TaxTMI 
TaxTMI 
2018 (2) TMI 787
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....nd given due declaration to the department for manufacturing of the said items. On 17.8.2014, the appellant obtained registration for the unit No.I to commence production on 18.8.2004, the Deputy Commissioner vide letter dated 8.10.2014 denied the duty exemption to the goods cleared by the unit No.3 relying on the circular No.939/29/2010-CX dated 22.12.2010 on the ground that unit No.III is just an addition to the existing Unit and it cannot be considered as an independent unit. The appellant protested the said letter and started paying duty on the products cleared from unit No.3 post 18.8.2004 under protest. The Commissioner (Appeals) affirmed the order by denying the exemption to unit No.III. Aggrieved with the said order, the appellant is before us. 3. Learned Counsel for the appellant submitted that the exemption has been denied to unit No.III on the sole ground that it cannot be considered as a new and separate identifiable industrial unit for the purpose of Notification as unit No.III is part of the existing unit. He submits that for the purpose of fiscal laws, the concept of the factory and industrial unit are different. The Courts have consistently held that an industria....
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....nit No.III as even one of the unit is closed, the second unit can continue to use the common facilities, thereby not impacting its working. Moreover, it would not be right to say that in order to claim exemption under Notification No.50/03-CE, the industrial unit must produce all inputs on its own for use in the manufacture of final product. For example, it is not necessary that the industrial unit have its own power plant to generate electricity for use in the manufacture of specified goods. The electricity can be purchased from outside resources. Thus, sharing the common facilities with the existing production unit will not impact the independent industrial unit status of new unit. He submits that the Hon'ble Apex Court in the case of Rollatainers Ltd. has held that even if certain infrastructural requirement is considered to be not available in one of the unit, and is commercially availed from another unit, that will not affect their existence as separate units. He submits that the Deputy Director of Industries vide letter dated 4.6.2010 stated that the addition of plant and machinery has been taken on the records and that other terms and conditions of commencement of commercial....
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....ine 30.07.2007 28.7.2007 Unit III Personal care products viz. hand-wash, shaving cream, hand & body lotion, face wash, fairness creams, hair cream, tooth paste and talc powder, etc. 05.03.2010 26.03.2010 and 30.03.2010, for different products 04.03.2010 25.03.2010 and 29.03.2010, for different products 10. We have gone through the different declarations filed the appellant from time to time which mandate that the appellant has complied with conditions of the notification by intimating to the department. The claim of the appellant is that the said items has been cleared for the first time at the time of filing of the said declarations. For ease of convenience the declarations filed by ten appellant from time to time are extracted below: WIPRO Applying Thought Date: 05^th July, 2004 Baddi/AR/Exc/File-002 To, The Assistant Commissioner, Central Excise, Khalini Shimla, Himachal Pradesh Subject: Compliance with conditions enumerated under notification 76/2003-CE dated 05/11/2003 to claim CE exemption under Notification No.50/2003 dated 10/06/2003 Dear Sir, We wish to inform you that we shall be shortly commencing the product....
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.... year. 4. We also submit the following particulars:- f) Name & address of the Manufacturer : M/s WIPRO LIMITED Plot No.77 EPIP Phase-I, Jharmajri Tehesil :Nalagarh, Disst. Solan (H.P.) g) Location/ Location of Factory / Factories : Plot No.77 EPIP Phase-I, Jharmajri Tehesil :Nalagarh Disst.Solan (H.P.) h) Descriptions of inputs Used in manufacture of Specified goods :Oils like PFAD, PKFAD, NERBO, CPO, CPS i) Descriptions of the Specified goods Produced : Fatty Acid, Noodles, Glycerine j) Date on which option under this notification has been exercised : 3823.11.12, 3401.11.90, 1500.00.00 k) Date of Commericial Production : 30.07.2007 Thanking You, Yours Sincerely For WIPRO LIMITED Authorized Signatory CC: Superintendent, Central Excise, Range III, Baddi, Distt. Solan (H.P.) WIPRO Applying Thought Thursday, March 04, 2010 To, The Assistant Commissioner, Central Excise Division, MukundNiwas, PanthaGathi, Shimla, Himachal Pradesh Subject: Compliance with conditions enumerated under notification 76/2003-CE dated 05/11/2003 to claim CE exemption under Notification No.50/2003 dated 10/06/200....
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....ustrial Development Centre or Export Promotion Industrial Part or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area of Uttarakhand or State of Himachal Pradesh- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the Schedule appended hereto, other than the goods specified in the Annexure appended hereto, and cleared from a unit located in the Industrial Growth Centre of Industrial Development Centre or Export Promotion Industrial Part or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area as the case may be, specified in [Annexure-II and Annexure-III] appended hereto, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts: P....
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....ar meaning is given to the word in Webster's Third New International Dictionary, viz., "a single thing or person or group that is a constituent and isolable member of some more inclusive whole". The word "industrial" is defined in the Shorter Oxford Dictionary to mean "pertaining to, or of the nature of, industry or productive labour". An industrial unit must, therefore, mean a separate or isolable part, concerned with industry, of a complex. 7. Given this meaning, the plant and building within the petitioners' factory at Thane used exclusively for the manufacture of varnishes must be held to be an industrial unit. 14. In the case of Himalayan Co-op Milk Product Union Ltd. (supra), the Hon'ble Apex Court had an occasion to examine the issue and relying on the decision of Bombay High Court in the case of Devidayal Electronics & Wire Ltd. wherein the Apex Court has observed as under: 6. The Tribunal while allowing the appeal followed a decision of Bombay High Court reported in 1984 (16) E.L.T. 30 (Bom.) - Devidayal Electronics & Wires Ltd. and Another v. Union of India and Another. The similar notification in respect of an earlier year was under consideration before th....
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....s manufactured therein and by way of an example, it was observed that it may create complications where a factory manufacturing goods falling under more than one tariff item but has only one generator of power plant, so in such cases in what manner generator or power plant was to be allocated between two items. The plea raised was negatived and it was held that total value of the entire machinery in the industrial unit should be taken into account. At this stage, it would be appropriate to point out the difference in the language used in two notifications. We find that in the Notification dated 19-6-1980, with which we are presently concerned, the proviso to clause (ii) of the Notification says "..... the capital investment made from time to time on plant and machinery installed in the industrial unit in which the said goods under clearance are manufactured ....". The expression "said goods" is not used in the Notification interpreted in the case of Golden Press (supra). The "said goods" signifies or identifies the goods which are covered under Item 68 in respect of which exemption has been granted. But the word "said" is not used in the Notification under consideration in the case....
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....ething quite distinct and separate from it. The Tribunal has pointed out that "industrial unit" is an expression well understood in the Excise Department. It is an old practice in the Central Excise Department to treat different parts of a factory licensed to produce different goods separately and to issue licence separately under Rule 174 of the Central Excise Rules, 1944 for the different parts of a factory. All such sections or parts of a factory are known as industrial units holding individual L-4 licences. 3. The factual position has not been controverted. If that be so, in the Notification, the expression "industrial unit" must have been used in the sense in which the Excise Department understands it. 4. Having regard to the facts of the case, we do not find any infirmity in the order of the Tribunal. 5. We were also referred to a number of decisions in which the Central Excise Tribunal has consistently followed the same view. Two of the cases came to this Court in appeal where this Court did not interfere with the orders passed by the Central Excise Tribunal [1. CCE v. Prem Cables Pvt. Ltd. - 1989 (43) E.L.T. 739 (Tribunal) - Affirmed by this Court in 1997 (83) E.L.....
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....a different commodity has to be treated as separate manufacturing unit. The same view has been expressed by the Apex Court in the case of Himalayan Co-op. Milk Product (supra) and also Hon'ble Bombay High Court in the case of Devidayal Electronics & Wires (supra). Therefore, a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than one manufacturing units and each section or part of the factory would be independently eligible for exemption, as the duty exemption under Notification No.50/2003-C.E. is unit-wise and not factory-wise. 17. This issue was again examined by this Tribunal in the case of Prakash Straw Board Pvt.Ltd. (supra), wherein this Tribunal has followed the decision in the case of Tirupati LPG Industries Ltd. observed as under: 7. We further find that in the case of Tirupati LPG Industries Ltd. v. CCE, Meerut-I (supra), the assessee was having two separate units in their factory one for manufacturing of LPG cylinder and another for conductors unit and this Tribunal has considered the substantial expansion of both the units separately, therefore, following the precedent decision of this Tribunal and observ....
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....nd Forgings Ltd. (supra) wherein the High Court has examined the issue and observed as under: 9. So far as the objection regarding common of power is concerned that per se cannot be a ground for denying the deduction claimed because this reason by itself cannot destroy the independent identity of the unit. Similarly common management of the two units or maintenance of common books of accounts per se are also not germane for considering the claim under section 8oJ of the Act. This view of mine is fortified by the view taken by Karnataka High Court in the case of International Instruments (P) Ltd. v. Commissioner of Income-tax, Karnataka, reported in (1980) 12 ITR 11 at page 21 wherein it has been held that, "The fact that there was common management or the fact that separate accounts had not been maintained, would not also lead to the conclusion that they were not separate undertakings. Even if separate account is not maintained the investment on each of the units can be reasonably determined with the material which the assessee may make available to the department. We are, therefore, of the view that the finding of the Tribunal that the assessee was not entitled t....
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....e Revenue held a view that the factory of the main appellant is one and the same and as such the main appellant cannot avail exemption under Notification No.50/2003 for some of the products and not in respect of some other products. Holding that the main appellant is not eligible for exemption under the said notification as it was considered that only one factory was in existence, proceedings were initiated against the main appellant, partner of the main appellant and certain officials of the main appellant." And this Tribunal has examined the issue has under: 6. We have heard both the sides and perused the appeal records. We note that the impugned order elaborately examined the identity of the appellants factory as a whole with various statutory Government authorities and utility agencies. We note that such appreciation is not directly relevant to examine the application of exemption under Notification No.50/03. In fact, the appellant also did not contest the fact that they have only one factory in the said location. They only pleaded that in the said factory there were two identifiable manufacturing units involved in the manufacture of different types of products in differe....
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....lable to such goods. We note that the said clarification brings-out that the exemption is to be applied even to a new assembling line which in any case will be part of an already existing factory having other manufacturing unit/facility. 9. The Tribunal while examining the application of exemption under the above said notification in the case of M/s Tirupati LPG Industries Ltd, 2015 (324) ELT 201 (Tri.-Del.) relying on the decision of the Hon'ble SC in Reckitt Columan of India Ltd., 1997 (92) ELT 457 (SC) held: "in our view, this ground for denial of exemption to cylinder unit is totally incorrect, as held by Apex Court in the case of Reckitt Colman of India Ltd. (supra) each section or part of a factory manufacturing a different commodity has to be treated as separate manufacturing unit. The same view has been expressed by the Apex Court in the case of Himalayan Co-op. Milk Product (supra) and also Hon'ble Bombay High Court in the case of Devidayal Electronics & Wires (supra). Therefore, a factory manufacturing more than one commodity in different sections, has to be treated as consisting of more than one manufacturing units and each section or part of the factory would be inde....
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....rder, we find that the impugned order is not legally sustainable. Accordingly, we set-aside the same and allow appeals with consequential relief. 23. Further in the case of Dharampal Premchand Limited (supra), this Tribunal further observed as under: 8. We find that the Notification No.50/2003-CE dt. 26.02.2003 grants exemption to new industrial units which have commenced their production on or after 07.01.2003. We also note that the notification does not have the concept of factory but speaks only of industrial unit. Hence, the relevant factor would be the date of commencement of production in the industrial unit. A unit is treated as existing unit if the commercial production has started prior to 07.01.2003 and is treated as a new industrial unit if the commercial production has started after 07.01.2003. 9. We find that in order to distinguish the factory and the industrial unit, the Ld. Commissioner (Appeals) has correctly followed the ratio of the Hon'ble Apex Court decision in the case of Tencon Industrial Corporation Vs. CCE, Bombay -I- 2003 (156) ELT 164 (SC) wherein it was held that where a factory produced more than one excisable goods production is by one unit an....
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.... the notification. For this purpose, distinction has to be made between 'Commercial Production' and 'Trial Production'. Though the term 'commercial production' is not defined in this notification, it should be construed in contradistinction with the term 'Trial Production'. Trial Production is followed by commercial production. Trial Production is the production 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 commercial production during that phase. The plant can be treated as having commenced commer....