Strict proof of substantial expansion required for exemption; mere replacement of machinery does not satisfy the installed-capacity condition.

Exemption under Notification No. 50/2003-CE was available only on proof of substantial expansion by increase in installed capacity of at least 25%. The claimant bore the burden of strictly establishing eligibility with evidence, but the record showed only replacement of old machinery with new machines, scrap of some old equipment, and no supporting proof before the adjudicating authority. The verification report finding no substantiated expansion was not effectively challenged. On these facts, the exemption was rightly denied and the consequential demand sustained, with both appeals failing.

---

---

Issues: Whether the appellant was entitled to exemption under Notification No. 50/2003-CE on the basis that it had undertaken substantial expansion by increase in installed capacity by not less than 25% and whether denial of the exemption was justified.

Analysis: The notification granted exemption to specified industrial units only if the prescribed condition of substantial expansion was satisfied. The burden lay on the appellant, as the claimant of the exemption, to establish by evidence that installed capacity had been increased by at least 25%. The record showed that the range verification report found that old and used machines had been replaced with new machines, that certain old machines were lying as scrap, and that no supporting evidence of the claimed expansion was produced before the adjudicating authority. The verification report was not effectively challenged, and the appellant failed to discharge the burden of proving eligibility.

Conclusion: The exemption under Notification No. 50/2003-CE was rightly denied, and the appeal was without merit.

Final Conclusion: The denial of exemption and the consequential demand were sustained, and both appeals failed.

Ratio Decidendi: A claimant to an exemption notification must strictly prove fulfilment of the prescribed conditions, and mere replacement of old machinery does not establish substantial expansion in installed capacity.

---