TaxTMI 
TaxTMI 
2023 (11) TMI 410
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....003 on the clearances of their products w.e.f. 10.09.2003. The following documents were annexed with the said application: (a) Copy of Audited Balance Sheet (as on 31.03.2002 and 3.03.2003). (b) Statement of Plant & Machinery for Expansion capitalized. (c) Chartered Engineer Certificate dated 09.09.2003, certifying that machines have been installed and commissioned and copy of various invoices in respect of procurement of Capital Goods. (d) Chartered Accountant's certificate dated 10.09.2003 showing investment made in Plant & Machinery. (e) Certificate dated 20.10.2003 of Tehsildar in respect of Khasra Nos. 3. On being enquired few more documents, as demanded, were provided by the appellants. However, the department took the view that in terms of the aforesaid Notification No. 50/2003-CE and the Board's Circular No.772/5/2004-CX dated 21.01.2004, the party did not appear to have fulfilled the conditions stipulated in the said notification. It was observed from the letter dated 10.09.2003 that the expansion of plant and machinery has been capitalized from 09.04.2002 to 08.09.2003 and as such the expansion starte....
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.... situated are included in Annexure-II of the notification and the IIT report which was received after the passing of the aforementioned Order-in-Original also needs to be considered. De novo adjudication was directed after considering the said notification and the said report. Pursuant to the directions of the said remand that the order under challenge bearing no. 20/2010 dated 29.10.2010 was passed again confirming the proposals of the above tabled Show Cause Notices. Being aggrieved, the appellant is before this Tribunal. 5. We have heard Shri Jitin Singhal, learned Advocate for the appellant and Shri O.P. Bish, learned Authorized Representative for the department. 6. Learned counsel for the appellant has submitted that the substantial expansion has been made by the appellant in accordance with the provisions of Notification No. 50/2003-CE dated 10.06.2003. It is submitted that Chartered Engineer's certificate dated 20.03.2004 issued by Sh. Akhilesh Jain and his statement recorded by the department on 26.10.2004 clearly establishes that substantial expansion in the installed capacity by more than 25% was undertaken after 07.01.2003.....
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.... 33% vii. Drying of flock fabric 33% viii. Brushing of flock fabric 33% ix. Post finishing 90% Thus, it clearly establishes that requisite expansion in the appellant's installed capacity has taken place subsequent to 07.01.2003, the cutoff date in the impugned notification. 6.4 It is submitted that the manufacture of flock fabric is an integrated process involving nine stages in line. Hence all such operations are to be performed in a continuous process. If the capacity of any of these operations is not increased, the installed capacity of the plant cannot be increased by such percentage as is required by the Notification No. 50/2003. Emphasis has been laid to the fact that expansion of capacity is dependent on date of commissioning of the equipments required in these continuous processes and since the date of commissioning of flock fabric brushing with the process of brushing got commissioned in July, 2003 and process of printing in post finishing got commissioned in July, 2003 and the process of boiler in flock fabric drying got commissioned in September, 2003, therefore the enhanced ins....
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....pacity has wrongly been arrived at in the IIT Roorkee report, by subtracting pre expansion capacity from the post expansion capacity. Learned DR further made a point that there is nothing to substantiate the claim of the appellant that the enhancement of overall capacity by 33% came into effect only from September 2003 onwards. The enhancement in the installed capacity with respect to two stages namely flock fabric brushing and post finishing has not been mentioned to have been enhanced after 07.01.2003. Learned DR further impressed upon that there is no procurement installation and commissioning of any boiler in the appellant factory after 07.01.2003. Hence, the report has wrongly linked the commissioning of boiler as an effective enhancement post the cutoff date (07.01.2003) of the notification dated 10.06.2003. The report is silent about the expansion in 5 out of 9 stages of the appellant's process of manufacturing the flock fabric. Hence, the report extends no benefit to the appellant for being covered under Notification No. 50/2003-CE dated 10.06.2023. Learned DR has relied upon the decision of Hon'ble High Court of Uttarakhand in the ....
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....and copy of various invoices in respect of procurement of Capital Goods. (d) Chartered Accountant's certificate dated 10.09.2003 showing investment made in Plant & Machinery. (e) Certificate dated 20.10.2003 of Tehsildar in respect of Khasra Nos. Subsequent to the directions of remand, the following additional documents have been filed: (a) Chartered Engineer Certificate dated 17thFebruary, 2004 alongwith Annexure-'A' showing detailed List of Plant & Machinery capitalized from 09.04.2002 to 08.09.2003 certifying that after the installation of additional plant & machinery, the installed capacity is increased by 12.00 lac linear meter per year (finished fabric weight 340 gms per linear meter) totaling to 48.00 lac liner meter per year (finished fabric weight 340 gms per linear meter). He has also certified that at present the appellants have also started to produce base fabric (textile). (b) Letter dated 17th February, 2004 (c) Declaration dated 09.12.2003, wherein appellants have certified themselves that after expansion, installed capacity of Flock Fabric has been increased, from 36 lac linear meters (finished fabric w....
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.... clause 2(b) of the said notification need to be interpreted. The provision reads as follows: 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) xxxxxxxxx (b) industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January. 2003. In the language of the notification, there seems no ambiguity and the plain reading of the same suggests that the benefit of notification is available to the unit existing prior 07.01.2003 if increase in its installed capacity by 25% or more has been effected after 07.01.2003. Hon'ble Supreme Court in the case of Compac Private Limited Vs. CCE Vadodara held that the notification has to be construed in the terms of the language used therein. It is well settled that unless literal meaning given to a language leads to anomaly or absurdity, the golden rule of literal interpretation shall be followed. The Hon'ble Apex Court in another case of CCE Chandigarh Vs. Bhalla Enterprisesheld that t....
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.... accretion in installed capacity by at least 25% with additional plant and machinery (e) Additional investment in plant and machinery in modernization or for improving the quality of existing products, unless it leads to increase installed capacity by 25% or more, would not tantamount to substantial expansion." 10.3 A look at this circular makes it clear that emphasis was given to factual increase of 25% capacity by installation of additional plant and machinery. The enhancement post cutoff date is reported to have increased the installed capacity by more than 25%. To put it in other words, while using the word "additional plant and machinery", in the circular, it has not been insisted that the existing plant and machinery should remain. What has been held out, to our opinion, is that such additional plant and machinery or the parts thereof, irrespective secondhand should be brought in due to which installed capacity of a manufacturing unit stands extended by more than 25%. The circular, makes it abundantly clear that the additional plant and machinery mentioned therein though may not be in addition to existing equipments but it should sign....
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....ring organization that it can be said that the unit has been set up. Operations for the establishment of a unit, from the very nature of that expression, can only signify steps that have to be taken to establish the unit. The word "set up" in the principal clause, in our opinion, is equivalent to the word "established". Operations for establishment cannot be equated with the establishment of the unit itself or its setting up." 10.5 Reverting to the facts of the present case, we observe that the department has raised the demand of duty on the premise that since the expansion programme was undertaken by the appellants prior to 07.01.2003, the appellants' unit is not entitled for the exemption of Notification No. 50/2003. Whereas, the case of appellant is that although the expansion programme was inititated before 07.01.2003 however the installed capacity of more than 25% was got enhanced after 07.01.2003. Hence, the benefit of notification is definitely available to the appellant. The same is otherwise apparent from the certificate given by their Chartered Engineer ShriAkhilesh Jain dated 10.09.2003 and 17.02.2004 and also from the certificate i....
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....s the date of procurement of the machines and equipments and even parts added by the appellants to enhance the installed capacity of their manufacturing unit. Manufacturing Stage No. of Machines Effective Capacity (Meters Day) Machines/ Equipments added Date of procurement No. of machines Effective capacity (Meters/Day) % Increase Tow cutting 04 11878.72 1. Cutting machine 2. Cutting Blade 31.03.2033 08.11.2002 06 17818.18 50% Dyeing 04 13090.90 1. Tanks 2. Dyeing Tank 3. Water Softening Plan 12.03.2003 31.03.2003 31.03.2003 06 19636.36 50% Drying 02 12727. 27 1. Fluid Bed Dryer 2. Chain Pulley Blok 11.04.2002 07.01.2003 03 19090.90 50% Sieving 02 13636.36 1. Sieving Machine 31.03.2003 04 27272.27 100% Coating 01 900 rpm 1. Coating head rolls 2. Visco meter 3. Weighing machines 4. Electronics ....
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.... Washing Machine 9. Washing Range 10. Rasing/Brushing machine 07.06.2002 03.04.2003 11.10.2002 31.03.2003 08.04.2003 14.04.2003 06.05.2003 21.06.2003 29.06.2003 01.08.2003 12.05.2003 26.09.2002 16.04.2002 01.04.2002 17.03.2003 28.06.2003 19.06.2003 02 9000 90% 10.8 We observe from the report/chart that at tow cutting stage, two machines were added and the date of procurement is 8-11-02 and 31-3-03. Though one is procured before the cutoff date but it is reported that till the another is processed and both the machines are installed, the capacity of plant and machinery at tow cutting stage cannot be enhanced that too to more than 25%. Therefore we hold that the installed capacity at tow cutting stage got enhanced on 31-03-03 i.e. after the cutoff date of the impugned notification. Similarly at the Dyeing stage, the IIT Report clarifies the enhancement by reporting that six machines were added on 123-03, 31-3-03 and 31-3-03, respectively. Therefore the installed capacity of dyeing stage got enhanced after 07-01-03. At the Drying stage also, thre....
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....alled capacity during the period 7-1-03 and upto 10-9-03. The report of IIT Roorkee is held to have elaborated the scope of enhancement at all nine stages of manufacture in the appellants' unit. The segment wise pre and post expansion capacity calculation is there in the said report, as already tabled above in the submissions of the appellants. 10.10 We further observe that similar were the findings in the report of Shri Akhilesh Jain. Hence the report of IIT Roorkee corroborates the report of Chartered Engineer of the appellants dated 20.03.2004 which is prior in time than the report of Shri D.K. Jain dated 13.09.2004, Engineer appointed by the department. The said independent engineer appointed by the department is observed to have been silent on all above observed parameters except he has simply mentioned that substantial expansion should be of such a nature and scale as would be comparable to setting up of a new unit. As has already explained above that the substantial expansion clarified vide circular of 21.01.2004, cannot be equated to establishment of a new unit to be called as the 'expansion of enhanced capacity.' Shri D.K.....
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....y in non-industrial area. There is no reason given for this conclusion except that procurement process started prior 07.01.2003. In the light of above discussion this report is held to be wrongly relied. The findings based on this report are thus liable to be set aside. 10.13 We observe that the adjudicating authority has wrongly rejected the said report for want of the documentary evidence as that of bill of erection and commissioning. Had there been no document such, such meticulous table could not have been prepared. We also notice that the adjudicating authority has wrongly observed in Para 6.17 of the Order-in-Original that there is no remark by the IIT Professors as to when the additional machines or equipments procured by the appellant's unit were actually installed and commissioned by them. These findings are also held to be wrong because once it is reported that except few parts of few machines, the plant and machinery for each stage of manufacturing process were procured after the cutoff date of the notification (07.01.2003). The question of installation of those parts prior 07.01.2003 does not at all arise. Otherwise also t....
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....y explanation, we hold that report of Shri D.K. Jain is wrongly made the basis to deny benefit of notification to the appellants. The detailed reports (technical and expert) produced by the appellant are held sufficient to falsify the departments sole evidence. 10.16 The adjudication authority has placed reliance upon the decision of Vishwakarma Paper & Board Ltd. Vs. Commr. of C. Ex., Meerut-II reported as 2010 (255) ELT 328. We observe that the facts of the said case are absolutely different from the facts of the present case. In the said case the appellant had ordered for installation and commissioning of a boiler in their factory premises on 10.07.2002. The seller M/s. Steamatic Resources started installation of the boiler in first week of November, 2002. The factory of the appellant in the said case remained closed for renovations and expansion w.e.f. 12.12.2002 till 15.01.2003 and the entire installed capacity got commissioned during this period. Due to these reasons, it was held by Hon'ble High Court in the said case that the 'substantial enhancement of installed capacity' of the appellant had started and even co....
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....gorization under various further categories in Annexure II. I observe that this judgment has been accepted by the department and no appeal has been preferred against it. Therefore, I hold that the party being located in a Khasra no. notified in Annexure II would be eligible to exemption in light of observations of the High Court with reference to the Khasra Nos. with remarks 'to be notified later on'. Despite these observations, the adjudicating authority in subsequent para of order under challenge, while relying upon S.No. 5(C)2 of annexure II of Notification No. 50/2003-CE dated 10.06.2003 has held that Khasra No. 786, 787, 792/1 in Village Ranipur were not yet notified at the time when appellant availed the exemption. Hence, appellants were not eligible for the duty exemption in terms of the said notification. Denying eligibility despite holding appellant's area to be covered under notification is absolutely a wrong finding. Due to this apparent contradiction also, the order is liable to be set aside. 10.18 The judgment of Vishwakarma Paper & Board Ltd (supra) only is relied upon while arising at said ....