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TaxTMI 
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2018 (6) TMI 231
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....logies Pvt. Limited (M/s. LPT for short) under the scheme of amalgamation. M/s. LEPL had stopped the production by the time of amalgamation was affected, surrendered their Central Excise registration and shifted the plant and machinery installed at the said plot, to another unit situated at village Malpur, Bhud. M/s. LPT set up a new manufacturing unit for manufacturing mobile batteries, mobile chargers and accessories and obtained a new Central Excise registration dated 17.03.2010. M/s. LPT also opted for exemption under Notification No. 50/2003-CE dated 10.06.2003 and intimated to the department vide letter dated 26.03.2010. An inspection was conducted in November 2010 for verifying the facts regarding the products being manufactured, installation of new plant and machinery and date of commencement of commercial production etc. and were satisfied on the eligibility of the unit for claiming exemption under the said notification. On 25.09.2013, Assistant Commissioner of Central Excise, Division - Shimla issued a letter to M/s. LPT taking the view that claim for area based exemption from 27.03.2010 to 26.03.2020 was incorrect and the exemption was available only upto 24.11.2013 subs....
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.... LPT bought and installed new plant and machinery for setting up its new manufacturing unit. The entire set up of plant and machinery is independently capable of manufacturing mobile phones and chargers. Therefore, the new plant and machinery qualified as a separate independent unit in itself. It is further submitted that there is no dispute as regards the commercial production which is clear from the verification report, returns and the electricity bills for March, 2010. Further, various other evidences have also been enclosed with the appeal. The department however, is proposing to deny the benefit of the said Notification on the basis of an incorrect interpretation of the said Notification. The department seeks to rely on the Circular of 2012 and the Order of the High Court dated 26.09.2008 to deny the exemption under the said Notification. Ld. Counsel further submitted that the Department's case is that, by virtue of the amalgamation, exemption granted to M/s LEP (from 25.11.2003 to 24.11.2013) was extended to M/s LPT. The department has not considered the eligibility of the unit established by M/s LPT independently, under the said Notification. He submits that the purpose of....
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.... prior to 31.03.2010. The unit manufacturing mobile chargers and accessories have fulfilled both these criterion and hence, is eligible for availing the said exemption. It is his submission is that M/s. LEPL had stopped production at the unit located at Plot No. 191-C, Industrial Area, Baddi, the plant and machinery which were used for the manufacture of Invertors, UPSs and Transformers were re-located to another unit, and the said plot of land was lying vacant since April, 2009. After the amalgamation of M/s LEPL with M/s LPT in February, 2010, M/s LPT bought new plant and machinery and set up a distinct production line of mobile chargers and batteries etc. at Plot No. 191- C, Industrial Area, Baddi. On 24.03.2010, the unit had commenced commercial production and hence the criteria under the said Notification has been fulfilled by M/s LPT independently and therefore, the Circulars dated 20.122010 and 17.02.2012 are inapplicable as the Circular dated 20.12.2010 contemplates a situation where apart from the products which were previously being manufactured by a party, new products were alongside also manufactured and it was in that context that the Circular clarified that the....
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.....2010. M/s. LPT also opted for exemption under Notification No. 50/2003-CE dated 10.06.2003 and intimated to the department vide letter dated 26.03.2010. On the basis of above facts, the only issue arises before us is that whether M/s. LPT has set-up a new manufacturing unit or continued with the manufacturing activity as has been undertaken by M/s. LEPL. 7. From the facts, it is clear that M/s. LEPL had stopped the production before amalgamation and had also plant and machinery were shifted to another place and Central Excise registration was also surrendered. M/s. LPT has started a new unit with new plant and machinery for manufacturing of new products. Whether the goods manufactured by M/s. LPT shall be entitled for exemption as a new unit or in continuation of old unit, we find that a similar issue came up before this tribunal in the case of Wipro Enterprises Ltd vs. CCE, Shimla (Final Order No. 62164/2017 dated 11.12.2017) wherein the facts of the said case were as under:- "2. The facts of the case are that the appellant started their manufacturing at their factory in plot No.77, EPIP, Phase-1, Jarmajri, Tehsil Nalagrah, District Solan, Himachal Pradesh with effect from 18.....
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....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 declarations in order to claim CE exemption under Notification No.50/2003 dated 10/06/2003:- 1. We hereby declare that we intend to avail of the exemption under Notification 50/2003-CE dated 10/06/2003 from the first clearances during the current financial year and we also declare that we shall not withdraw the option to avail the exemption during the remaining part of the financial year. 2. We also submit the following particulars:- a)....
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....ou, 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. We hereby declare that we intend to avail of the exemption under Notification 50/2003-CE dated 10/06/2003 from the first clearances during the current financial year and we also declare that we shall not withdraw the option to avail the exemption during the remaining part of the financial year. 2. We also submit the following particulars:- a) Name and Address of the Manufacturer M/s Wipro Limited, Plot No.77, EPIP....
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....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 remaining part of the financial year; (ii)The manufacturer shall, while exercising the option under condition (i), inform in writing to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise giving the following particulars, namely:- (a) name and address of the manufacturer; (b) location/locat....
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....s 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. We, however, find that in principle what has been held in Devidayal (supra) as followed by the Tribunal, cannot be said to be an incorrect view. The factual deviation would be a matter on facts of each case. The other case which the Tribunal has referred to is reported in 1987 (27) E.L.T. 273 (A.P.) - Golden Press v. Deputy Collector of Central Excise, Hyderabad and Another. In this case a notice was issu....
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....sed 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. goods other than the "said goods". 7. In our view the Tribunal rightly preferred the view taken in the case of Devidayal (supra). The factual hurdles like a common generator may be in use by different units in the factory complex as indicated in the case of Golden Press (supra) can well be worked out by devising proper method while apportioning the value of different plants proportionately. In no way such h....
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....onsistently 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 High Court has been consistently followed by the Tribunal in many other notifications also. 16. Further, in the case of Tirupati LPG Industries Ltd. (supra), the Apex Court had an occasion to examine the issue and observed as under: 6. It is not in dispute that both divisions - conduction division and cylinder division - are located within the same factory compound and the goods being manufactured....
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....s 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 date, the said circular will apply. Admittedly, the appellant has started their production before the cut-off date, therefore the said circular has no relevance. Further, during the course of the arguments, learned AR relied on the circular No.960/03/2012-Cx dated 17.2.2012. 19. We have examined the said circular and para 2 of the circular which reads as under: 2. References have been receive....
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.... 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 a passage in between and they are not complimentary to each nor they are subsidiary to each other. The end product is also different, one manufactures duplex board and the other manufactures paper. They are separately registered with the Central Excise Department. The staff is separate, their management is separate. It is also not the case of revenue that end product of one factory is ra....
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....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 matter for Central Excise purposes as to by which name - whether by name of plant, unit or the like, each set is described. Since each unit cannot be described as a factory, he proceeded to hold that the whole premises should be considered as single entity and exemption was accordingly denied. While examining the decision of Bombay High Court in Devidayal Electronics Wires Ltd, 1984(....
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....tronics & 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 of Notification No.74/1978-CE, the Hon'ble Bombay High Court held as below: "5. The Notification uses the word "factory" and it used the words "industrial unit ". It must, therefore, be assumed that the words were intended to bear different meanings. Put differently the words "industrial unit" must mean something other than "factory". 11. The above-said decision has been note....
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.... 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 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 un....
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...., 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 mentioned decision was followed by this Tribunal in the case of Prakash Straw Board Pvt. Ltd. Vs. CCE, Meerut-II - 2016 (332) ELT 741(Tri. Del.) The ratio of the judgment in the case of Tirupati LPG Industries Ltd. is squarely applicable to the facts of the present case. Hence, following the same, we find no infirmity in the order of the Ld. Commissioner (Appeals) in rela....