TMI Blog2017 (5) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... d machinery which should result in increase of more than 25% in the installed capacity. The Hon’ble High Court of Uttrakhand in the case of Uttaranchal Iron & Ispat Ltd. [2010 (12) TMI 491 - UTTARAKHAND HIGH COURT] has held that the circular nowhere says that such machinery, in order to be additional machinery, should be in addition to those, which are in existence. The said clarification, which also used the word additional investment in plant and machinery in modernization, read with other part of circular, makes it abundantly clear that the additional plant and machinery, mentioned therein, is not in addition to the existing, but signifies something new brought-in in the manufacturing process, which is turn, increases the capacity. 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, and thus is entitled for exemption - as the appellant is entitled for benefit of exemption Notification 49-50/2003-CE dated 10.06.2003, therefore, the demand confirmed against the appellant are not sustainable. Appeal allowed - decided in favor of appellant. - Appeal No. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrugation machine as per the manufacturing process of corrugation sheets and corrugated rolls. And conclusion as under: In view of the above discussion and findings, I find that the unit has not installed any additional corrugation machine to increase the installed capacity of corrugated boxes. Corrugated sets, corrugated sheets and corrugated rolls. The Noticee have only installed the machine for pasting, creasing, drying and printing of the boxed. Therefore, the notice does not fulfil the conditions prescribed in the Notification and also do not fulfil the criteria of definition of substantial expansion clarified by the CBEC circular No. 772/05/2004-CX dated 21.02.2004. 3. The said order was challenged before the Ld. Commissioner (A) who up held that the order of the adjudicating authority and denied the benefit of Notification No. 50/2003-CE ibid. In consequent to these orders, the proceedings were initiated against the appellant to demand duty along with interest and to impose penalty. As the appellant cleared goods during the intervening period by availing the benefit of exemption Notification No. 50/2003-CE and the demands along with interest were confirmed and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Isapt Ltd. reported in 2011 (266) ELT 331 (Uttarakhand). (ii) CCE, Merrut-II Vs. Shiv Hari Plywood Ltd. Unit-I reported in 2015 (327) ELT 365 (Tri. Del.) (iii) CCE, Chandigarh V. Bhandari Deepak Industries Pvt. Ltd. reported in 2015 (318) ELT 677 (Tri. Del.) (iv) CCE, Chandigarh Vs. Sudershan Pine Products reported in 2014 (305) ELT 158 (Tri. Del.) (v) CCE, Shilong Vs. Hatikuli Tea Estate reported in 2008 (230) ELT 497 (Tri. Kol.) (vi) CCE Vs. Assam Polyester Co-op Society Ltd. reported in 2003 (162) ELT 350 (Tri.Kol.) 7. He further submits that the appellant has placed on record a report of the Chartered Engineer which certifies the production capacity of the various machines prior to and after expansion in July, 2004. The installed capacity was 1175 MT and after expansion it was increased to 1825MT per year, therefore, it is evident that the installed capacity of the appellant is increased more than 25%, therefore, they are entitled for benefit exemption Notification No. 50/2003-CE. He further submits that Revenue has not led any evidence to prove that the installed capacity has not increased more than 25%, therefore, he submits that as the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 less than 25% quantum or value of investment in plant and machinery is not very material in deciding the criteria of substantial expansion. (c) There is not bar on use of second hand machinery for undertaking substantial expansion so long as it enhances the existing installed capacity by not less than 25%. What is relevant is the increase in installed capacity by not less than 25% by way of additional installation of plant and machinery. (d) the term substantial expansion is not defined in terms 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 modernizatio 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. 14. On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding inspection mentioned in the Directorate of Industries letter dated 02.01.2004 is false. When this letter dated 02.01.2004 acknowledging more than 25% increase in the installed capacity of semi corrugated paper and corrugated boxes was preceded by the inspection of the unit on 26.12.2003, in our view, it is obsurd to doubt the correctness of this letter of the Directorate of Industries. As regards the Department s allegation that enhancement of capacity is only in respect of semi craft papers and corrugated sheets and there is no enhancement of capacity in the manufacture of corrugated boxes, the same is not correct, as the Directorate of Industries letter dated 02.01.2004 also mentions enhancement of installed capacity for the manufacture of corrugated boxes from the earlier 1200 MT per annum to 1800 MT per annum. Just because no additional machinery for manufacture of corrugated boxes was installed, it cannot be presumed that there was no enhancement in the manufacturing unit s capacity to manufacture corrugated boxes. Moreover, the Tribunal in series of judgments, as mentioned above, has held that for achievement of 25% of more enhancement in installed capacity for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents. 17. Further in the case of Assam Polyester Co-operative Society Ltd. wherein this Tribunal observed as under: 3. The revenue in their memo of appeal have 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 in the said section will not entitle the respondent to claim the benefit of the Notification. We do not agree with the above contention of the Revenue. The Tribunal vide its order No. A-1228-1230 [2003 (154) ELT 230 (T)] in the case of CCE, Shillong V. M/s Monabari Tea Estate has held that there is nothing in the notification to suggest that there should be an increase in each and every section of the manufacturing unit. If there is overall increase of 25% the same would meet the conditions of Notifications. We find that the Revenue 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. As such we do not find any merits in the Revenue s appeal and reject the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnace for hearing the Rosin, two settling Tanks for filtration and one Steam Boiler of 300 Kg per hr capacity for distillation of Rosin in the kettle. Before expansion that the batch size was 800 Kg and the heating of Rosin was done by using fuel wood, but after expansion, heating is done by steam boiler in addition to fuel wood and the batch size has increased to 1000 kg. The installation of the above additional machinery is also confirmed by the Jurisdictional Range Officer. In view of this, just because the size of the kettle in which the Rosin is heated and Discharge kettle in which the Rosin is poured has remained the same, it cannot said that the additional capacity has been achieved merely by process improvement but not by installation of additional machinery and equipment. Only when without installation of any additional machinery or equipment whatsoever, capacity is increased by increasing efficiency or improving process then the Revenue s plea for denying the exemption would be valid. In this case when, undisputedly the respondent have installed additional equipment and machinery by making additional investment, as a result at which the capacity of production has incre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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