TaxTMI 
TaxTMI 
2015 (8) TMI 59
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....reas mentioned in Annexure-II and Annexure-III which have commenced commercial production on or after the 7th day of January, 2003, but not later than the 31st day of March, 2010] and (b)Industrial units existing before the 7th day of January, 2003 in areas mentioned in Annexure-II, 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, 2010];" According to the appellant company, they are a new industrial unit, which had commenced commercial production on 30th day of March, 2010. On this basis, they are claiming the duty exemption under this exemption notification. There is no dispute that the appellant company under their letter dated 26.03.2010 had filed the required declaration for availing exemption notification no.50/03-CE dated 10.06.2003, wherein they had declared the product to be manufactured by them and that they intended to start commercial production on or before 31.03.2010. 1.2 According to the department, an information was received that th....
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.... over to the appellant company on 30.3.2010 to start commercial production, though their engineers had stayed till 1.4.2010 for observation. He also stated that the furnace had been commenced commercial production on 30.3.2010 by their engineers and it was possible to produce M.S. Ingots from 30.03.2010 onwards. Inquiry was conducted with Chief General Manager, Uttrakhand Power Corporation Ltd. (UPCL) and on inquiry, it was learnt that the power consumption of the appellant company on 29.03.2010, 30.03.2010 and 31.03.2010 was 340 units, 6000 units and 30,420 units respectively while the production of 11.68 MT had been shown on 29.03.2010, the production of 11.67 MT was shown on 30.03.2010 and the production of 17.52 MTs was shown on 31.03.2010. The Department was of the view that the appellant had not commenced commercial production as looking to the records of the operation of the furnace, it could not be said that the unit had commenced commercial on or before 31.03.2010. In course of subsequent inquiry, it was learnt that since the power consumption of the furnace installed for production of M.S. Ingots varies from 600 units to 1200 units PMT, it was not possible to produce 11 M....
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....a unit at C-8, UPSIDC Industrial Estate, Bahadra, Dist. Haridwar, Uttrakhand for manufacture of M.S. Ingots from M.S. Scrap and Sponge Iron , that the induction furnace had been procured from M/s. Inductotherm India Pvt. Ltd (IIPL) in Feb. 2010, that the furnace had been installed in last week of March, 2010 and had been commissioned and had started commercial production before 31st March, 2010, that the appellant under their letter dated 26.03.2010 had made a declaration to the Jurisdictional Asstt. Commissioner, Central Excise for availing the exemption under notification no.50/03-CE and in this regard had furnished the necessary information, that Khasra number of the Plot on which the factory is located, is specified in the notification no.50/03-CE and the goods manufactured are also covered for exemption under this notification, that during the last week of March, 2010 the appellant unit had received 100.260 MTs of M.S. Scrap, 236.50 MTs of Sponge Iron and 47 MTs of Silco Magnese, that power consumption on 29.3.2010, 30.03.2010 and 31.03.2010 was 340 units, 6052 units and 30420 units respectively and the production recorded on 30.03.2010 and 31.03.2010 was 11.675 Mts. and 17.52....
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....its and that in view of the above, the impugned order holding that the appellant had not commenced commercial production on or before 31.03.2010 and hence, are not eligible for the exemption notification no.50/2003-CE and confirmation of duty demand on this basis against the appellant company for the period from March, 2010 to September, 2011 along with interest under Section 11AB and imposition of penalty of equal amount on them under Section 11 AC is not sustainable. 4. Shri Ranjan Khanna, ld. Departmental Representative vehemently defended the impugned order by reiterating the findings of the Commissioner in it and pleaded that even as per the appellant's own claim that 600 units to 1500 units are required for manufacture of one MT. of M.S. Ingots, as per the appellant's record of power consumption of 334 units on 29.03.2010, production of 11 M.T. of M.S. Ingots on that day was impossible and subsequently, even the appellants themselves accepted that on 29.03.2010 there was no production and claimed that this production had been wrongly recorded. He pleaded that the power consumption for 30.03.2010 was 6052 units and on the basis of the appellant's own norm of pow....
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....entral Excise Tariff Act, 1944 and also from additional excise duty leviable under the Additional Duty of Excise (goods of Special Importance) Act, 1957 [AED(GSI)] and Additional Duties of Excise (Textile & Textiles Articles) Act, 1978, [AED(T&TA)]. The exemption is subject to the condition that the assessee who intends to avail this exemption files a declaration in this regard in the prescribed format to the jurisdictional Asstt. Commissioner, Central Excise, with a copy to the Superintendent of Central Excise and the exemption shall be effective from the date of exercise of option. There is no dispute that the goods being manufactured are not mentioned in the negative list of the items specified in Annexure-I of the notification and the Khasra No. of the Plots on which the unit is located are specified in Annexure-II of the notification. There is also no dispute that the appellant under their letter dated 26.3.2010 had filed the necessary declaration to the jurisdictional Central Excise Authorities informing that they will commence commercial production on or before 31.03.2010. The dispute is only in respect of the eligibility of the appellant unit for exemption in terms of condi....
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....The first stage of setting up of a manufacturing plant is erection work in course of which foundation of the machinery, on which machinery is to be installed is prepared, supporting structures which support the machinery to be installed are erected and the sheds which house the machinery are constructed. After completion of the erection work, the next stage is the installation of the machinery. However, before the machinery can be used for full-fledged commercial production, it has to be tested for which it is run on trial basis. During this phase run on trial basis if the production is not of the desired quantity and /or of the desired quality, the necessary adjustments are made and defective parts or components, if any found, are replaced. The commercial production starts only when the commissioning i.e. trial run is complete and the plant is in a position to start the manufacture of the goods of the desired quality and according to its installed capacity. In our view, the date of commencing of the commercial manufacture is the date of commissioning of plant when the newly commissioned plant had been run and some goods of the desired quality had been produced. However, once the p....
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....ly trial run of the plant and the bogus entries of production were made to wrongly claim the exemption. However, we find that while on one hand, the Department alleges that there was no production of M.S. Ingots during the last week of March, 2010, on the other hand, the show cause notice issued to the appellant has also demanded duty of Rs. 90,805/- on 30.4 MTs. of M.S. Ingots cleared during March, 2010 and this duty demand is included in the duty demand of Rs. 5,27,66,984/- confirmed by the appellant in the impugned order. Thus, the Department's allegation that there was no production by the appellant unit during March, 2010 and that the appellant have made only bogus entries regarding production during March, 2010, in their records is not compatible with the Commissioner's order confirming duty demand of Rs. 90,805/- in respect of the clearance of 30.40 Mts. of M.S. Ingots during March, 2010. 9. Moreover, the appellant had filed the declaration regarding availment of this exemption on 26.03.2010 and it was possible for the jurisdictional central excise officers to immediately visit the unit to verify as to whether at that point of time they were in position to start t....
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....as confirmed the duty demand on 30.4 MTs. of M.S. Ingots cleared during the month of March, 2010, and thereby accepting the appellant's claim of having commenced production during March, 2010, the Department, merely on the basis of its own interpretation of Electronic Load Survey Report for 30.03.2010 and 31.03.2010 cannot allege that the appellant unit had not commenced commercial production on or before 31.03.2010. As discussed above, for determining as to whether the Appellant had commenced commercial production on or before 31.03.2010, the quantum of production during March, 2010 is not relevant and what is relevant is as to whether the plant had been "commissioned" on or before 31.03.2010 i.e. whether on or before 31.03.2010, a plant was in a position to manufacture the finished product of the desired quality and according to its installed capacity and some production had been made and as discussed above, on this point, there is no evidence produced by the Department to refute the Appellant's plea based on certificate of the furnace suppliers, IIPL and Chartered Engineer's certificate, that the furnace had been commissioned on 30.03.2010. Moreover when the Departme....