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M/s Acquamall Water Solutions Ltd. Versus CCE, Meerut-II

2016 (6) TMI 767 - CESTAT NEW DELHI

Area based exemption - denial of benefit of the exemption on the intermediate products namely water filter cartridges and EVA pipes. - Notification No.50/2003-CE dated 10.06.2003 - substantial expansion in the installed capacity - Held that:- It is admitted by the appellant that the substantial expansion in respect of the intermediate products have been undertaken only after the period of dispute. This brings us to the more fundamental question whether to increase the installed capacity of the u .....

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as been crystalised as a result of the investigation ordered by the Commissioner whose reports dated 19.11.2007 and 13.02.2008, the Commissioner relies in the order. Inasmuch as copies of these reports have not been furnished to the appellant, the Commissioner has passed this order behind the back of the appellant clearly disregarding principles of natural justice. We also find that the basis of the demand does not emerge from the impugned order itself, making this error sufficient to set-aside .....

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cause notices dated 24.05.2006 and 06.12.2006 were finalised. 2. Appellant have a manufacturing unit located in Bhimtal Distt Nainital which is licensed by the Uttaranchal Government. The unit is situated within notified Industrial area and has availed the benefit for substantial expansion under Area Based exemption Notification No.50/2003-CE dated 10.06.2003. Appellant manufactures two main products: 1. Water Filter cum Purifier and (WFCP) 2. Water Cooler Cum Purifier (WCCP) They also manufact .....

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city was duly supported by a certificate from Professor of IIT Roorkee, IISC, Bangalore besides a Chartered Engineer Shri A.D. Deopujari. The appellant started substantial expansion of their other product, WCCP in September October, 2004 by addition of automated conveyor systems, additional conveyors, heating oven and other plant and machinery. The increase in installed capacity of this product was said to be from 1818 to 4000 (approximately) units per annum which was in turn supported by a cert .....

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n for denying the benefit was started by issue of show cause notices dated 24.05.2006 and 06.12.2006 which culminated in the impugned order dated 31.03.2008. In the impugned order which is under challenge, the Commissioner allowed the benefit of Notification No. 50/2003 for the main products WFCP as well as WCCP in line with the order of his predecessor. However, he denied the benefit of the exemption on the intermediate products namely water filter cartridges and EVA pipes. The reason cited by .....

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ied by IIT, Roorkee, IISC, Bangalore and Chartered Engineer and have been accepted by the Revenue. (ii) The appellant has cited several decisions of this Tribunal which have clearly ruled that to claim the exemption under the Notification No. 50/2003-CE, it is not necessary that each and every part / section of the factory should be expanded. If the substantial expansion of the unit as a whole has taken place, the expansion would be admissible to all the products manufactured therein. They relie .....

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-2003 (162) ELT 350 (Tri. Kolkata). * CCE, Shillong vs. Hindustan Coca -Cola Beverages - 2004 (169) ELT 152 (Tri. Kolkata). * CCE, Dibrugarh vs. Hindustan Coca - Cola Beverages (P) Ltd. - 2005 (186) ELT 242 (Tri. Kolkata). (iv) On the question of judicial discipline the appellant contended that the Commissioner vide her order dated 30.01.2006 has allowed exemption to the appellant. This order has been accepted by the Department and hence the department cannot take a contrary stand in subsequent .....

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ame products for the same period. (vi) The appellant has also taken serious objection to the Commissioner relying on two reports by the Assistant Commissioner dated 19.11.2007 and 13.02.2008 which indicate that he had ordered further investigations after receiving the reply of the appellant and after hearing the appellants in September - October, 2007. These reports of Assistant Commissioner have not been made available to the appellants, thereby violating the principles of natural justice. The .....

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ted that the substantial expansion in respect of these products have been completed only on 15.07.2006 and 15.05.2006 respectively. 6. Heard both sides and perused the records. 7. Appellant has claimed the benefit of Notification No. 50/2003-CE which exempts the goods specified in the First and Second Schedule of the Central Excise Tariff Act, other than the negative list and specified in Annexure-I of the notification, cleared from a unit located in the Industrial Growth Centre or Industrial In .....

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y-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, 2007 . 8. The fact that the appellant has satisfied the condition of substantial expansion for their main product WFCP and WCCP is not in dispute and the benefits have been allowed by the Commissioner in the impugned order. He however has held that substantial expansion has been done only in the period subsequent to the disputed per .....

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d machinery. Any increase in the installed capacity by means other than installation of additional plant and machinery would not qualify for the benefit of exemption under substantial expansion . (b) As substantial expansion is defined in terms of increase in installed capacity by 25% or more, value of investment in plant and machinery is not the criteria to define substantial expansion. So long as additional installation of plant and machinery results into increase in installed capacity by not .....

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of original or depreciated value of plant and machinery. The only criterion to be satisfied is accretion in installed capacity by atleast 25% with additional plant and machinery. (e) Additional investment in plant and machinery for modernisation or for improving the quality of existing products, unless it leads to increase in installed capacity by 25% or more, would not tantamount to substantial expansion . 9. The clarification clearly shows that substantial expansion is only by way of increasin .....

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te products are not independent but are integrated with the production lives of the final products. Accordingly, Water Filter Cartridge and EVA Food Grade Pipes are manufactured corresponding to the number of finished products manufactured during a particular period. It is admitted by the appellant that the substantial expansion in respect of the intermediate products have been undertaken only after the period of dispute. This brings us to the more fundamental question whether to increase the in .....

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some of which are placed below: * CCE, Meerut-II vs. Prakash Straw Board Pvt. Ltd., - 2016 (332) ELT 741 (Tri. Delhi). * CCE, Chandigarh vs. Bhandari Deepak Industries Pvt. Ltd. - 2015 (318) ELT 677 (Tri. Del.) * CCE, Shillong vs. Monabari Tea Estate - 2003 (154) ELT 230 (Tri. Kolkata) * CCE, Shillong vs. Dorria Tea Estate -2005 (156) ELT 999 (Tri - Kolkata). 10. The above view has also been taken by the Commissioner in her order dated 30.01.2006 for the prior period. However, in the impugned o .....

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