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TMI Blog2017 (5) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the appellant alongwith declaration. The objections were raised as regards the frequency converter machine in terms of CBEC Circular No. 772/5/2004-CX dated 21.01.2004 which alleged was not satisfied by the appellant. The appellant was also requested to provide the individual capacity of each of the products manufactured by it. Thereafter, the Assistant Commissioner held that the benefit of exemption Notification is not entitled to the appellant observing as under: I find that crucial machinery for manufacture of corrugated boxes, corrugated sheets, corrugated sets and corrugated Rolls is the corrugation machine. The notice have not installed any additional corrugation machine for undertaking the substantial expansion for claiming the exemption under Notification No. 50/2003-CE dated 10.06.2003. The additional machinery installed by the Noticee comprises frequency converter, pasting machine, Die punching machine, Eccentric slotter, Four Bar rotary, Box drying machine. The function of these machines is only for pasting, giving crease to cartons and for drying of cartons. The color Flaxo printer installed for undertaking the expansion can also not be considered as vital m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular dated 21.01.2004. As condition (a) provides that they must be some investment in their machinery for the purpose of exemption Notification. Condition (b) provides that the value of the investment is irrelevant in so far as the benefit of the exemption notification. Condition (c) provides that even second hand machinery can be used to enhance the installed capacity and reiterates that what is relevant is that the installed capacity ought to increase by at least 25%. Condition (d) provides that the value of machinery is not relevant. Condition (e) states that improving the quality of the products would not be substantial expansion unless the installed capacity increases by 25%. Therefore, the authorities below has completely misread the said circular and came to the conclusion that crucial machinery was not installed, therefore, there is no increase in installed capacity as the condition (a) provides that machinery should have been installed. Therefore, he prayed that impugned orders are to be set aside. 5. He further submits that the certificate issued by DIC was accepted certifying that the appellant has increase their installed capacity more than 25%, therefore, the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We have seen that in the adjudication order it is recorded by the adjudication authority that the installed capacity of corrugated boxes has been increased from 1175 MT to 1825 MT i.e. more than 55% increased in the installed capacity. It is also recorded that as the unit has not installed any additional machinery for manufacture of corrugated boxes, corrugated sets and corrugated rolls therefore, they are not entitled for benefit of Notification by CBEC Circular 772/5/2004-CX dated 21.02.2004. For better appreciation, the circular issued by CBEC is extracted here in below: 3. Board has received representations from various quarters seeking clarification on the term substantial expansion . With a view to ensure smooth implementation of the exemption schemes, following guideline are circulated to explain the scope of substantial expansion so far as it relates to the applicability of above-mentioned notifications. (a) increase in installed capacity of an existing unit by not less than 25% should be the result of installation of additional plant and machinery. Any increase in the installed capacity by means other than installation of additional plant and machinery would not qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2003. In this case, there is not dispute that the appellant undertook the expansion work after 07.01.2003. According to the appellant, they had made an application to the Directorate of Industries for the necessary approval for substantial expansion, and in that application they had furnished the details of the new machinery to be installed and the machinery (digester) to be re-placed. They have also placed on record the copies of these applications. As per the documents on record, the officers of inspection team of Directorate of Industries inspected the factory before they started expansion work and also inspected their factory after completion of expansion work in December, 2003. There is a letter dated 02.01.2004 of the Directorate of Industries addressed to the respondent unit acknowledging that their installed capacity in respect of semi craft papers and corrugated boxes has increased and that installed capacity for manufacture of semi craft papers has increased from 7200 MT to 9000 MT per annum and the installed capacity for manufacture of corrugated boxes had increased from 1200 MT to 1800 MT per annum. The letter also mentions the additional investment of about Rs. 34.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring process which is turn, increases the capacity. 16. Further, we find that the in the case of CCE, Shillong Vs. Hatikuli Tea Estate again after analysing the issue of this Tribunal observed as under:- 4. We, however, find that neither the Notification nor the ministry s Circular cited above, refers to the capacity of the drawing section as the only crucial factor to determine the installed capacity. Even though the respondents had a higher installed capacity of the drawing section, they could not have produced more than the installed capacity of the fermenting section, which was the lowest amongst all departments. There was no evidence produced on record by the Department that the respondents produced more than the installed capacity of the fermenting section before the claimed date of expansion. As such, it is not possible to accept the arguments of the Learned S. D.R. On the other hand, the chartered engineer s certificate produced by the respondents is detailed and acceptable and the same also has not been challenged by the Department. Accordingly, even though the order passed by the lower Appellate Authority is not detailed and has not examined the issues involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guage in the Notification requires substantial expansion in industrial unit and the expansion is not with reference to any individual section of the unit or machinery in the unit." The same ratio was adopted by CESTAT earlier in the case of CCE, Shillong Vs. MKB (Asia) Pvt. Ltd. -2003 (09) LCX 028 = 2003 (158) ELT 616 ( Tri. Kol.). 19. Further, we find that in the case of Sudarshan Pine Products wherein this Tribunal observed as under: 5. We have considered the submissions from both the sides and perused the records. It is not disputed that in terms of the letter dated 06.01.2007 of General Manager, District Industries Centre, Una (HP) not only additional machinery and equipment has been installed by the respondent unit, but their production capacity has increased by 65% and this is also evidence by their power consumption as the power load has increased from 2.220 KW to 5.95 KW. It is also not disputed by either side that while before the expansion, there was only one Melting Tank of 800 Kg capacity, one water works of 1000 kg capacity, one copper kettle of 1000 kg capacity and one discharge tank of 1500 kg capacity, after the expansion there are two melting tanks of 1000 kg e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in hand the appellant has made some addition in their plant and machinery which resulted in increases their production capacity more than 25% which is not disputed by the Revenue in the impugned order. 22. Further, we find that it has been alleged that how the production capacity was determined by the Director of Industries is not known. It is contrary to the facts of records, as the report on assessment of revised capacity of the appellant has been placed by the appellant on record which is as under: 23. As Director of industries has examined the factory premises of the appellant and after following due procedure observed that the installed capacity of the appellant has been increased from 1175 MT to 1825 M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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