TaxTMI 
TaxTMI 
2018 (6) TMI 231
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....) amalgamated with M/s. Luminous Power Technologies 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 exem....
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....phone chargers, batteries and its accessories. (e) M/s 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....
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....aimed by new industrial unit, which should have commenced commercial production 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 ....
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....s, 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. 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.....
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....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 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 a....
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....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. We hereby declare that we intend to avail of the exemption under Not....
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.... 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: 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 withdr....
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....fore, 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 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 us....
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....ld 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 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 vi....
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.... 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.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 s....
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....ing 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 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....
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....elf 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 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....
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....ding 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 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.50/0....
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....ufacturing 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 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 unde....
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....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 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 6....
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....' 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 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., 20....
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....te 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 impugned order denying benefit of exemption in respect of cylinder unit is also not correct." 24. In view of above analysis, we hold that the appellant has started three different units on the same plot of land and having separate plant and machinery, separate, inputs, manpower, finances and are manufacturing different products, therefore, all the three units cann....