TaxTMI 
TaxTMI 
2019 (1) TMI 371
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.... Notification No. 39/2001-CE. The appellant exercised his option vide letter dated 31.03.2006 and 31.03.2007 for availing self re-credit during the financial year 2006-2007 and 2007-2008. They had filed applications for self re-credit of Rs. 31,85,74,909/- in PLA paid through PLA in respect of goods cleared for the period from February, 2006 to September, 2007. The contention of the department was that the appellant installed additional machinery after 31.12.2005, the benefit of Notification is not intended to be extended to such products whose production was done from the machinery which have been installed after 31.12.2005. The sanctioning authority noticed that the claimant has made substantial enhancement in production capacity after 31.12.2005 by installing new Plant and Machinery and after conducting the verification, it was concluded that the product manufactured cleared using the Plant and Machinery installed after 31.12.2005, they are not entitled for re-credit. Accordingly, the claim for re-credit was rejected vide order No. 303 to 322/2008-2009 dated 27 March 2009. Being aggrieved with the said order, the appellant filed appeal before Commissioner (Appeals), Central Exci....
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....t appeal. 2. Shri. V.S. Nankani, Ld. Senior Counsel with Shri. Amit Laddha Ld. Advocate appeared. He submits that the appellant had fulfilled all the contention stipulated in the Notification No. 39/2001-CE(Supra) and therefore, they rightly claimed refund/re-credit and Central Excise duty paid through PLA for the dispute period claiming benefit of the said Notification. He submits that the Notification No. 39/2001-CE does not put any bar or restriction on the expansion of the unit and therefore mere adding machineries at the intermediate level would not disentitle the appellant to avail the benefit of Notification No. 39/2001-CE. He submits that as per the explanation -I (ii)(b) of Clause 4 of Notification, the civil construction work of the factory premises and installation of the plant and machinery therein is completed and the unit starts commercial production not later than 31.12.2005. As regard, this contention, there is no dispute that the civil construction work and installation of plant and machinery was completed and the unit had started commercial production before the 31.12.2005. He submits that the said condition does not provide the restriction on value or the quantu....
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....stoms, New Delhi - 2005 (183) E.L.T. 209 (Tri. - Del.) * Voltas Limited vs. Commissioner of Customs, Mumbai - 2005 (182) E.L.T. 117 (Tri. - Mumbai) * Furtura Surgicare Pvt. Ltd. vs. Commissioner of C.Ex., Bangalore III - 2004 (172) E.L.T. 127 (Tri. - Bang.) 4. He submits that prior to making an addition of machines at the processing stage, the appellant used to buy almost 85% of the requirement in the weaving section the cotton yarn from open market, the total capacity of spinning section was only about 15% of the weaving section and therefore to meet the needs of requirement of the weaving section, the appellant were procuring cotton yarn from the market and using the same for weaving into grey fabrics which are used in made-ups. Post the aforesaid addition, the appellant have managed to reduce their reliance on purchase of yarn by almost 10%. The addition made by the appellant in the intermediate stage was only as and when by way of backward integration. He submits that merely enhancement of the efficiency without affecting the production capacity of the final product, the benefit of the Notification 39/2001-CE cannot be denied as held in the judgment of CCE vs Rudraksh Dete....
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.... (276) ELT 230 (Tri. Amd.), CCE vs Varsana Ispat Ltd. 2015 (329) ELT 444 (Tri. Amd.), Saurashtra Ferrous Pvt. Ltd. 2014 (309) ELT 49 (Guj.) and Plastene India Ltd. 2014 (314) ELT 14 (Guj.) 5. He submits that in all the aforesaid cases the facts were altogether different from the facts prevailing in the present case, therefore, reliance placed by the department is incorrect. On the issue of invocation of extended period, he submits that the same is not applicable in the present case as the appellant followed re-credit mechanism laid down in paragraph 29 of the said Notification and the re-credit of duty paid through PLA was claimed by the appellant during the period February 2006 to September 2007 by following the procedure as provided under the provisions of the said Notification. As per the para 2A(g) of the Notification 39/2001-CE provided a mechanism for recovery of the credit availed irregularly and/ or availed in excess of the amount determined correctly refundable under clause (e) thereof and in terms of 2A(g). In the present case, the department has not determined the amounts as correctly refundable within time frame stipulated in para 2A(e) of the notification and therefor....
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....ts in the Kutch Region. The notification No. 39/2001-CE as amended up to the relevant period is reproduced below: 'Kutch (Gujarat) - Exemption to excisable goods (except those specified in Annexure) and cleared from Units in Kutch District of Gujarat 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 First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) other than goods specified in the Annexure appended to this notification and cleared from a unit located in Kutch district of Gujarat from so much of the duty of excise or the additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by ut....
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....respect of which exemption is claimed is a new unit and has been set up during the time period specified in condition (i) above. (iii) Before effecting clearances under this notification, the manufacturer shall also furnish a declaration regarding the original value of investment in plant and machinery installed in the factory as on the date of commencement of commercial production, to the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be. (iv) The manufacturer shall also produce a certificate from the said Committee confirming the original value of investment and such a certificate shall be produced within a period of one month from the date of commencement of commercial production, or such extended period as the said Assistant Commissioner or Deputy Commissioner may allow. (v) In case on the basis of such certification, or otherwise, the original value of investment in plant and machinery, (a) is found to be less than rupees twenty crore but was declared to be rupees twenty crore or more, the manufacturer shall be liable to pay back the entire amount of duty exemption availed under the notification along with interest at the rate of t....
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....g vision; (h) Watches and clocks of retail sale price not exceeding Rs. 500 per piece; (i) Rubberised coir mattresses; (j) Toothbrushes; (k) Kerosene, that is to say, any hydrocarbon oil (excluding mineral colza oil and white spirit) which has a smoke content of 18 mm or more [determined in the apparatus known as smoke point lamp in the manner included in the Bureau of Indian Standards Specification ISI : 1448 (P. 31) - 1968 as in force for the time being] and is ordinarily used as an illuminant in oil burning lamps; (l) Liquefied petroleum gases and other gaseous hydrocarbons other than natural gas, ethylene, propylene, butylenes and butadiene; (m) Compressed Natural Gas (CNG); (n) Cotton sewing thread, not containing synthetic staple fibres; (o) Cotton yarn, not containing synthetic staple fibres; (p) Diesel engines upto 10 HP; and (q) Goods specified in the Table annexed to Notification No. 11/2001-Central Excise, dated the 1st of March, 2001. 3. Goods specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). [Notification No. 39/2001-C.E., dated 31-7-2001 ]" 9. From the above notification, we observe that the follow....
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....exemption from Central Excise duty on clearance of the final product. The dispute arose only due to the reason that the appellant made further investments which resulted in the addition of the following machineries after 31.12.2005. Name of the Machine Number Section of Installation Role / Functions of Machines Spindles 46800 Spinning A spindle is a straight spike usually made from cotton used for spinning, twisting fibers into yarns. Ring Frame 39 Spinning Functions of Ring Frame are as follows: * To draft the roving for conversion of very fine strand of some fiber to form yarn of required count; * To impart strength to the yarn by inserting the necessary amount of twist; * To collect twisted strand called yarn onto handy and transportable. Looms 142 Weaving (Bed-sheets) Loom is used to weave cloth. The purpose of any loom is to hold the warp threads under tension to facilitate the interweaving of the weft threads. Looms 102 Weaving (Terry Towels) -------Do--------- Processing Stenters 1 Processing/ Dyeing (Bed-sheets) Stenters are used to provide adjustment and control of fabric width during dyeing and have other functions such as heat setting, a....
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.... the respective cutting machines has not undergone any change. Accordingly, we find that the appellant fulfilled all the conditions stipulated in the Notification No. 39/2001-CE (Supra) and therefore, have rightly entitled for the refund of Central Excise duty paid in their PLA for the disputed period. We find that the allegation of the department is not flowing from the exemption Notification inasmuch as the notification does not put any bar or restriction on the extension of the unit and therefore, mere adding machineries that too at the intermediate level would not disentitle the appellant to avail the benefit of notification No. 39/2001-CE. As regard the explanation-I (ii) (b) of Clause 4 of Notification No. 39/2001-CE, we find that the civil construction work on its factory premises and installation of plant and machinery thereunder should be completed and the unit starts commercial production not later than 31.12.2005. From this, we are of the view that only condition is that civil construction and plant and machinery involving investment of more than 20 Crores should be completed and that commercial production in the said unit should start before 31.12.2005. As per the undis....
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....ore and more industry with maximum investment are setup, the exemption is provided only for 5 years. It is not the case that by increasing the investment, the appellant is getting exemption for more than 5 years. Irrespective of huge investment the appellant is entitled for exemption only up to the 5 years from the commencement of commercial production. Therefore, the intention of the notification is very clear that if the initial civil work and installation of the Plant and machinery is completed and commercial production in such unit started before 31.12.2005, the exemption for 5 years irrespective of any of the amount of value or quantity is available. We have also perused the Board Circular No. 110/21/2006-Cx dated 10.07.2008 wherein the ambiguity with respect to eligibility of benefit of exemption notification was clarified as under "Point No. 1: Whether the benefit of exemption would be available goods /products that the units start manufacturing after the cut off date for the commencement of commercial production i.e. 31/12/2005. Comments: There would be two situations. First is that where a unit introduces a new product by installing fresh plant, machinery or capital....
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.... increase in capacity of production." "Board has examined the matter. Under the said notifications, any new unit set up or an existing unit which has undergone substantial expansion that commences commercial production before the cut-off date is entitled to excise duty exemption in respect of excisable goods (other than those appearing in the negative list) manufactured and cleared for a period of ten years from the date of commencement of commercial production. The provisions of these notifications do not place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years as per the notification. Therefore, it is clarified that in all the above situations, the benefit of the excise duty exemption under the notifications would continue to be available to eligible industrial units. However the period of exemption would remain ten years and would not get extended on account of such modifications or additions under any circumstances." 15. From the above clarification, it is clear that irrespective of any addition or modification in the plant an....
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....as not installed prior to 31.12.2005. In these vital facts, the Hon'ble High Court held that the assesse is not eligible to the benefit of exemption Notification No. 39/2001-Cx in respect of manufacturing of pig iron. The relevant paragraph 11 of the said judgment is reproduced below: "Now, so far as the non-granting of the exemption/benefits contained in the Notification No. 39/2001, on production/manufacturing of cast iron articles is concerned, it is not clear as to whether on production/manufacture of cast iron articles on the unit/plant and machineries fully installed and commissioned prior to 31-12-2005, the petitioners have been denied the said benefits or not? However, considering the decision of the Division Bench of this Court, if, the unit/plant and machineries have been commissioned/installed (Fully) prior to 31-12-2005, the petitioner may be entitled to the benefits contained in the aforesaid Notification, on manufacture/production of cast iron articles for a period of five years from the date of commencement of the first commercial production of such goods on such unit." 17. As regard the judgment of Hon'ble High Court in the case of Plastine India Ltd. (supra), we....