TMI Blog2022 (8) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... iod on the new products also. The appellant had not set up a new Unit and there was only a diversification of production capacity by adding new machines. The old products were continued to be manufactured, in addition to the new products. The fact that the investment for the new products was very large and the percentage of production of the new product was also very large cannot be made a ground to deny the benefit of the Exemption Notification dated 10.06.2003 to the appellant - In the present case, neither there was a charge in the show cause notice nor there is a finding in the impugned order that the old products and the new products had separate manpower or finances. It has, therefore, to be considered as a single Unit. Appeal allowed - decided in favor of appellant. - EXICSE APPEAL NO. 60202 OF 2021 - FINAL ORDER NO. 60122/2022 - Dated:- 23-8-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri B.L. Narasimhan, Advocate for the Appellant Ms. Shivani and Ms. Geetika, Authorized Representatives for the Department ORDER M/s. Wipro Enterprises Pvt. Ltd. (Unit-II) [the appellant] has filed this appeal to assail the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 09.02.2017 7. Body Wash 09.03.2017 8. Glucovita Bolts 30.03.2017 9. Fabric conditioner 06.10.2017 10. MCB 23.11.2017 11. Socket 25.11.2017 12. Panel 25.11.2017 13. Switch 27.11.2017 4. The Department issued a show cause notice dated 16.10.2018 and proposed to deny the benefit of Exemption Notification on new products on the ground that the appellant started manufacturing these products after 31.03.2010. It was also alleged that the appellant started a new Unit for manufacturing new products and the benefit of Exemption Notification was not available on such new products. 5. The adjudicating authority passed the impugned order, whereby the proposals made in the show cause notice were confirmed holding that the appellant established a new Unit for manufacturing new products after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, Deodorant, Body Wash, Glucovita Bolts, Body Wash, Fabric Conditioner, MCB, Socket, Panel Switch in Unit-II (acquired Unit) for a further period of ten years. It is also an undisputed fact on record that the Noticee did not manufacture the new products from the acquired unit before cut-off date of 31.03.2010 and commenced their commercial production much after cut-off date, thus, the condition of the Notification, supra, regarding commencement of commercial production on or before 31.03.2010 also remains unfulfilled to be eligible for availing duty exemption on addition of new products in the acquired unit. ****** I find that the intention of the Government in issuance of Circular No.939/29/2010-CX dated 22.12.2010 and Circular No.960/03/2012-CX dated 17.2.2012 was only to assist bonafide needs of an eligible unit to enhance or diversify its production capacity. In this regard, I further find that the Board office vide letter issued from F.No.101/7/2015-CX3 dated 09.05.2016 has also clarified that clarifications issued vide aforesaid Circulars were issued only to assist bonafide needs of an eligible unit to enhance or diversify its production capacity and the Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the letter dated 09.05.2016 issued by the Board is incorrect; (v) Reliance placed on the order dated 11.12.2017 passed in the case of the appellant is incorrect; and (vi) No interest is chargeable and no penalty is imposable. 7. Ms. Shivani, learned authorized representative appearing for the Department, however, supported the impugned order and made the following submissions: (i) The Board has issued a letter dated 09.05.2016 which clarifies that the Exemption Notification was issued to assist bonafide needs of an eligible Unit to enhance or diversify its production capacity and not to allow installation of a new Unit in the guise of enhancement or diversification of production capacity beyond the cut-off date. It was never the intention of the Circulars dated 20.12.2010 and 17.02.2012 to extend such exemption to a new Unit commencing its commercial production of totally new products after the cut-off date i.e 31.03.2010; (ii) It is an undisputed fact that the appellant did not have the plant and machinery to manufacture new products on or before the cut-off date i.e. 31.03.2010, and with the installation of the plant and machinery for manufacture of the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the goods specified in Annexure-I appended hereto, and cleared from a unit located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area, as the case may be, specified in Annexure-II and Annexure-III appended hereto, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts: ******* 2. The exemption contained in this notification shall apply only to the following kinds of units, namely :- (a) new industrial units set up in areas mentioned in Annexure-II and Annexure-III, 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 existing before the 7th day of January, 2003, in areas mentioned in Annexure- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al centres specified in the Annexure to the Notification is also satisfied. Thus, all the three requirements set out in the main portion of the Exemption Notification stands satisfied. 14. The requirement of satisfying clause 2(a) of the Exemption Notification also stands satisfied as the industrial Unit in question was set up in the year 2008 and it commenced commercial production on 02.12.2009, much prior to the cut-off date i.e. 31.03.2010. 15. Thus, when these two conditions are satisfied and no dispute has been raised regarding the other conditions mentioned in the Notification, the appellant is entitled to claim benefit of the exemption in respect of the products manufactured and cleared by the appellant from the concerned Unit either before or after 31.03.2010. The preamble to the Notification does not restrict its applicability to only those goods which the Unit manufactures from its inception. 16. The CBEC, by its Circular dated 22.12.2010, clarified the scope of the Exemption Notification dated 10.06.2003. It is reproduced below: Central Board of Excise and Customs New Delhi, dated the 22nd December, 2010 To All Directors General All Chief Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Therefore, it is clarified that in all the above situations, the benefit of the excise duty exemption under the notifications would continue to be available to eligible industrial units. However the period of exemption would remain ten years and would not get extended on account of such modifications or additions under any circumstances. (emphasis supplied) 17. It would be seen from the aforesaid Circular dated 22.12.2010 regarding the scope of Notification dated 10.06.2003 that the provisions of the Notification dated 10.06.2003 do not place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible Unit after the cut-off date and during the exemption period of ten years. In all such cases, the benefit of the excise duty exemption under the Exemption Notification would continue to be available to an eligible industrial Unit, though, the period of exemption would remain to be ten years. 18. It needs to be noted that the words addition/modification appearing in the aforesaid Circular dated 22.12.2010 are not preceded by the words existing machinery . It can thus safely be concluded that the ambit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5931 of 2019, which is said to be pending. The adjudicating authority has, however, distinguished this decision on facts. 22. In Khurana Oleo Chemicals, a Division Bench of the Tribunal observed as follows: We also note that in terms of Board s Circular dated 22-12- 2010, it is clear that the provision of the said notification do not place any bar or restriction or any addition/alteration in the plant or machinery or on the production of new product by an eligible unit after cutoff date during exemption period of 10 years as per notification. We further note that the Board has clarified the scope of exemption in its Circular dated 17-2-2012. It is noted that if the exemption is extended to one unit, the change in its ownership would not jeopardize the admissibility of exemption for remaining part of the period. The guidelines have been issued with regard to the shifting of eligible unit to new location. In the present case, the evidence submitted by the appellant establishes that the eligible unit has been acquired by the appellant and manufacture of earlier specified product did continue in the new appellant s unit also. In addition, the appellant manufactured new product - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of a new unit in the guise of enhancement or diversification of production capacity of an eligible unit beyond the cut-off date. Such an interpretation of the circular would go much beyond the conditions prescribed in the exemption notifications and therefore would not be permissible. 3. Accordingly, it is hereby directed that any application for manufacture of new products by installing fresh plant, machinery or capital goods after the cut-off date or expanding operations to an adjacent plot should be examined carefully and allowed only after reaching a conclusion that the application has been made for bonafide reasons. Reasons for reaching such conclusion should be recorded in the file and approved by the Commissioner. Every such approval along with reasons for such approval should be brought to the notice of the Chief Commissioner also. 4. This issues with the approval of the Competent Authority. Difficulty faced, if any in implementation of the above instructions may be brought to the notice of the Board. 26. In this connection, the learned authorized representative pointed out that the new products that the appellant had started manufacturing at Unit II were ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the Exemption Notification dated 10.06.2003 if the new Unit is set up in the guise of enhancement or diversification of production capacity. 29. The appellant had not set up a new Unit and there was only a diversification of production capacity by adding new machines. The old products were continued to be manufactured, in addition to the new products. The fact that the investment for the new products was very large and the percentage of production of the new product was also very large cannot be made a ground to deny the benefit of the Exemption Notification dated 10.06.2003 to the appellant. 30. Learned authorized representative appearing for the Department also placed reliance upon the decision of the Tribunal in Wipro Enterprises Ltd. in the case of the appellant to contend that the plant manufacturing old products would be one Unit and the plant manufacturing new products would be another Unit. Paragraph 24 of the decision of the Tribunal is reproduced below: 24. In view of above analysis, we hold that the appellant has started three different units on the same plot of land and having separate plant and machinery, separate, inputs, manpower, finances an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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