TaxTMI 
TaxTMI 
2017 (5) TMI 49
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....appellant to be filed which had already been filed by the appellant alongwith declaration. The objections were raised as regards the frequency converter machine in terms of CBEC Circular No. 772/5/2004-CX dated 21.01.2004 which alleged was not satisfied by the appellant. The appellant was also requested to provide the individual capacity of each of the products manufactured by it. Thereafter, the Assistant Commissioner held that the benefit of exemption Notification is not entitled to the appellant observing as under: I find that crucial machinery for manufacture of corrugated boxes, corrugated sheets, corrugated sets and corrugated Rolls is the corrugation machine. The notice have not installed any additional corrugation machine for undertaking the substantial expansion for claiming the exemption under Notification No. 50/2003-CE dated 10.06.2003. The additional machinery installed by the Noticee comprises frequency converter, pasting machine, Die punching machine, Eccentric slotter, Four Bar rotary, Box drying machine. The function of these machines is only for pasting, giving crease to cartons and for drying of cartons. The color Flaxo printer installed for undertaking ....
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....ion Notification. He submits that the department is misreading that the circular dated 21.01.2004. As condition (a) provides that they must be some investment in their machinery for the purpose of exemption Notification. Condition (b) provides that the value of the investment is irrelevant in so far as the benefit of the exemption notification. Condition (c) provides that even second hand machinery can be used to enhance the installed capacity and reiterates that what is relevant is that the installed capacity ought to increase by at least 25%. Condition (d) provides that the value of machinery is not relevant. Condition (e) states that improving the quality of the products would not be substantial expansion unless the installed capacity increases by 25%. Therefore, the authorities below has completely misread the said circular and came to the conclusion that crucial machinery was not installed, therefore, there is no increase in installed capacity as the condition (a) provides that machinery should have been installed. Therefore, he prayed that impugned orders are to be set aside. 5. He further submits that the certificate issued by DIC was accepted certifying that the appellan....
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.... for benefit of Notification No. 50/2003 or not and in result whether duty liability is sustainable against the appeal or not? 13. We have seen that in the adjudication order it is recorded by the adjudication authority that the installed capacity of corrugated boxes has been increased from 1175 MT to 1825 MT i.e. more than 55% increased in the installed capacity. It is also recorded that as the unit has not installed any additional machinery for manufacture of corrugated boxes, corrugated sets and corrugated rolls therefore, they are not entitled for benefit of Notification by CBEC Circular 772/5/2004-CX dated 21.02.2004. For better appreciation, the circular issued by CBEC is extracted here in below: 3. Board has received representations from various quarters seeking clarification on the term substantial expansion . With a view to ensure smooth implementation of the exemption schemes, following guideline are circulated to explain the scope of substantial expansion so far as it relates to the applicability of above-mentioned notifications. (a) increase in installed capacity of an existing unit by not less than 25% should be the result of installation of additi....
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.... 50/2003-CE permits its benefit to the existing units which have undertaken substantial expansion by way of increase in their installed capacity by not less than 25% on or after 07.01.2003. In this case, there is not dispute that the appellant undertook the expansion work after 07.01.2003. According to the appellant, they had made an application to the Directorate of Industries for the necessary approval for substantial expansion, and in that application they had furnished the details of the new machinery to be installed and the machinery (digester) to be re-placed. They have also placed on record the copies of these applications. As per the documents on record, the officers of inspection team of Directorate of Industries inspected the factory before they started expansion work and also inspected their factory after completion of expansion work in December, 2003. There is a letter dated 02.01.2004 of the Directorate of Industries addressed to the respondent unit acknowledging that their installed capacity in respect of semi craft papers and corrugated boxes has increased and that installed capacity for manufacture of semi craft papers has increased from 7200 MT to 9000 MT per annum....
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.... of the circular, makes it abundantly clear that the additional plant and machinery, mentioned therein, is not in addition to the existing, but signifies something new brought in the manufacturing process which is turn, increases the capacity. 16. Further, we find that the in the case of CCE, Shillong Vs. Hatikuli Tea Estate again after analysing the issue of this Tribunal observed as under:- 4. We, however, find that neither the Notification nor the ministry s Circular cited above, refers to the capacity of the drawing section as the only crucial factor to determine the installed capacity. Even though the respondents had a higher installed capacity of the drawing section, they could not have produced more than the installed capacity of the fermenting section, which was the lowest amongst all departments. There was no evidence produced on record by the Department that the respondents produced more than the installed capacity of the fermenting section before the claimed date of expansion. As such, it is not possible to accept the arguments of the Learned S. D.R. On the other hand, the chartered engineer s certificate produced by the respondents is detailed and acceptable....
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....Kol.) has inter-alia held as under: "on hearing both sides, we find that the report relied upon by the Commissioner, clearly shows in detail that there has been a substantial expansion of the industrial unit. The language in the Notification requires substantial expansion in industrial unit and the expansion is not with reference to any individual section of the unit or machinery in the unit." The same ratio was adopted by CESTAT earlier in the case of CCE, Shillong Vs. MKB (Asia) Pvt. Ltd. -2003 (09) LCX 028 = 2003 (158) ELT 616 ( Tri. Kol.). 19. Further, we find that in the case of Sudarshan Pine Products wherein this Tribunal observed as under: 5. We have considered the submissions from both the sides and perused the records. It is not disputed that in terms of the letter dated 06.01.2007 of General Manager, District Industries Centre, Una (HP) not only additional machinery and equipment has been installed by the respondent unit, but their production capacity has increased by 65% and this is also evidence by their power consumption as the power load has increased from 2.220 KW to 5.95 KW. It is also not disputed by either side that while before the expans....
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....lear that the additional plant and machinery, mentioned therein, is not in addition to the existing, but signifies something new brought-in in the manufacturing process, which is turn, increases the capacity. 21. Admittedly, in the case in hand the appellant has made some addition in their plant and machinery which resulted in increases their production capacity more than 25% which is not disputed by the Revenue in the impugned order. 22. Further, we find that it has been alleged that how the production capacity was determined by the Director of Industries is not known. It is contrary to the facts of records, as the report on assessment of revised capacity of the appellant has been placed by the appellant on record which is as under: ....
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....gies considered: Need of existing and revised Infrastructure fucilities Time study approach has been adopted to assess the production capacity of the revised plant & machinery. Manufacturing Process has been studied. Management's proficiency & vision have also been taken in to account. Future objectives of the industries Have also been considered. Study has also been carried out about the manpower employed and production support requirements to cope with the production activity. 3. Assumptions made: Certain assumptions have been midde to lay down the benchmarks for assessing the installed capacity: (i). The installed/revised capacity has been assessed after taking into consideration the Plant & Machinery, which liave been expanded and duly verified by CE & CA and physically inspected on 19.7.2004. Document 2 54 The Revised capacity has been assessed on single shift, eight hours of working of the plant for three hundred working days in a financial year. 4. Observations & Findings on Overall teclinical aspects of the unit: Process Section wise details of the product being manufactured by the unit have been inspected ....