2003 (9) TMI 614 - AT - Central Excise

Appellant's Equipment Possession Disqualifies Exemption Claim

The Tribunal held that the appellant, despite disconnecting power and dismantling machinery, still possessed the necessary facilities for processes ... Eligibility to Notification No. 40/95 - having the facility - exemption for processing operations (calendering, dyeing, bleaching) - possession of machinery versus operabilityHaving the facility - possession of machinery versus operability - eligibility to Notification No. 40/95 - Whether a processor who has installed machinery for bleaching, dyeing or printing but has disconnected power and removed motors nevertheless 'has the facility' and is thereby excluded from the exemption under Notification No. 40/95 for the period 1-4-1995 to 23-4-1995. - HELD THAT: - The Tribunal interpreted the proviso to Notification No. 40/95 as drawing a distinction based on whether the processor 'has the facility' for bleaching, dyeing, printing etc., not on whether such facilities are operational at a given time. The presence of installed equipment and machinery in the processing house constitutes 'having the facility.' Temporary disconnection of electric supply or removal of motors merely renders the facilities non-operational but does not amount to loss of the facility. Only alienation of the relevant machinery and equipment would negate the existence of the facility. Applying this principle to the facts, since the appellant continued to possess the installed machinery and had not alienated it, the appellant was to be regarded as 'having the facility' and therefore excluded from the exemption under the Notification. [Paras 2, 3]The appellant, by merely disconnecting power and removing motors without alienating the machinery, was 'having the facility' and thus not eligible for the exemption under Notification No. 40/95; the appeal is dismissed.Final Conclusion: The Tribunal dismissed the appeal and held that possession of installed machinery, despite being temporarily non-operational due to disconnection of power or removal of motors, amounts to 'having the facility' and excludes the processor from the exemption under Notification No. 40/95 for 1-4-1995 to 23-4-1995. Issues:1. Eligibility to Notification No. 40/95 during 1-4-1995 to 23-4-1995.Analysis:The dispute in this case revolves around the eligibility of the appellant, a processor of cotton fabrics, to avail the exemption under Notification No. 40/95 during the period from 1-4-1995 to 23-4-1995. The proviso to the notification states that certain exemptions are not available to a processor who has facilities for specific processes like bleaching, dyeing, printing with the aid of power or steam. The impugned order concluded that the appellant, having the necessary equipment and machinery for bleaching, dyeing, and printing with power, was not eligible for the exemption claimed. The appellant argued that since they had disconnected the power connection and removed the motor, they should not be considered as 'having the facility.' However, the impugned order maintained that the presence of the necessary facilities, regardless of whether they were operational, disqualified the appellant from the exemption.Upon reviewing the records and considering the arguments presented by both parties, the Tribunal delved into the interpretation of the term 'having facility.' The crux of the matter was whether the appellant, despite having the machinery installed but not in operation due to disconnection of power, could be deemed as not 'having the facility.' The Tribunal disagreed with the appellant's interpretation, emphasizing that the distinction in the notification was based on possession of the necessary equipment and machinery, not their operational status. The Tribunal clarified that 'having facility' implied the possession of the required machinery, irrespective of whether they were operational. Merely disconnecting power supply and dismantling the motor did not negate the fact that the appellant possessed the facilities. The Tribunal highlighted that the appellant would cease to 'have the facility' only upon disposing of the relevant machinery, which had not occurred in this case.Consequently, based on the above analysis, the Tribunal found no merit in the appellant's contention. The appeal was deemed unsuccessful, and the Tribunal rejected the appellant's claim for exemption under Notification No. 40/95 for the specified period.