2023 (12) TMI 999 - AT - Central Excise

Area-based exemption covers both capacity expansion and product diversification under Notification 01/10-CE para 8(b)(i)

The CESTAT Chandigarh dismissed the Revenue's appeal regarding area-based exemption under Notification No. 01/10-CE dated 06.02.2010. The tribunal held ... Area based exemption - exemption Notification No. 01/10-CE dated 06.02.2010 - substantial expansion - expansion of capacity or modernization and diversification or not - HELD THAT:- The purpose stipulated in para 8(b)(i) of expansion of capacity means expansion of capacity of the existing product or diversification from the existing product. Further, it is found that the Commissioner (Appeals) in para 7(i) has observed that exemption notification has to be interpreted by taking into consideration, the language of the notification which has to be given its due effect. If the tax payer falls within the plain terms of the exemption, it cannot be denied its benefit by calling any aid a supposed intention of the exempting authority. There are catena of judgments that the reading of the Notification cannot be done in the manner, so as to give a narrow and restricted meaning. It is well settled that the interpretation of the Notification should not be done in such a way as to make the notification otiose or nugatory. There are no infirmity in the impugned order - appeal of Revenue dismissed. Issues involved: Appeal against rejection of department's appeal and upholding of Order-In-Original by Commissioner (Appeals) regarding entitlement to benefit of Notification No. 1/2010-CE dated 6.2.2010 for expansion of manufacturing unit.Summary:The appeal was filed by the Revenue against the Commissioner (Appeals) order rejecting the department's appeal and upholding the Order-In-Original. The respondent, engaged in manufacturing Ferro Silicon, Calcium Carbide, and Ferro Chrome, sought to avail the benefit of Notification No. 1/2010-CE dated 6.2.2010 after expanding their unit by more than 25% of the existing value of plant & machinery. The adjudicating authority accepted the expansion, leading to the Revenue's appeal. The appellant argued that the impugned order did not properly interpret the exemption notification and that the respondent was not entitled to its benefits. They contended that the case was not about capacity expansion but about replacing an existing product with a new one. However, the respondent and the authorities below maintained that the respondent met the criteria for the notification's benefits, as the expansion was in line with the notification's provisions. The Commissioner (Appeals) emphasized that the notification did not restrict the expansion to the installed capacity of the existing product only. The respondent had shifted from manufacturing Calcium Carbide to Ferro Chrome, satisfying the notification's requirements. The Tribunal upheld the Commissioner's decision, stating that the notification should be interpreted liberally in favor of the taxpayer if they fall within its plain terms, citing relevant case law. Consequently, the appeal of the Revenue was dismissed, and the cross objections were disposed of accordingly.