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of <h1>Excise Duty Exemption Granted for Expansion of Manufacturing Unit</h1> <h3>In Re : M/s Lakhani Footwear Pvt. Ltd.</h3> In Re : M/s Lakhani Footwear Pvt. Ltd. - 2016 (344) E.L.T. 721 (A. A. R.) Issues Involved:1. Whether the proposed Unit-II qualifies as a substantial expansion of the existing unit under Notification No. 50/2003-CE.2. Whether the proposed Unit-II, established after the sunset clause date, is eligible for the excise duty exemption under Notification No. 50/2003-CE.Issue-wise Detailed Analysis:1. Substantial Expansion Qualification:The applicant, M/s Lakhani Footwear Private Ltd, proposed to expand its existing unit by installing more than 25% additional plant and machinery and constructing a new building. The applicant argued that this qualifies as substantial expansion under Board's Circular No. 772/5/2004 CX dated 21.1.2004. The applicant planned to obtain a separate factory license and E.S.I., PF Code for the expanded capacity, which would be named Haridwar Plant-II, while maintaining a separate series of invoices prefixed with 'SE' for clearances from the expanded capacity. The excise and service tax returns would be filed in a consolidated manner as the expansion is within the same plot.The Revenue contended that the proposed Unit-II would not qualify as an expansion but as a different entity since it would obtain separate licenses and codes, and it would come into existence after the sunset clause date of 31.3.2010.The Authority observed that the applicant had complied with the conditions of Notification No. 50/2003-CE by submitting the required Intimation/Declaration before the cutoff date, with commercial production commencing on 26.03.2010. The Authority further noted that the CBEC Circular No. 939/29/2010-CX dated 22.12.2010 clarified that the notification does not restrict additions or modifications to the plant and machinery or the production of new products after the cutoff date. Therefore, the applicant's proposal to install new plant/machinery and produce shoes of different brands and designs qualifies as substantial expansion, allowing the continued benefit of excise exemption.2. Eligibility Post Sunset Clause:The Revenue's second objection was that the proposed Unit-II would not be eligible for the exemption as it would come into existence after the sunset clause date of 31.3.2010. The applicant relied on Circular No. 960/03/2012-CX dated 17.02.2012, which clarified that expansion by acquiring adjacent land and installing new plant/machinery is akin to expansion within the existing premises. The Authority noted that the applicant's expansion was within the same Khasra No. 72 and 74, where the original unit commenced production before the cutoff date.The Authority emphasized the intention of the Government to promote industrial development and employment in Uttarakhand, as outlined in the New Industrial Policy and the Office Memorandum dated 7th January 2003. The Notification No. 50/2003-CE aimed to exempt goods manufactured in specified areas from excise duty to support this policy. Denying the exemption for the proposed expansion within the same plot would contradict the policy's objective of fostering growth and development.Ruling:The Authority ruled that the benefit of Notification No. 50/2003-C.E. dated 10.06.2003 would be available to goods manufactured from the expanded unit, i.e., PLANT-II HARIDWAR, established from the expansion of the existing unit.
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