Substantial expansion of installed capacity, not actual production, governed the exemption claim and the denial was set aside.

Exemption under Notification No. 50/2003-CE had to be tested on substantial expansion of installed capacity, not on actual production. The authority rejected the claim on the wrong criterion and did not establish that the chartered engineer's certificate was inadmissible. The earlier remand direction for cross-examination of the expert could not be fully implemented because the expert had died, and no further directions were sought from the Tribunal. On that basis, the impugned order was unsustainable and was set aside, with consequential relief in accordance with law.

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Issues: Whether the appellant was entitled to the exemption under Notification No. 50/2003-CE on the basis of substantial expansion of installed capacity, and whether the impugned order could be sustained when the remand direction for cross-examination was not complied with.

Analysis: The exemption depended on substantial expansion of installed capacity and not on actual production. The earlier remand had directed cross-examination of the expert whose opinion formed the basis of the departmental case. That direction could not be complied with because the expert had died, and no application was moved for further directions from the Tribunal. The original authority also failed to establish that the chartered engineer's certificate was inadmissible, yet rejected the claim by relying on actual production rather than the notified criterion of installed capacity.

Conclusion: The impugned order was unsustainable and was set aside; the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The demand, interest, and penalty did not survive because the exemption claim was not properly dislodged on the correct legal test and the remand directions were not effectively complied with.

Ratio Decidendi: Where exemption turns on substantial expansion of installed capacity, the authority must decide the issue on that statutory criterion and cannot substitute actual production as the basis for denial.

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