proposes to take a separate factory license, ESI No. and P.F. Codes. Revenue submit .....

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exemption notification and shall have to pay duty at the applicable rates. 6. It is observed that the Revenue has raised two objections. First objection is that the proposed Unit II does not fall under the category of existing unit, which has undergone substantial expansion in terms of Notification No. 50/2003-CE. Second issue raised is connected to the first issue, i.e., the proposed Unit-II will come into existence after the sunset clause i.e. after 31.03.2010, therefore said unit will not be .....

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and date of exercising option under Notification No. 50/2003-CE and date of commercial production are both shown as 26.03.2010. 8. Notification No. 50/2003-CE dated 10.06.2003 inter-alia exempts goods other than specified goods cleared from units located in areas mentioned in Annexure II and III to the Notification from whole of the duty of excise or additional duty of excise, subject to following 2 conditions (i) The manufacturer who intends to avail of the exemption under this notification sha .....

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the following particulars, namely:- (a) name and address of the manufacturer; (b) location/location of factory/factories; (c) description of inputs used in manufacture of specified goods; (d) description of the specified goods produced; (e) date on which option under this notification has been exercised; 9. It is observed from the Intimation / Declaration filed by the applicant under Notification No. 50/2003-CE that both above conditions have been satisfied. 10. Further, clause (2) of Notificat .....

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aken substantial expansion by way of increase in installed capacity by not less than twenty-five per cent, on or after the 7th day of January, 2003, but have commenced commercial production from such expanded capacity, not later than the [31st day of March, 2010.] 11. It is observed from above that exemption benefit under 2(b) above will not be available to the applicant as the industrial unit did not exist before 07.01.2003 and it started trial production only on 21.03.2010. It is to be seen if .....

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Declaration dated 29.03.2010 under Notification No. 50/2003-CE, submitted by the applicant that they commenced commercial production on 26.03.2010. Since it was a new unit, it could not have started production before 07.01.2003. Therefore, this sub-condition is also met by the applicant. 12. Applicant has relied on Circular No. 939/29/2010-CX dated 22.12.2010 issued by CBEC regarding scope of Notification No. 50/2003-CE. Relevant portion of the Circular is reproduced as under: Representations ha .....

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of the machinery by installing ancillary machines or replacement of some parts etc but in such a way that it does not lead to increase in capacity of production. (i) Where new dosage forms are manufactured after the cut-off date on the same line of production with the same machinery. (ii) Where a unit manufacturers a new product by installing fresh plant, machinery or capital goods after the cut-off date. Board has examined the matter. Under the said notifications, any new unit set up or an exis .....

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s by an eligible unit after the cut-off date and during the exemption period of ten years as per the notification. Therefore, it is clarified that in all the above situations, the benefit of the excise duty exemption under the notifications would continue to be available to eligible industrial units. However the period of exemption would remain ten years and would not get extended on account of such modifications or addition under any circumstances. 13. It is noticed that the above Circular has .....

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ll under the category of existing unit, is not correct. Relevant Notification No. 50/2003-CE, as also CBEC Circular dated 22.12.2010 and 17.02.2012, do not envisage such condition. In view of said clarifications issued by CBEC, applicant can continue to avail the benefit of excise exemption. 14. As far as second issue raised by Revenue regarding applicant starting a new unit i.e. Haridwar Plant II and not falling under the existing unit, is concerned, applicant has relied on Circular No. 960/03/ .....

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ling of the exemption physically shifts to a new location within the areas specified in the exemption Notification; and c. When a Unit availing of the exemption under an area-based Notification expands by acquiring a plot of land adjacent to its existing premises and installing new plant/machinery on such land. In the context of expansion of a Unit by acquiring an adjacent plot of land and installing new plant and machinery on such land, attention is invited to Boards Circular No. 939/29/2010-CX .....

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, the exemption should continue to be available for the residual period of exemption. 15. It is observed from the above Circular dated 17.02.2012 that the situation of expansion of an eligible unit by acquiring an adjacent plot of land and installing new plant and machinery on such land, is akin to expansion by way of installing new plant and machinery inside the existing plot/premises. CBEC clarified that in such cases, the exemption should continue to be available from the residual period of e .....

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