TaxTMI 
TaxTMI 
2007 (4) TMI 570
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....6 dt. 20-9-06 Sh. Vinod Kumar Agarwal, S/o Sri Jugminder Das R/o Govind Nagar, Kotdwar, Director of above unit. -- 50,000/- 3. 209-CE/APL/ MRT-I/06 dt. 20-9-06 Sh. Nishant Agarwal S/o Sri Virendra Agarwal R/o Jawahar Street, Najibabad, Director of above unit -- 50,000/- 4. 210-CE/APL/ MRT-I/06 dt. 20-9-06 Sh. Dinesh Agarwal S/o Sri Kesho Ram R/o 40/29, Civil Lines, Roorkee, Director of above unit -- 50,000/- 2. Briefly stated the facts of the case are that the appellants holding Central Excise Registration No. AABCC5681RXM001 were engaged in the manufacture of 'M.S. Ingots' falling under Chapter Sub-heading 7206.90 of the schedule to the Central Excise Tariff Act, 1985. Vide letter dt. 8-8-03, they intimated to the Deputy Commissioner, Central Excise, Dehradun that they wanted to increase their plant capacity as per Notification No. 50/03 -CE dated 10-6-03 as amended. Vide letters dated 22-5-04, 5-6-04 & 18-6-04 they further intimated about receipt of different new machineries namely one Control panel with water stru. & accessories, one 5 MT Induction Furnace with hydropower bus bar & accessories, one Transformer & Furnace 5TON W.C. Le....
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....stantial expansion for the purpose of exemption under Notification No. 50/03-C.E., dated 10-6-03. Following documents were submitted in support of their claim of exemption under Notification No. 50/03-CE dated 10-6-03 : - (i) Certificate dated 28-6-03 of Patwari. Patti-Sukhro, Tehsil Kotdwar duly countersigned by the S.D.M. Kotdwar certifying that M/s Charu Steel factory is situated in village Balbhadrapur (Industrial Estate) at Khasra No. 14. (ii) Certificate dated 23-12-04 of Shri Shakti Kumar, Chartered Engineer, regarding production capacity of the crucible in the unit. (iii) Certificate dated 7-1-05 of Shri Shakti Kumar, Chartered Engineer, regarding production capacity of new crucible in the unit. (iv) Block diagram of unit's production section, indicating position of old as well as new plant & machinery installed in the unit. (v) Block diagram of unit's production section, indicating position of old furnace as well as new furnace installed in the unit. (vi) Chart showing details of plant & machinery on account of substantial expansion as on 7-1-05. ....
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....f the unit for the alleged violation of certain provisions of the Central Excise Rules, 2002. 8. The above Show Cause Notices were decided by the adjudicating authority vide Order-in-Original No. 35 Joint Commissioner/MRT-I/2006 dated 30-4-06, denying benefit of Notification No. 50/2003-C.E., dated 10-6-03, confirming the duty demanded alongwith interest and imposition of penalty as detailed above. 9. Being aggrieved with the aforesaid Order-in-Original, the appellant filed these appeals mainly on the following grounds : - (1) The adjudicating authority has erred in not considering the pleas of the appellant in reply to show cause, the submissions made at the time of personal hearing and the purport and thrust of the case law cited. (2) The notification No. 50/2003-C.E., dated 10-6-2003 has to be construed on its own terms so as to effectuate its underlying purpose and object. It ought to have been borne in mind that the terminology "substantial expansion" was the skin of underlying economic thought to boost economic development and better being of local population in Uttaranchal by attracting there investments in industrial sector. The scope and mod....
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....able for any penalty in the facts and circumstances of the case. There was and there is no intent to evade payment of duty. They availed exemption of the notification in the bonafide belief that they were entitled to avail it. Penalty is not imposable on them in view of :- (I) 2005 (180) E.L.T. 209 (T) - Acon's Construction Product v. CCE, Chennai which was affirmed by Supreme Court in 2005 (184) E.L.T. 120 S.C., and (II) 2005 (190) E.L.T. 352 (T) - Fiber Foils Ltd v. CCE, Mumbai. Even otherwise, Rule 26 of Central Excise Rules 2002 is not attracted. Shri A.C. Jain, Advocate and Shri Pradeep Kumar Sharma, Senior Accountant appeared before me for personal hearing on behalf of the appellants and reiterated the submissions as made in the grounds of appeal. In brief they submitted that the instant case has been made based on Board's Circular 772/05/2004 dated 21-1-2004. They contested that the Circular is not law and the Notification is to be interpreted on its plain terms and that they fulfilled the requirement of the Notification by way of installation of Furnace of having capacity 5 TONS. Their production increa....
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....50/2003-CE dt. 10-6-03 pertains to positive industries. 14. The relevant provisions of Notification No. 50/2003-CE dt. 10-6-03 as amended are as under : The exemption contained in this notification shall apply only to the following kinds of units, namely : (i) new industrial units which have commenced commercial production on or after the 7th day of January 2003, but not later than the 31st day of March 2007. (ii) industrial unit existing before the 7th day of January 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five per cent on or after the 7th day of January 2003, but have commenced commercial production from such expanded capacity, not later than the 31st day of March 2007. 15. Thus the exemption contained under Notification No. 50/2003-C.E., dt. 10-6-03 is applicable either to new industrial unit or existing units undertaking substantial expansion by way of increase in installed capacity by not less than 25%. With a view to ensure smooth implementation of exemption scheme, the Central Board of Excise & Customs, vide Circular No. 772/....
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....f installation of additional 'Plant & Machineries' namely Furnace, Control Panel & Cooling Tower to give effect to increase in installed capacity not less than 25%. Any increase in the installed capacity by means other than installation of additional plant & machineries would not qualify for the benefit of exemption under 'substantial expansion'. 17. In other words, adjudicating authority has held that though the expansion in installed capacity has been done by 25% but the same has not been done by way of installation of additional plant and machinery. The adjudicating authority, further relied on the decision of Hon'ble Tribunal in the Case of M/s Travancore Titanium v. CCE - 2002 (148) E.L.T. 640 (T). 18. The appellant have submitted that in the Notification No. 50/2003-CE dated 10-6-03, manner of "substantial expansion" has not been mentioned/ explained. They effected increase more than 25% in the installed capacity, modernized their furnace and incurred capital investment of over Rs. 89 lacs, there was technically no other economical way for the appellant to effect substantial expansion of installed capacity except by way of installation of a new 5 Ton furnace a....
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....itted certificates dated 23-12-04 & 7-1-05 of Shri Shakti Kumar, Chartered Engineer in support of their claim of substantial expansion of the unit. 20. Therefore, the issue before me is whether expansion in the installed capacity not less than 25 % by way of replacement of installed machinery will amount to substantial expansion under Notification No. 50/2003-C.E., dated 10-6-03 or not. 21. I find that main thrust of the adjudicating authority is on installation of additional plant and machinery as per Clause (a) of Para 3 of the Board's Circular No. 772/5/2004-CX., dated 21-1-2004 whereas the appellants contested that manner of substantial expansion has not been mentioned/ explained in the Notification and it does not matter as to how the substantial increase in installed capacity was effected and the notification is to be interpreted on its plain terms. I find force in the appellants' submission in view of Hon'ble Supreme Court's decision in the case of CCE, Chandigarh v. Bhalla Enterprises - 2004 (173) E.L.T. 225 (S.C.) wherein it was held that "The basic rule in interpretation of any statutory provision is that the plain words of the statute must be given effect....
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....alled capacity of an existing unit by not less than 25% should be the result of installation of additional plant and machinery. Any increase in the installed capacity by means other than installation of additional plant and machinery (d) The term substantial expansion is not defined in terms of original or depreciated value of plant and machinery. The only criterion to be satisfied is accretion in installed capacity by at least 25% with additional plant and machinery. (e) "Additional investment in plant and machinery for modernization or for improving the quality of existing products, unless it leads to increase in installed capacity by 25% or more, would not tantamount to substantial expansion." 25. The above quoted clause (a) and (e) of Para 3 of the said Circular dated 21-1-2004, read together, signify that though the required increase in installed capacity of unit should be achieved by addition of plant and machinery, but if such increase is achieved by way of modernization, even then the unit would be deemed to have satisfied the conditions. Further as per Clause (d) of Para 3, as long as there is increase of 25% in the i....