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2016 (10) TMI 385 - CESTAT NEW DELHI

2016 (10) TMI 385 - CESTAT NEW DELHI - TMI - Area based exemption - Notification No. 50/2003-CE requires increase in installed capacity by not less than 25% to grant exemption - various documents like certificate of Chartered Engineer, Capacity Certificate by the General Manager, DIC Kotdwar, details of procurement of capital goods etc. deposited by appellant in support of their claim - whether denial of exemption justified? - Held that: - the appellants are in regular communication with the dep .....

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ave changed the rating of solid state generator from 2000 KW to 2500 KW various other changes were made to increase the cooling of the assess generator. The furnace crucible capacity was increased 4 MT to 5 MT. The changes were carried out only in one crucible. These things have been explained by M/s Electrotherm (India) Limited who carried out the said upgradation work. The department did make reference to M/s Electrotherm, who confirmed the said expansion and supplied the supporting invoice fo .....

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ty cannot be rejected on perusal of documents placed - appeal allowed - decided in favor of appellant. - Excise Appeal Nos. 115, 116, 117 of 2007, Excise Appeal Nos. 772 - 773 of 2012, Excise Appeal Nos. 58006 to 58010 of 2013 - Final Order Nos. 53777 53786/ 2016 - Dated:- 27-9-2016 - Dr. Satish Chandra, President And Shri B. Ravichandran, Member (Technical) Sh. Amit Jain, Advocate for the appellant Sh. Amresh Jain, AR for the Respondent ORDER Per B. Ravichandran These are ten appeals involving .....

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have been clearing the goods after 25% enhancement of production capacity. The appellants submitted various documents like certificate of Chartered Engineer, Capacity Certificate by the General Manager, DIC Kotdwar, details of procurement of capital goods etc. in support of their claim. The Revenue by entertaining a view that the appellant did not make additional installation of machines and have not made expansion on such a scale and on such a nature, initiated proceedings to deny the exemption .....

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lants. These appeals were all directed against such orders, confirming duty demands and imposing penalties on the unit and on various individuals. 2. We have heard the ld. Counsel representing the appellants and the ld. AR for Revenue. We have also perused the appeal records including written submissions. The allegations against the main appellant which resulted in the above impugned orders were as below: (i) That as stipulated in the Board s Circular No. 772/5/2004-CE dated 21.01.2004, they had .....

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attempted to prove it s import to their factory through Trade Tax Forms No. 31 which were not found entered in the statutory records of Trade Tax Check Post. (iv) That the party neither enhanced it s electrical power load nor they upgraded the same by installing any transformer. (v) In addition to above, discrepancies in the certificate issued by the Chartered Enginner, General Manger of DIC, Kotdwar have been pointed out . 3. The original authority held that Notification No. 50/2003-CE require .....

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f Notification No. 50/2003-CE and their claim cannot be accepted. Accordingly, duty demand was confirmed and equal amount of penalty was imposed. Further, penalties were imposed on the individuals who are Directors in the company. 5. We have examined carefully the impugned order dated 29.09.2006 and noted the various grounds on which the conclusion for denial of exemption was arrived at. It is pertinent to record the appellants point wise counter on these grounds so that the fact can be examined .....

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ered Engineer also visited the appellant s factory on 16.05.2003, before the substantial expansion was undertaken, and gave a certificate to the effect that the capacity of the unit was 4 MTs. This certificate was produced before the ld. Commissioner, as acknowledged in para 3.3(i) of the OIO dated 29.9.2006, however, the ld. Commissioner doubts the same without any valid reason and without producing any evidence to contradict the same. * The certificate along with its Annexures is self-explanat .....

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by the GM, DIC on 16.2.2004 relied upon the Chartered Engineer s certificate issued on 16.5.2003, as referred above and not on the certificate dated 26.4.2004. * The certificate issued by the Government department cannot be doubted in this manner. If the adjudicating authority had such doubts, proper recourse was to undertake investigation and response from DIC (as is stipulated in the letter dated 20.11.2007 of the Commissioner of Central Excise, Chandigarh also). Having not done the same, the .....

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ehensible that the same change can be done twice in the furnace originally of 3 MTs. * Invoice dated 12.2.2002 establishes that the capacity of furnace was 3 MTs on 12.2.2002 and not the capacity as on 2.8.2003. * Invoice dated 24.7.2003 for the present substantial expansion is handwritten whereas that dated 12.2.2002 was typed. * Cost of expansion from 3 to MT was ₹ 14.25 lakhs whereas the cost of expansion for 4 to 5 MT is only 8 lakhs. * The original invoice dated 24.7.2003 was not prod .....

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is also certified by the Chartered Engineer as per the Certificate dated 16.5.2003. This observations is also based only on conjectures and surmises, without any supporting evidence. If there was any doubt, the ld. Commissioner ought to have caused inquiry/ investigation to ascertain the actual capacity of the furnace post expansion. Having not done that, the appellant cannot be proceeded against, only on the basis of suspicion. It is settled law that mere suspicion cannot take the place of evid .....

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and comparison on the part of the ld. Commissioner, without any legal basis. Furthermore, the first expansion from 3 MT to 4 MT had two crucibles, whereas the second expansion had only 1 crucible initially in July 2003. The second crucible at a cost of ₹ 11.94 lakhs was added subsequently (page 425 in Appeal No. E/772/2012). The original invoice was never asked for during the proceedings. Had it been asked, the appellant had no problem providing the same. The same is still available with t .....

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the claim of the appellant has been produced by the Department. Further, the regulations provide for load for 1 MT furnace and not for 5 MT, therefore, the same has no relevance to the present case of the appellant. 2800 KVA is sufficient for upto 6 MT furnace, as evident from quotation of Electrotherm. 5 Para 4.6- Power factor unit and CI rough castings purchased under trade tax Form 31, Nos. 345310 and 345699 were not entered in the check post at Kotdwar. The stamp on these Form 321 is differe .....

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er engaged by the Department, when he appeared before the Hon ble Tribunal at the time of hearing of the stay application, categorically confirmed that the revised capacity of the furnace is 5.8 MT, based on which the Hon ble Tribunal prima facie concluded that the capacity expansion has taken place. 6 Para 4.6- Chartered Engineer in his certificate has certified that power factor unit modified whereas Mr. Sanjeev Jindal stated power factory unit purchased . This inconsistency leads to the concl .....

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The certificate should be read holistically with facts/ documentary evidence. 7 Para 4.9 Production has increased to 1378 MT per month, which is abnormal and not commensurate with the expansion claimed. This conclusion again is only on the basis of suspicion, without any legal basis and without any technical evidence. Without prejudice to the above, it is submitted that at 4 MT, with heat taking 3 hrs. On 24 hour working, 8 heats are possible. In a day 32 MTs would be produced, which leads to 9 .....

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ased only on a suspicion, without any legal or factual basis and it reflects improper understanding of the ld. Commissioner regarding the technical aspects of power consumption in the furnaces. In perfect situations, like perfect scrap with no impurity, 521 KW per MT of electricity consumption is there. But practically, this figure is not achievable. The energy efficiency upon expansion was possible on account of various upgrades in the machinery, like installing additional converters, changes i .....

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t payment of duty, the ld. Commissioner has taken no action for getting the case investigated for establishing the allegation. This itself establishes the hollowness of the said finding. 9 Para 6.23 (in Appeal No. E/772/2012) the certified by Sh. D. K. Jain cannot be brushed aside merely on account of observations of the Hon ble CESTAT in the stay order dated 29.03.2007, inasmuch as the appeal is still pending for disposal. The appellant never contested the certificate of Sh. D. K. Jain on the b .....

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chronology of events, we note that the appellants filed their first letter on 03.07.2003 within one month of issue of Notification No. 50/2003-CE dated 10.06.2003, requesting the officer to visit and to ascertain the installed capacity, investment in machinery etc. Again on 04.07.2003, the appellants intimated the jurisdictional Superintendent regarding beginning of expansion of installed capacity in their unit and requesting for exemption. On 03.08.2003 intimation was given to the jurisdiction .....

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munication with the department regarding their claim for exemption under the said Notification. As could be seen from the findings of the original authority, various doubts and suspicion have been raised against some of the documents and certificate submitted by the appellant. We note that the appellants have explained their position vis-a-vis these doubts. In fact, the case for denial of exemption was mainly sought to be supported on the ground of (a) Certain items said to have been used in the .....

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h by way of checking with the concerned authorities or by physically verifying the availability of such instrument in the appellant s premises. We do not find any such examination by the department. 8. Regarding the discrepancies in the Chartered Engineer certificate and the confirmation of capacity by the General Manger, DIC we find that the same are given as per the request of the appellants based on materials produced. The appellant did categorically claimed that the Chartered Engineer verifi .....

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ng the issue. Shri Jain has stated based on the formula relating to capacity production with the revised capacity is 5.8 MT. thus, clearly capacity expansion has taken place. The capacity expansion also remains certified by the General Manager of District Industries Centre. Considering the above recordings by the Tribunal we find no reliance can be made on the earlier opinion of the same Chartered Engineer. 9. One more indication of expansion in capacity was sought to be emphasised by the appell .....

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PMT consumption of electricity establish that the appellant before issue of exemption notification were producing more goods but were not recording in the production. We find such observation is purely in the realm of presumption and cannot form basis of any legal conclusion. Similar such presumptions adverse to the appellants have been made by the original authority. As already noted, all these suspicion and doubts could have easily been verified during the relevant period itself so that the f .....

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