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Wipro Enterprises Limited Versus CCE, Shimla

2018 (2) TMI 787 - CESTAT CHANDIGARH

Area Based Exemption - Benefit of N/N. 50/03-CE dated 10.6.2003 - denial of duty exemption on the ground that unit No.III is just an addition to the existing Unit and it cannot be considered as an independent unit - circular No.939/29/2010-CX dated 22.12.2010 - Whether in the facts and circumstances of the case, the benefit of Notification No.50/03 dated 10.6.2003 can be denied to the unit No.III on the ground that the unit No.III was not an independent industrial unit but an addition of unit? .....

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is clear that the factory and unit are two different connotations and a factory can have three different industrial units. - The Revenue has heavily relied on the CBEC circular No.939/29/2010-CX dated 20.10.2010. In that circular where the industrial unit manufacturer a new product by installing fresh plant, machinery or capital goods after the cut-off date, the said circular will apply. Admittedly, the appellant has started their production before the cut-off date, therefore the said circ .....

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E/Stay/51850/2015 in Appeal No E/52955/2015 - A/62164/2017-EX[DB] - Dated:- 11-12-2017 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Shri B.L. Narsimhan, Advocate for the appellant Shri Satyapal Singh, AR for the respondent ORDER Per: Ashok Jindal The appellants in appeal against the impugned order denying the exemption under Notification No.50/03-CE dated 10.6.2003 to Unit No.III with effect from 18.8.2004. 2. The facts of the case are that the appellant start .....

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due declaration to the department for manufacturing of the said items. On 17.8.2014, the appellant obtained registration for the unit No.I to commence production on 18.8.2004, the Deputy Commissioner vide letter dated 8.10.2014 denied the duty exemption to the goods cleared by the unit No.3 relying on the circular No.939/29/2010-CX dated 22.12.2010 on the ground that unit No.III is just an addition to the existing Unit and it cannot be considered as an independent unit. The appellant protested .....

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part of the existing unit. He submits that for the purpose of fiscal laws, the concept of the factory and industrial unit are different. The Courts have consistently held that an industrial unit is considered as that isolable and self-sustainable part of a factory which is capable of manufacturing goods independently. Since the term industrial unit has been interpreted on multiple occasions in the context of different laws, the established judicial understanding of the same must be adhered to a .....

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E Vs. Reckitt Colman India Ltd.-1997 (92) ELT 457 (SC) (4) Tirupati LPG Industries Ltd. Vs. CCE, Meerurt-I-2015 (324) ELT 201 (Tri.-Del.) (5) CCE, Meerut-II Vs. Prakash Straw Board Pvt.Ltd.-2016 (332) ELT 741 (Tri.-Del.) (6) Rollatainers Ltd. Vs. CCE, Delhi-III-2004 (170) ELT 257 (SC). (7) Victoria Automotive INC Vs. CCE, Dehradun-2017-VIL-947-CESTAT-DEL-CE (8) CCE, Chandigarh Vs. Dharmpal Premchand Limited-2017 (TIOL-4060-CESTAT-CHD. 4. He further submits that unit No.III came into existence wi .....

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ontrol board, generator set, water source, effluent treatment plant, sewerage system and canteen, it will not disentitle unit No.III to qualify as new and separate identifiable industrial unit in view of the decision of Hon ble Patna High Court in the case of Hindustan Malleables & Forgings Ltd.-1991 (191) ITR 70 (Patna). 5. He further submits that in the present case, if unit No.1 is closed, it would not impact the functioning of unit No.III. Therefore, the fact of use of common facilities .....

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rate electricity for use in the manufacture of specified goods. The electricity can be purchased from outside resources. Thus, sharing the common facilities with the existing production unit will not impact the independent industrial unit status of new unit. He submits that the Hon ble Apex Court in the case of Rollatainers Ltd. has held that even if certain infrastructural requirement is considered to be not available in one of the unit, and is commercially availed from another unit, that will .....

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hich the appellant was permitted to set up an industry in Himachal Pradesh and such conditions were not related to the conditions subject to which exemption under Notification is allowed. He submits that the circular relied by the adjudicating authority deals with only installation of additional plant and machinery and not of setting up of a new unit itself and hence reliance placed by the Revenue on the said circular is legally incorrect. 6. On the other learned AR relied on the CBEC circular r .....

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t be termed as separate unit. 7. Heard the parties and considered the submissions. 8. On careful consideration of the submissions of both sides, we find that the following issues emerge: Whether in the facts and circumstances of the case, the benefit of Notification No.50/03 dated 10.6.2003 can be denied to the unit No.III on the ground that the unit No.III was not an independent industrial unit but an addition of unit. 9. In this case, we find that, all the units are set up in the same plot of .....

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Toilet soaps, glucose powder and liquid detergent 18.8.2004 05.07.2004 Unit II Fatty acid, soap noodles and crude glycerine 30.07.2007 28.7.2007 Unit III Personal care products viz. hand-wash, shaving cream, hand & body lotion, face wash, fairness creams, hair cream, tooth paste and talc powder, etc. 05.03.2010 26.03.2010 and 30.03.2010, for different products 04.03.2010 25.03.2010 and 29.03.2010, for different products 10. We have gone through the different declarations filed the appellant .....

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, Himachal Pradesh Subject: Compliance with conditions enumerated under notification 76/2003-CE dated 05/11/2003 to claim CE exemption under Notification No.50/2003 dated 10/06/2003 Dear Sir, We wish to inform you that we shall be shortly commencing the production and clearance of excisable goods from our factory. As prescribed under CE Notification No.76/2003, we are making the following declarations in order to claim CE exemption under Notification No.50/2003 dated 10/06/2003:- 1. We hereby de .....

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Factories :Plot No.77 EPIP Phase-I, Jharmajri Tehesil :Nalagarh Disst.Solan (H.P.) c) Descriptions of inputs Used in manufacture of Specified goods :Noodles, Perfumes, oils/fatty acid, Caustic soda, Tale, Kaolin, Color etc. d) Descriptions of the Specified goods Produced :Toilet Soap e) Date on which option Under this notification Has been exercised : It will be informed in due course since the date of commercial production is not yet finalized. Thanking You, Yours Sincerely For WIPRO LIMITED Au .....

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e of excisable goods from our factory. As prescribed unde CE Notification No.76/2003, we are making the following declarations in order to claim CE exemption under Notification No.50/2003 dated 10/06/2003:- 3. We hereby declare that we intend to avail of the exemption under Notification 50/2003-CE dated 10/06/2003 from the first clearances during the current financial year and we also declare that we shall not withdraw the option to avail the exemption during the remaining part of the financial .....

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on which option under this notification has been exercised : 3823.11.12, 3401.11.90, 1500.00.00 k) Date of Commericial Production : 30.07.2007 Thanking You, Yours Sincerely For WIPRO LIMITED Authorized Signatory CC: Superintendent, Central Excise, Range III, Baddi, Distt. Solan (H.P.) WIPRO Applying Thought Thursday, March 04, 2010 To, The Assistant Commissioner, Central Excise Division, MukundNiwas, PanthaGathi, Shimla, Himachal Pradesh Subject: Compliance with conditions enumerated under noti .....

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dated 10/06/2003 from the first clearances during the current financial year and we also declare that we shall not withdraw the option to avail the exemption during the remaining part of the financial year. 2. We also submit the following particulars:- a) Name and Address of the Manufacturer M/s Wipro Limited, Plot No.77, EPIP Phase I, Jharma Tehsil Nalagarh, DisttSolan (H.P.) b) Location/ Location of Factory/ Factories M/s Wipro Limited, Plot No.77, EPIP Phase I, Jharma Tehsil Nalagarh, DisttSo .....

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g) CC: Superintendent, Central Excise, Range III, Baddi, Distt. Solan (H.P.) 11. On going through the said declarations, we find that the appellant has started their production in different units in the same factory having different inputs for manufacturing of their final products and final products are different. We also take note of the fact that all the units are independent as they are having their own factory building, and the plant and machinery, employees, bank accounts, etc. separately. .....

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cheme Area of Uttarakhand or State of Himachal Pradesh- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public inter .....

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e, as the case may be, leviable thereon under any of the said Acts: Provided that the exemption contained in this notification shall apply subject to the following conditions, namely:- (i) The manufacturer who intends to avail of the exemption under this notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year; (ii)The .....

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produced; (e) date on which option under this notification has been exercised; (iii) The manufacturer may, for the current financial year, submit his option in writing on or before the 30th day of November, 2003.] 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) new industrial units which have commenced commercial production on or after the 7th day of January, 2003, but not later than the 31st day of March, 2010; (b) industrial units .....

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before the Hon ble Bombay High Court in the case of Devidayal Electronics and Wires Ltd. (supra) wherein the Hon ble High Court analysed the issue and observed as under: 6. The word Unit is defined in the Shorter Oxford English Dictionary, Third Edn., to mean one of the separate parts or members of which a complex whole or aggregate is composed . A similar meaning is given to the word in Webster s Third New International Dictionary, viz., a single thing or person or group that is a constituent .....

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yan Co-op Milk Product Union Ltd. (supra), the Hon ble Apex Court had an occasion to examine the issue and relying on the decision of Bombay High Court in the case of Devidayal Electronics & Wire Ltd. wherein the Apex Court has observed as under: 6. The Tribunal while allowing the appeal followed a decision of Bombay High Court reported in 1984 (16) E.L.T. 30 (Bom.) - Devidayal Electronics & Wires Ltd. and Another v. Union of India and Another. The similar notification in respect of an e .....

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o distinguish the case on facts. We, however, find that in principle what has been held in Devidayal (supra) as followed by the Tribunal, cannot be said to be an incorrect view. The factual deviation would be a matter on facts of each case. The other case which the Tribunal has referred to is reported in 1987 (27) E.L.T. 273 (A.P.) - Golden Press v. Deputy Collector of Central Excise, Hyderabad and Another. In this case a notice was issued on the manufacturer of cartons as to why penalty be not .....

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tons, it was held that cost of cutting machines etc. could not be excluded which according to the manufacturer was not used for printed cartons. The argument that the value of the investment in the plant and machinery manufacturing a particular item under a separate tariff would alone be taken into consideration was not accepted. The language of the exemption notification as involved in that case was quoted which was to the effect : The sum total of the value of the capital investment made from .....

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create complications where a factory manufacturing goods falling under more than one tariff item but has only one generator of power plant, so in such cases in what manner generator or power plant was to be allocated between two items. The plea raised was negatived and it was held that total value of the entire machinery in the industrial unit should be taken into account. At this stage, it would be appropriate to point out the difference in the language used in two notifications. We find that i .....

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ct of which exemption has been granted. But the word said is not used in the Notification under consideration in the case of Golden Press (supra) as indicated above says ... industrial unit in which the goods under clearance are manufactured …. . The goods have not been specified by using the expression said goods . In the Notification dated 19-6-1980, as already indicated earlier, the goods falling under Item 68 are to be referred as said goods . Therefore, in our view it will not be pos .....

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proportionately. In no way such hurdle, as posed, would change the meaning of a Notification which on the face of it and by the plain language used therein has unambiguous and clear meaning. 8. Such Notifications by which exemption or other benefits are provided by the Government in exercise of its statutory power, normally have some purpose and policy decision behind it. Such benefits are meant to be provided to the investors and manufacturers. Therefore, such purpose is not to be defeated nor .....

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of the value of the capital investment from time to time on plant and machinery installed in the industrial unit in which the said goods, under clearance, are manufactured, is not more than rupees ten lakhs. It is of significance to note that although the earlier part of the Notification refers to goods cleared by or on behalf of the manufacturer from one or more factories , the Proviso speaks of an industrial unit . Therefore, the industrial unit has not been used in the sense of a factory, bu .....

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dividual L-4 licences. 3. The factual position has not been controverted. If that be so, in the Notification, the expression industrial unit must have been used in the sense in which the Excise Department understands it. 4. Having regard to the facts of the case, we do not find any infirmity in the order of the Tribunal. 5. We were also referred to a number of decisions in which the Central Excise Tribunal has consistently followed the same view. Two of the cases came to this Court in appeal whe .....

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L.T 30 (Bom.)], where a similar view has been taken. The learned Addl. Solicitor General has contended that these cases were decided under different Notifications. The contention of the assessee is that this view of the Bombay High Court has been consistently followed by the Tribunal in many other notifications also. 16. Further, in the case of Tirupati LPG Industries Ltd. (supra), the Apex Court had an occasion to examine the issue and observed as under: 6. It is not in dispute that both divisi .....

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ly eligible for exemption under this notification. 9. As regards, the cylinder unit, this unit had started production sometime in 2001 and this unit undertook expansion of installed capacity only in December, 2003 which was completed on Jan. 2004, as result of which, installed capacity for production of cylinders increased to 552460 per annum from the earlier capacity of 368440 per annum. It is not in dispute that the capacity expansion was achieved by adding certain machinery, namely, five Mig .....

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t in the case of Reckitt Colman of India Ltd. (supra) each section or part of a factory manufacturing a different commodity has to be treated as separate manufacturing unit. The same view has been expressed by the Apex Court in the case of Himalayan Co-op. Milk Product (supra) and also Hon ble Bombay High Court in the case of Devidayal Electronics & Wires (supra). Therefore, a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than on .....

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(supra), the assessee was having two separate units in their factory one for manufacturing of LPG cylinder and another for conductors unit and this Tribunal has considered the substantial expansion of both the units separately, therefore, following the precedent decision of this Tribunal and observation made by the learned Commissioner (Appeals) in the impugned order, we do not find any infirmity in the impugned order. 18. From the above discussion, we find that it is clear that the factory and .....

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g the course of the arguments, learned AR relied on the circular No.960/03/2012-Cx dated 17.2.2012. 19. We have examined the said circular and para 2 of the circular which reads as under: 2. References have been received from field formations as well as from trade and industry seeking clarification regarding admissibility of benefit under area-based exemption Notification No.49/2003-CE and Notification No.2003-CE both dated 10.6.2003, in the following situations: a. When there is a change in the .....

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nd none of the issues belonged to the appellant before us. We hold that the circular dated 17.2.2012 also have no relevance to the facts of this case. Now in the impugned order, the Commissioner (Appeals) has denied the exemption on the ground that the appellant is sharing common facilities such as electricity sub-station, electrical control board, generator set, water source, effluent treatment plant, sewerage system and canteen, therefore, they are the one unit. The said usage of common facili .....

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the two units or maintenance of common books of accounts per se are also not germane for considering the claim under section 8oJ of the Act. This view of mine is fortified by the view taken by Karnataka High Court in the case of International Instruments (P) Ltd. v. Commissioner of Income-tax, Karnataka, reported in (1980) 12 ITR 11 at page 21 wherein it has been held that, The fact that there was common management or the fact that separate accounts had not been maintained, would not also lead t .....

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that in the case of Rollatainers Ltd. (supra), the Hon ble Apex Court has examined the issue and observed as under: 8. Simply because both the factories are in the same premises that does not lead to the inference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is a passage in between and they are not complimentary to each nor they are subsidiary to eac .....

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ex level it is maintained by the appellant company. There are separate staff, separate finished goods. Simply because both the factories may have common boundaries that will not make it one factory. Accordingly, we are of the opinion that the view taken by the Tribunal does not appear to be well-founded and likewise, the view taken by the Commissioner, Central Excise. Accordingly, we allow both these appeals, set aside the order of the Tribunal passed on June 7, 2002 as well as the order passed .....

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tertained a view that the claim of the main appellant to the effect that Unit-I and Unit-II are to be dealt with separately for excise duty purposes and the exemption claimed for Unit-II on such basis, is not legally tenable. The Revenue held a view that the factory of the main appellant is one and the same and as such the main appellant cannot avail exemption under Notification No.50/2003 for some of the products and not in respect of some other products. Holding that the main appellant is not .....

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rities and utility agencies. We note that such appreciation is not directly relevant to examine the application of exemption under Notification No.50/03. In fact, the appellant also did not contest the fact that they have only one factory in the said location. They only pleaded that in the said factory there were two identifiable manufacturing units involved in the manufacture of different types of products in different production lines. We note that there were certain factual errors recorded by .....

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not matter for Central Excise purposes as to by which name - whether by name of plant, unit or the like, each set is described. Since each unit cannot be described as a factory, he proceeded to hold that the whole premises should be considered as single entity and exemption was accordingly denied. While examining the decision of Bombay High Court in Devidayal Electronics Wires Ltd, 1984(16) E.L.T. 30 (BOB.), the original authority erred in not examining the provisions of Notification No.50/03. .....

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ctory. It is clear that the terms of the notification when read together will clearly reveal that different terms are used in different contexts and summary conclusion based on inference and presumption as made by the original authority is not supported. 8. The CBEC vide their letter dated 21.03.2006 addressed to Secretary (Industrial Development), Government of Uttaranchal clarified that in case of a manufacturer, producing motor vehicles, if a new assembly line/ production line is installed af .....

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factory having other manufacturing unit/facility. 9. The Tribunal while examining the application of exemption under the above said notification in the case of M/s Tirupati LPG Industries Ltd, 2015 (324) ELT 201 (Tri.-Del.) relying on the decision of the Hon ble SC in Reckitt Columan of India Ltd., 1997 (92) ELT 457 (SC) held: in our view, this ground for denial of exemption to cylinder unit is totally incorrect, as held by Apex Court in the case of Reckitt Colman of India Ltd. (supra) each sec .....

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would be independently eligible for exemption, as the duty exemption under Notification No.50/2003-C.E. is unit-wise and not factory-wise. Therefore, for determination of eligibility of cylinder unit, for exemption under Notification No.50/2003-C.E. the capacity expansion of 25% or more has to be seen in respect of this unit only and not the capacity expansion of the entire factory as a whole. In view of this, the impugning order denying benefit of exemption in respect of cylinder unit is also n .....

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proval. It was observed by the Apex Court that the word/expressions- factory and industrial Unit - when used in the same notification would be presumed to have been used for different meaning. It was held that industrial unit would mean something other than factory, which would be a separate isolated part of plant which is exclusively used for manufacture of goods for which exemption is claimed. 2000 (120) ELT 327 (SC). 12. We also note that in various decisions, the Tribunal held that terms uni .....

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f specified goods. All such units are necessary part of a factory, if located in the contagious area. Each division of a factory manufacturing different identifiable items or undertaking different identifiable processes will have to be considered as a unit of the factory. 13. On careful consideration of the impugned order and the submissions of the appellant against the said order, we find that the impugned order is not legally sustainable. Accordingly, we set-aside the same and allow appeals wi .....

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. A unit is treated as existing unit if the commercial production has started prior to 07.01.2003 and is treated as a new industrial unit if the commercial production has started after 07.01.2003. 9. We find that in order to distinguish the factory and the industrial unit, the Ld. Commissioner (Appeals) has correctly followed the ratio of the Hon ble Apex Court decision in the case of Tencon Industrial Corporation Vs. CCE, Bombay -I- 2003 (156) ELT 164 (SC) wherein it was held that where a facto .....

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bunal in the case of Tirupati LPG Industries Ltd. Vs. CCE, Meerut-I - 2015 (324) ELT 201 (Tri. Del.) wherein there was an LPG cylinder unit, which started production in 2001 and later in the same compound another unit for ACSR conductors was set up and had trial production in October, 2002 to December, 2002. While deciding the issue of date of onset of commercial production, the Tribunal treated the two units as separate industrial units. Relevant extracts of the judgment of the Tribunal are rep .....

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stalled before 7-1-2003, this notification would also cover these unit, which had been set up before 7-1-2003, but commenced commercial production on or after 7-1-2003. Therefore, new industrial unit would include not only those units set up on or after 7-1-2003, but would also include those industrial units which have been set before 7-1-2003. But the new industrial unit set up either on or after 7-1-2003 or set up prior to 7-1-2003, must, for being eligible for the exemption satisfy the condit .....

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as to be made between Commercial Production and Trial Production . Though the term commercial production is not defined in this notification, it should be construed in contradistinction with the term Trial Production . Trial Production is followed by commercial production. Trial Production is the production during the process of commissioning of a plant. The process of commissioning of a manufacturing plant starts after completion of erection installation. During commissioning, the various machi .....

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he same, the plant cannot be said to have commenced commercial production during that phase. The plant can be treated as having commenced commercial production only after completion of trial run i.e. commissioning. 8.5 In this case from the production figures of conductor unit during Oct., 2002 - Dec., 2002 period, Jan, 2003 to March, 2003 period and from April, 2003 to June, 2003 period, it is clear that production during period prior to April, 2003 was only trial production, and there is merit .....

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cts of the present case. Hence, following the same, we find no infirmity in the order of the Ld. Commissioner (Appeals) in relation to Pan Chatni and Scented Elaichi. 11. As for the expansion of the unit manufacturing Scented Supari, the Ld. Commissioner (Appeals) has correctly followed the above mentioned Honble Apex Court decision while allowing the benefit of substantial expansion. We also find that the ratio laid down in the Para 9 of the Tribunal order, in the case of Tirupati LPG Industri .....

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ly, five Mig Welding Machines, one Deep Drawing Hydraulic Press of 200 tons, one Trimming machine, one Foot Ring Forming machine, two Rotary Shearing Machines, two Auto Welding machines and two Automatic Bung Welding machines. The only ground on which the exemption is sought to be denied, is that expansion of 25% or more of installed capacity should have been in both units i.e. in conductor unit also. In our view, this ground for denial of exemption to cylinder unit is totally incorrect, as held .....

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