TMI Blog2019 (1) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... chines were installed prior to 31.12.2005 and 132 machine post that period. In respect of said two prodcuts, the same can be converted into terry towels and bed sheets respectively in the cutting department at this stage the finished goods take shape and emerge. It is undisputed that post 31.12.2005, the appellant did not install any new machine in the cutting department. As regard adding of sewing machines in the bed sheet sewing department, it did not make the production thereof, since the capacity of production is determined at cutting stage, wherein the machines installed have a rated capacity - The capacity of the production of bed sheets cannot be linked to the sewing machines thus the installed capacity for manufacture of made-ups which is directly linked to the respective cutting machines has not undergone any change - thus, the appellant fulfilled all the conditions stipulated in the Notification No. 39/2001-CE (Supra) and therefore, have rightly entitled for the refund of Central Excise duty paid in their PLA for the disputed period. If the observation of the department is considered that the appellant have made further investment in the plant and machinery after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil work and plant and machinery and commencement of commercial production before 31.12.2005, the exemption for 5 years is available. Time limitation - Held that:- Since we decide the case in favour of the assesse on merit itself we are not going to address the issue of limitation. The appellant is entitled for the exemption under Notification 39/2001-CE despite the fact that the appellant have installed additional machineries for manufacture at intermediary stage as the overall capacity of final product does not increase - appeal allowed - decided in favor of appellant. - Appeal No. E/12885/2013-DB - A/10032/2019 - Dated:- 2-1-2019 - MR. RAMESH NAIR, MEMBER (JUDICIAL) And MR. RAJU, MEMBER (TECHNICAL) For Appellant: Mr. V.S. Nankani Mr. Amit Laddha (Advocate) For Respondent: Mr. J. Nagori (AR) ORDER Per: Ramesh Nair The brief facts of the case are that the appellant are engaged in manufacture of excisable goods falling under chapter 63 namely, toweling fabrics, made ups, sheeting and their products of the first schedule to the Central Excise Tariff Act, 1985. The appellant being located in district of Kutch whether entitled for exemption no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred an appeal before the CESTAT which was decided vide order No. A/639/WZB/AHD/2011 S/477/WZB/AHD/2011 DATED 29.03.2011 observing that .the original authority, while deciding the de novo proceedings would not be bound by the observations and directions given by the Commissioner (Appeals). The remand would be treated as an open remand as if no opinion is expressed by Commissioner (Appeals) . In the deno vo proceedings before the adjudicating authority the appellant s main contention was that there was no expansion at the manufacturing of final product, namely, made ups. The expansion was made only in respect of intermediate stage which has not affected the production capacity of the final product i.e. Bed Sheets, Terry Towels. The adjudicating authority in deno vo adjudication rejected the claim of re-credit of ₹ 31,85,74,909/- for the period from February, 2006 to September, 2007 vide Order-In-Original No. 2001-20/re-credit/2011-2012 dated 22 March 2012. Being aggrieved by the said Order-In-Original, the appellant filed an appeal before the Commissioner (Appeals). The Ld. Commissioner (Appeals) remanded the matter to the adjudicating authority by giving observation th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdless of whether any additional investment had increased their production capacity or not. He submits that the only requirement is that the investment in plant and machinery should be minimum 20 crore thereafter there is no restriction of value cap on production or clearance of the goods from said unit. The appellant manufactured the same items which were declared by them under the said notification. The restriction is only in respect of new product, whereas in the present case no new product was manufactured after commencement of the production. He submits that the appellant had not added new machines so as to enhance the capacity of their final product. The appellant had added machines at intermediate stage like the processing, spinning and weaving section and not in cutting and sewing section which did not result any capacity expansion of the final product. He submits that the narrow interpretation of the Notification will defeat the object and purpose of Notification as held in the case of Assistant Commissioner Vs. Amara Raja Batteries Limited-2009 (8) SCC 209. He submits that the experts opinion such as Certificate issued by the Chartered Engineer and certificate issued of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for 10 years from the date of commencement of commercial production. The said notification were issued primarily for expansion and industrialization of the units located in the state of Uttarakhand and Himachal Pradesh. With reference to such notification the board has clarified the following issue whether the installed capacity in a particular unit is upgraded after the cut-off date, so as to increase the efficiency of the machinery by installing ancillary machines or replacement of some parts etc. but in such a way that it does not lead to increase in capacity or production. The Board has clarified in the Circular 939/29/2010-Cx dated 20.12.2010 that after commencement of commercial production before cut-off date, the unit is entitled to excise duty exemption in respect of excisable goods manufactured and cleared for a period of 10 years. The provisions of these notifications do not place a bar or restriction on any addition / modification in the plant or machinery or on the production of new product by an eligible unit after the cut-off date and during the exemption period of 10 years as per notification. Similarly in the present case the notification 39/2001 was issued wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the recovery is clearly time barred. 6. Sh. J. Nagori Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that the appellant have done substantial expansion in the plant and machinery which is used for the production of goods after the cut-off date i.e. 31.12.2005 accordingly the exemption to the goods attributed to the said additional plant and machinery installed after 31.12.2005 is not available to the appellant. He placed reliance on the following judgments: Ratmani Metals and Tubes Ltd. 2012 (276) ELT 230 (Tri. Amd.), CCE vs Varsana Ispat Ltd. 2015 (329) ELT 444 (Tri. Amd.), Saurashtra Ferrous Pvt. Ltd. 2014 (309) ELT 49 (Guj.) and Plastene India Ltd. 2014 (314) ELT 14 (Guj.) 7. We have carefully considered the submissions made by both the sides and perused the records.The issues involved in the present case are as under:- A) Whether the appellant has rightly claimed benefit of Exemption Notification No.39/2001-CE dated 31.07.2001 (as Amended from time to time) in respect of goods that said to have manufactured on such plant and machineries that were installed after c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2001, to the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, by the 7th day of the next month in which the duty has been so paid. (b) The Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, after such verification, as he may deem necessary, shall refund the amount of duty paid other than the amount of duty paid by utilization of CENVAT credit during the month under consideration to the manufacturer by the 15th day of the next month. (c) If there is likely to be any delay in such verification, the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, shall refund the amount on provisional basis by the 15th day of the next month to the month under consideration, and thereafter may adjust the amount of refund by such amount as may be necessary in the subsequent refunds admissible to the manufacturer. 3. The exemption contained in this notification shall be subject to the following conditions, namely :- (i) It shall apply only to new industrial units, that is to say, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercial production by the unit. 4. Nothing contained in this notification shall apply to a manufacturer or a factory availing of exemption under any of the following notifications, namely :- (a) Notification No. 8/2001-C.E., dated the 1st of March, 2001; (b) Notification No. 9/2001-C.E., dated the 1st of March, 2001; and (c) Notification No. 24/2001-C.E., dated the 30th April, 2001. Explanation: For the purpose of this notification, - (i) a change in the name or in the nature of ownership or a change in location of an existing unit would not entitle anyone for treatment as a new industrial unit. (ii) the expression set up on or after the date of publication of this notification in the Official Gazette shall mean that any civil construction work on its factory premises and any installation of plant and machinery therein commences only on or after the date of publication of this notification in the Official Gazette. (iii) the expression aggregate value of clearances shall mean the total value of clearances of excisable goods, whatsoever, from the unit in each year but shall not include goods cleared for use in the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst clearances of up to an aggregate value not exceeding twice the value of such investment from the date of commencement of commercial production in each year. b) It should apply to new industrial unit which is set up not later than 31.12.2005. c) The manufacturer should produce a certificate, special constitute committee certifying the fact that the unit in respect of which exemption is claimed, is a new unit and has been set up during the period as specified in the Notification. d) Before effecting clearances under the said Notification the manufacturer shall furnish a declaration regarding the original value of investment in plant and machinery installed in the factory as on date of commencement of commercial production, to the Assistant Commissioner of Central Excise. e) The exemption shall apply for a period of not exceeding 5 years from the date of commencement of commercial production by the unit. 10. Said exemption explained the meaning of set up on or after the date of publication of the said Notification in the Financial Gazette but not later than the 31.12.2005. It means that: a. Civil construction work on its factory premises and installation of pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r type of finish to the fabrics etc. Processing Stenters 2 Processing/ Continues Dyeing (Terry Towels) -----------Do--------- To understand the use of the installed machinery after 31.12.2005, the appellant have produced the process flow chart which is reproduced below: 12. From the details of machineries installed after 31.12.2005 and process flow chart, it is clear that the machines were used for intermediate process of the final product i.e. made-ups articles namely, Terry Towels and Bed Sheets. It is also observed that there is no addition to enhance capacity of final product i.e. bed sheets and terry towels. At the processing stage i.e. intermediate stage, the fabrics emerge which are then converted into the made-ups, the process of manufacture of made-ups takes place in the machine installed in the cutting department wherein prior to 31.12.2005, the appellant had already installed 15 length cutting and length hamming machines of Schmale Durate make for producing terry towel and 1 automatic laying machine of Gerber make for producing bed sheets. The said machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould start before 31.12.2005. As per the undisputed fact completion of construction and installation of plant and machinery involving investment more than 20 Crores completed and commercial production in such unit was started on 14.01.2005. After fulfilling such condition, the appellant wad entitled for exemption for 5 years from the date of commencement of the commercial production. In the notification, there is no cap on the value or quantity of the final product to be cleared during the 5 years of exemption period, therefore, we do not see that the appellant have violated any condition of the Notification No. 39/2001-CE as held by Hon ble Supreme court in the case of Tullow India Ltd (supra) and Compack Pvt. Ltd (Supra), it was clearly held that exemption Notification must be interpreted strictly and literally and nothing can be imported into the condition of the notification which does not exist in the notification. We, therefore, find that if the observation of the department is considered that the appellant have made further investment in the plant and machinery after 31.12.2005, but as per the facts discussed above regarding details of machinery installed after 31.12.2005 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduces a new product by installing fresh plant, machinery or capital good after the cut of date in such a situation, exemption would not be available to this new product. The said new product would be cleared on payment of duty, as applicable and separate records would be required to be maintained to distinguish production of these products from the products which are eligible for exemption. The other situation is the one where a unit starts producing some products (after the cut off date) using the plant and machinery installed upto the cut of date and without any addition to the plant and machinery. For example, in case of plastic moulded products a unit may commence the production of different products simply by changing the moulds and dies. In that case, the unit would be eligible for the benefit of Notification because the plant and machinery used for manufacture has remained the same. In this connection, it is further clarified that for the purpose of computing the original value of plant and machinery, the value of plant and machinery installed on the date of commencement of commercial production only shall be considered. 14. From the above clarification it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larification, it is clear that irrespective of any addition or modification in the plant and machinery since the notification did not place a bar or restriction on such addition /modification, the exemption shall be available in 10 years as per the above referred notification. In the present case also objective of the exemption notification no. 39/2001-CE is same that industrialization in the Kutch region therefore the clarification issued in above is equally applicable to the present case for the reason that in the notification no 39/2001-CE also it does not place any bar or restriction on any addition or modification in the plant and machinery. We find that since the appellant have strictly followed the conditions of the notification no 39/2001-CE particularly completion of civil work and plant and machinery and commencement of commercial production before 31.12.2005, the exemption for 5 years is available. 16. As regard the judgment relied upon by the department, we find that in the case of Ratmani Metals and Tubes Ltd. (supra) the assesse installed second tube mill after 31.12.2005 and claimed the benefit of exemption notification 39/2001-CE. In that case installation of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. As regard the judgment of Hon ble High Court in the case of Plastine India Ltd. (supra), we find that in the judgment, the issue involved was rebate under Rule 18 in respect of exported goods manufactured and cleared under Notification 39/2001-CE whereas in the present case claim of the appellant is in respect of domestic clearances and re-credit/ refund of the duty paid from PLA, therefore, the ratio of Plastine (India) Ltd. (supra) is not applicable in the facts and circumstances of the present case. 18. In the present case admittedly the unit was fully exempted prior to 31.12.2005 by the appellant subsequently by way of backward integration installed new machines at the processing, spinning and weaving section and not in the cutting and sewing sections which did not result in capacity expansion. Therefore, the facts of all the cases cited above relied upon by the revenue are not applicable in the facts of the present case. Therefore, all the judgments are distinguished. 19. As regard the limitation, since we decide the case in favour of the assesse on merit itself we are not going to address the issue of limitation. 20. As per our above discussion, we are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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