TaxTMI 
TaxTMI 
2017 (11) TMI 933
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Central Excise Tariff. They submitted a letter on 10.04.2004 with the jurisdictional Assistant Commissioner informing that they will manufacture Flavoured Elaichi (heading No.2001.10) and Pan Chatni (heading 2108.00) under Notification No.49/2003-CE dt. 10.06.2003 against office memorandum of Ministry of Commerce and Industries dt. 07.01.2003 in which above said items were exempted from excise duty. Since Pan Chatni was not covered in the Schedule to the said notification, benefit of Notification No.49/2003-CE did not appear to be applicable to them. Subsequently, the assessee vide their letter dt. Nil, which they claimed to have sent to the Dy. Commissioner, Central Excise Division, Shimla on 24.06.2004, with the copy to the Range offic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice was issued to the assessee. The same was adjudicated resulting in confirmation of demand of Rs. 28,50,527/- along with interest and the equivalent amount of penalty and denial of exemption under Notification No.49/2003-CE and Notification No.50/2003-CE. The assessee went in appeal where the Ld. Commissioner (Appeals) in his order dt. 05.10.2006 allowed the appeal of the assessee. Aggrieved from the same, the Revenue has filed this appeal. 4. Ld. AR submitted that the entire operation of the manufacture of various products is undertaken by the appellants in one complex for which single central excise registration has been taken by the appellants and clearances of individual excisable product cannot be treated as clearances of an ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. Heard the parties and perused the records. 7. We find that the Revenue's main ground of appeal is that the entire operation was being undertaken in one complex or factory for which central excise registration had been taken by the party and clearances of individual excisable products cannot be taken as clearances of an industrial unit. The Revenue has further argued that the exempted products only constitute 1% or even less of the total production of the unit, hence, by taking negligible and insignificant production of individual items as an industrial unit, for which no separate central excise registration was granted, the benefit should not be extended. It was further argued that the ratio of Hon'ble Supreme Court decisions have been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....015 (324) ELT 201 (Tri. Del.) wherein there was an LPG cylinder unit, which started production in 2001 and later in the same compound another unit for ACSR conductors was set up and had trial production in October, 2002 to December, 2002. While deciding the issue of date of onset of commercial production, the Tribunal treated the two units as separate industrial units. Relevant extracts of the judgment of the Tribunal are reproduced below:- "8.4 Now, the new industrial unit cannot be the one commencing commercial production on or before after 10-6-2003, the date of issue of exemption notification - as, if this meaning is adopted, the condition of commencing commercial production on or after 7-1-2003 would become redundant. Therefore, the w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on during the process of commissioning of a plant. The process of commissioning of a manufacturing plant starts after completion of erection installation. During commissioning, the various machinery is run on trial/test basis and if the production is not of the desired quantity and of the desired quality, the necessary adjustments are made. The running of a plant during its commissioning is only a trial run meant to make the necessary adjustments in the machinery and calibrate them to optimise their productivity. Commercial Production starts only when the commissioning i.e. trial run is complete. Though during trial run, there may be some production and the manufacturer may have sold the same, the plant cannot be said to have commenced comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this case:- "9. As regards, the cylinder unit, this unit had started production sometime in 2001 and this unit undertook expansion of installed capacity only in December, 2003 which was completed on Jan. 2004, as result of which, installed capacity for production of cylinders increased to 552460 per annum from the earlier capacity of 368440 per annum. It is not in dispute that the capacity expansion was achieved by adding certain machinery, namely, five Mig Welding Machines, one Deep Drawing Hydraulic Press of 200 tons, one Trimming machine, one Foot Ring Forming machine, two Rotary Shearing Machines, two Auto Welding machines and two Automatic Bung Welding machines. The only ground on which the exemption is sought to be denied, is that e....