TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 787
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....or 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 industrial unit is considered as that isolable and self....
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....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 production would remain unchanged, have no bearing in determining....
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.... & 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: 05th 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 production and clearance of excisable goods from our factory. As prescribed under CE Notification No.76/2003, we are making the following declarat....
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.....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 10/06/2003 Dear Sir, We wish to inform you that we shall be shortly commencing the production and clearance of excisable goods from our factory. As prescribed unde CE Notification No.76/2003, we are making the following declarations in order to claim CE exemption under Notification No.50/2003 dated 10/06/2003:- 1. W....
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....rtance) 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: Provided that the exemption contained in this notification shall apply subject to the following conditions, namely:- (i) The manufacturer who intends to avail of the exemption under this notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaini....
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....nt 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 the Court. It has been noticed that two words have been used in the Notification namely, the "factory" and "industrial unit". The two expressions would be presumed to have been used for different meaning. It was held that industrial unit would mean something other than the factory, which would be a separate isolate part of the plant which is exclusively used for manufacture of goods for which exemption is claimed. Learned counsel for the appellants tried to distinguish the case on facts.....
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.... 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 of Golden Press (supra) as indicated above says "... industrial unit in which the goods under clearance are manufactured ....". The goods have not been specified by using the expression "said goods". In the Notification dated 19-6-1980, as already indicated earlier, the goods falling under Item 68 are to be referred as "said goods". Therefore, in our view it will not be possible to take into consideration the value of investment of all the plants and machinery manufacturing different items viz. goo....
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....ces. 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.T. A-46. 2. Texspin Engg. & Mfg. Works v. CCE, Final Order No.204/86-D, dated 11-4-1986 - Affirmed by this Court in 1990 (50) E.L.T. A57. Our attention was also drawn to a judgment of the Bombay High Court in Devidayal Electronics & Wires Ltd & Anr. v. Union of India & Anr. - 1984 (16) E.L.T 30 (Bom.)], where a similar view has been taken. The learned Addl. Solicitor General has contended that these cases were decided under different Notifications. The contention of the assessee is that this view of the Bombay Hi....
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.... 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 observation made by the learned Commissioner (Appeals) in the impugned order, we do not find any infirmity in the impugned order. 18. From the above discussion, we find that it is clear that the factory and unit are two different connotations and a factory can have three different industrial units. The Revenue has heavily relied on the CBEC circular No.939/29/2010-CX dated 20.10.2010. In that circular where the industrial unit manufacturer a new product by installing fresh plant, machinery or capital goods after the cut-off dat....
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....n 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 to relief under section 84 and deduction under section 80J of the Act, during the assessment years in question is erroneous." 21. We also take note of the fact that in the case of Rollatainers Ltd. (supra), the Hon'ble Apex Court has examined the issue and observed as under: 8. Simply because both the factories are in the same premises that does not lead to the inference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is....
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....e 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 different production lines. We note that there were certain factual errors recorded by the original authority while examining the dispute. He records that the excise registration and the declaration filed under Notification No.50/03, covered entire premises. We note that in the intimation dated 21.04.2008, the appellant categorically displayed a site plan clearly demarcating Unit-I & Unit-II with a specific remark. Similarly, the original authority records that the term "unit" used in the said notification refers to the said "factory". The original authority records that it does not....
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....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 independently eligible for exemption, as the duty exemption under Notification No.50/2003-C.E. is unit-wise and not factory-wise. Therefore, for determination of eligibility of cylinder unit, for exemption under Notification No.50/2003-C.E. the capacity expansion of 25% or more has to be seen in respect of this unit only and not the capacity expansion of the entire factory as a whole. In view of this, the impugning order denying benefit of exemption in respect of cylinder unit is also not correct." 10. In Devidayal Electronics & Wires Limited (supra) while interpreting the provisions....
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....n 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 and as such the clearances cannot be clubbed together. He also correctly followed the decision of CCE Vs. Himalayan Cooperative Milk Product Union Ltd. - 2000(8) SC 642 wherein it was held that the Industrial Unit is a separate isolated part of the plant which is exclusively used for the manufacture of goods for which exemption is claimed. 10. In the specific context of area based exemption, similar issue came up before this Tribunal in the case of Tirupati LPG Industries Ltd. Vs. CCE, Meerut-I - 2015 (324) ELT 201 (Tri. Del.) wherein there was an LPG cylinder unit, which started production in 2001....
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....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 commercial production only after completion of trial run i.e. commissioning. 8.5 In this case from the production figures of conductor unit during Oct., 2002 - Dec., 2002 period, Jan, 2003 to March, 2003 period and from April, 2003 to June, 2003 period, it is clear that production during period prior to April, 2003 was only trial production, and there is merit in the Appellant's plea that their commercial production started in April, 2003 and accordingly this unit would be eligible for exemption from July, 2003 when the necessary declaration filed with the Assistant Commissioner." We also find that the above....