Custom, Excise & Service Tax Tribunal
Wipro Enterprises Pvt Ltd vs Shimla on 23 August, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH
EXICSE APPEAL NO. 60202 OF 2021
(Arising out of Order-in-Original No. 13/CE/Comm/SML/2020-21 dated 03.02.2021
passed by the Commissioner, Central Goods & Services Tax Commissionerate,
Shimla, Himachal Pradesh)
M/s. Wipro Enterprises ......Appellant
Pvt. Ltd. (Unit-II)
87-A, EPIP Phases-I,
Jharmajri, Tehsil Baddi,
Distt. Solan (H.P.)
Versus
Commissioner, .....Respondent
Central Goods & Services Tax
Commissionerate, Shimla
Ground & First Floor, Chhota Shimla Parking,
Chhota Shimla (H.P.)
APPEARANCE:
Shri B.L. Narasimhan, Advocate for the Appellant
Ms. Shivani and Ms. Geetika, Authorized Representatives for the Department
CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
Date of Hearing: 18.08.2022
Date of Decision: 23.08.2022
FINAL ORDER NO. 60122/2022
JUSTICE DILIP GUPTA:
M/s. Wipro Enterprises Pvt. Ltd. (Unit-II) 1 has filed this appeal to
assail the order dated 03.02.2021 by which the Commissioner, CGST,
Commissionerate, Shimla 2 has held that the appellant is not eligible to
avail benefit of exemption from duty under Notification No. 50/2003-
1. the appellant
2. the Commissioner
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CE dated 10.06.2003 3 in respect of new products which were
manufactured/added by the appellant after the cut-off date i.e.
31.03.2010. The Commissioner has, accordingly, confirmed the
demand of Rs. 6,28,16,499/- against the appellant under section
11A(1) of the Central Excise Act, 1944 4 and ordered for its recovery
with interest and penalty.
2. Jayaz Electrical Motors filed a declaration dated 24.12.2008
under the aforesaid area based Exemption Notification dated
10.06.2003 for manufacture of electrical motors, torch, LED products,
liquid detergent and toilet soap 5 stating that the commercial
production had commenced on 02.12.2009. The appellant purchased
Jayaz Electrical Motors on a slump sale basis and intimated this fact to
the Department by a letter dated 31.03.2014. The appellant also
stated that it will continue to avail exemption as per Exemption
Notification. By a letter dated 24.03.2015, the appellant intimated the
Department that the Unit was shifted from Khasra No. 85/4, Plot No.
5, Crestal Complex, EPIP Jharmajri, Baddi to Plot No. 87-A, EPIP
Phase-I, Jharmajri, Baddi. The appellant started manufacturing certain
other products namely, body wash, deo, face wash, glucovita bolts,
hand and body lotion, liquid hand wash, shaving cream, talcum
powder, fabric conditioner, MCB, socket, panel and switch 6 and
intimated this fact to the Department by letters dated 12.08.2016,
30.03.2017 and 18.01.2018.
3. The dates on which the appellant started manufacturing new
products are as follows:
3. the Notification dated 10.06.2003
4. the Excise Act
5. the old products
6. the new products
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S. No. Description of the goods Estimated start production date
1. Liquid Hand Wash 10.07.2016
2. Face Wash 10.07.2016
3. Talcum Powder 01.09.2016
4. Shaving Cream 01.09.2016
5. Hand & Body Lotion 01.09.2016
6. Deodorant 09.02.2017
7. Body Wash 09.03.2017
8. Glucovita Bolts 30.03.2017
9. Fabric conditioner 06.10.2017
10. MCB 23.11.2017
11. Socket 25.11.2017
12. Panel 25.11.2017
13. Switch 27.11.2017
4. The Department issued a show cause notice dated 16.10.2018
and proposed to deny the benefit of Exemption Notification on new
products on the ground that the appellant started manufacturing
these products after 31.03.2010. It was also alleged that the appellant
started a new Unit for manufacturing new products and the benefit of
Exemption Notification was not available on such new products.
5. The adjudicating authority passed the impugned order, whereby
the proposals made in the show cause notice were confirmed holding
that the appellant established a new Unit for manufacturing new
products after the cut-off date in the name of
enhancement/diversification of existing production. The adjudicating
authority relied on the Instructions dated 09.05.2016 and the order
dated 11.12.2017 passed in the case of the appellant. The relevant
portion of the order passed by the adjudicating authority is reproduced
below:
"21. I find that the Notification No. 50/2003-CE dated
10.06.2003, supra, provided full exemption from Excise
duties to goods cleared from industrial units in the state of
Himachal Pradesh & Uttarakhand for a period of ten years
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from the date of commencement of commercial production.
The exemption was available to new industrial units set up
after 07.01.2003 or existing industrial units which had
undergone substantial expansion after 07.01.2003 and had
commenced commercial production on or before
31.03.2010. As per provisions of notification No.50/2003-CE
dated 10.06.2003, the Noticee was required to file a
declaration with the Jurisdictional Assistant Commissioner
declaring therein details of name of finished goods, inputs
etc. for purpose of availing exemption under the said
notification. Thus, it can be seen from the above
Notification that the exemption was available only to
the finished goods which were declared by an
assessee in their declaration filed with the
Jurisdictional Assistant Commissioner at the time of
opting for exemption subject to commencement of
commercial production on or before the cut-off date
i.e. 31.03.2010 and complying with other conditions
appended therewith. Further, as per clarifications issued
by the Board from time to time, an eligible unit, in order to
meet its bonafide needs, could enhance or diversify its
production capacity, however, installation of a new unit in
the guise of enhancement or diversification of production
capacity beyond the cut-off date is not allowed.
******
26. In view of the above facts and discussion, I find that
there is no bonafides in the addition of the new
products as has been discussed above. I further find
that the Noticee had devised a modus operandi in
such a manner that a completely new unit was set up
in the garb of diversification /expansion of the unit by
adding new products to the existing products in order
to fraudulently avail inadmissible benefit of duty
exemption on the new products namely Liquid Hand
Wash, Face Wash, Talcum Powder, Shaving Cream, Hand &
Body Lotion, Deodorant, Body Wash, Glucovita Bolts, Body
Wash, Fabric Conditioner, MCB, Socket, Panel & Switch in
Unit-II (acquired Unit) for a further period of ten years. It
is also an undisputed fact on record that the Noticee
did not manufacture the new products from the
acquired unit before cut-off date of 31.03.2010 and
commenced their commercial production much after
cut-off date, thus, the condition of the Notification,
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supra, regarding commencement of commercial
production on or before 31.03.2010 also remains
unfulfilled to be eligible for availing duty exemption on
addition of new products in the acquired unit.
******
I find that the intention of the Government in
issuance of Circular No.939/29/2010-CX dated
22.12.2010 and Circular No.960/03/2012-CX dated
17.2.2012 was only to assist bonafide needs of an
eligible unit to enhance or diversify its production
capacity. In this regard, I further find that the Board
office vide letter issued from F.No.101/7/2015-CX3
dated 09.05.2016 has also clarified that clarifications
issued vide aforesaid Circulars were issued only to
assist bonafide needs of an eligible unit to enhance or
diversify its production capacity and the Notifications,
supra, do not allow the installation of a new unit in
the guise of enhancement or diversification of
production capacity beyond the cut-off date. On
harmonious and holistic reading of the above circulars and
clarifications issued by the Board and circumstances as
discussed above, I observe that it was never the intention
of the above circulars to extend such exemption to a
completely new unit commencing its commercial production
of totally new products after the cutoff date i.e. 31.03.2010
by setting up a new unit with totally new plant and
machinery in the existing unit. In this regard I further
observe that interpretation of the circulars by the Noticee
would go much beyond the scope of the conditions
prescribed in the exemption notifications and therefore
would not be permissible."
(emphasis supplied)
6. Shri B.L. Narasimhan, learned counsel for the appellant made
the following submissions:
(i) The appellant has fulfilled the condition of the Exemption
Notification. For the purpose of the Exemption
Notification, it is required that the goods should be
specified in the Schedule to the Tariff Act, they should not
be figuring the Annexure-I to the Notification and they
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should be cleared from a Unit located in one of the
industrial centres etc., specified in the Annexures to the
Notification. In the present case, there no dispute
regarding the satisfaction of any of these three elements
of the Notification;
(ii) The appellant acted in accordance with the Circulars
issued by Central Board of Excise and Customs 7 . The
appellant had set up additional plant and machinery to
manufacture new products by relying on the Circular
dated 22.12.2010. The Circular clarified that the
Notification 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. In support of this contention reliance has been
placed on the decisions of the Tribunal in:
a) Richfeel Health and Beauty Pvt. Ltd. vs. CCE &
8
ST ;
b) Khurana Oleo Chemicals vs. CCE, Chandigarh 9; and
c) Dharmpal Satyapal Ltd. vs. CCE. 10
(iii) The Circulars issued by CBEC are binding on the
Department;
(iv) Reliance placed on the letter dated 09.05.2016 issued by
the Board is incorrect;
(v) Reliance placed on the order dated 11.12.2017 passed in
the case of the appellant is incorrect; and
(vi) No interest is chargeable and no penalty is imposable.
7. CBEC
8. 2019 (1) TMI 5 - CESTAT Chandigarh
9. 2017 (348) E.L.T. 332 (Tri. Chan.)
10. 2019 (12) TMI 788- CESTAT Kolkata
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7. Ms. Shivani, learned authorized representative appearing for the
Department, however, supported the impugned order and made the
following submissions:
(i) The Board has issued a letter dated 09.05.2016 which
clarifies that the Exemption Notification was issued to
assist bonafide needs of an eligible Unit to enhance or
diversify its production capacity and not to allow
installation of a new Unit in the guise of enhancement or
diversification of production capacity beyond the cut-off
date. It was never the intention of the Circulars dated
20.12.2010 and 17.02.2012 to extend such exemption to
a new Unit commencing its commercial production of
totally new products after the cut-off date i.e 31.03.2010;
(ii) It is an undisputed fact that the appellant did not have
the plant and machinery to manufacture "new products"
on or before the cut-off date i.e. 31.03.2010, and with
the installation of the plant and machinery for
manufacture of the new products, a completely new Unit
has come into existence which is clearly distinct from the
existing Unit i.e. the Unit manufacturing products
declared initially on 24.12.2008 by Jayaz Electrical Motors
which was eligible for availing area based exemption till
01.12.2019;
(iii) It is a fact that the existing investment was almost
negligible as compared to proposed new investment. The
appellant has invested all in the new plant machinery and
new setup after the cut-off date mentioned in the
Exemption Notification;
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(iv) Reliance placed by the appellant on Richfeel Health,
Khurana Oleo Chemicals and Dharmpal Satyapal Ltd.
is misplaced. In fact, the issue stands decided in favour of
the Department in the following cases:
a) Wipro Enterprises Ltd. vs. Cex, Shimla 11;
b) Tirupati LPG Industries Ltd. vs. Commissioner of
C.Ex, Meerut-I 12;
c) Devidyal Electronics & Wires Ltd. vs. UOI 1984 13;
d) Collr. of Central Excise vs. Reckitt Colman of India
Ltd 14; and
(v) An Exemption Notification should not be liberally
construed and the benefit must be given to the
Department.
8. The submissions advanced by the learned counsel for appellant
and the learned authorized representative appearing for the
Department have been considered.
9. The issue that arises for consideration in this appeal is as to
whether the appellant is entitled to avail the benefit of the area based
Exemption Notification dated 10.06.2003. It would, therefore, be
appropriate to reproduce the relevant portion of the said Notification
and it as follows:
"Notification No. 50 of 2003 dated 10.06.2003
Exemption to goods other than specified goods
cleared from units located in the Industrial Growth
Centre or Industrial Infrastructure Development
Centre or Export Promotion Industrial Park or
Industrial Estate or Industrial Area or Commercial
Estate or Scheme Area of Uttarakhand and Himachal
Pradesh. - In exercise of the powers conferred by sub-
11. Excise Appeal No. 52955 of 2015 decided on 11.12.2017
12. 2015 (324) E.L.T. 201 (Tri. Del)
13. 1984 (16) E.L.T. 30 (Bom)
14. 1997 (92) E.L.T. 457 (S.C.)
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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 and the Second Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986), other than the
goods specified in Annexure-I appended hereto, and
cleared from a unit located in the Industrial Growth
Centre or Industrial Infrastructure Development Centre or
Export Promotion Industrial Park 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:
*******
2. The exemption contained in this notification shall apply
only to the following kinds of units, namely :-
(a) new industrial units set up in areas
mentioned in Annexure-II and Annexure-III,
which have commenced commercial production
on or after the 7th day of January, 2003, but
not later than the 31st dat of March, 2010;
(b) industrial units existing before the 7th day of
January, 2003, in areas mentioned in Annexure-II,
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, but have commenced commercial
production from such expanded capacity, not later
than the 31st day of March, 2010.
3. The exemption contained in this notification shall
apply to any of the said units for a period not
exceeding ten years from the date of publication of
this notification in the Official Gazette or from the date
of commencement of commercial production, whichever is
later."
(emphasis supplied)
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10. It follows from the aforesaid Notification that for the purpose of
claiming exemption under the Notification, it is necessary that the
goods should be specified in the First Schedule and the Second
Schedule to the Central Excise Tariff Act, 1985 15 ; they should not
figure in Annexure 1 to the Notification; and they should be cleared
from a Unit located in one of the industrial sectors specified in the
Annexure to the Notification.
11. In the present case, as noticed above, Jayaz Electrical Motors
had filed a declaration under the Exemption Notification for
manufacture of the old products and the commercial production had
commenced on 02.12.2009. The appellant had purchased Jayaz
Electrical Motors and informed the Department by a letter dated
31.03.2014. The appellant also stated that it will continue to avail the
exemption under the said Notification. The appellant also intimated the
Department, by a letter dated 24.03.2015, that it was shifting its Unit
from Khasra No. 85/4, Plot No. 5, Crestal Complex, EPIP Jharmajri,
Baddi to Plot No. 87-A, EPIP Phase-I, Jharmajri, Baddi. The appellant
also started manufacturing new products in addition to the
manufacture of old products and intimated this fact to the
Department by letters dated 12.08.2016, 30.03.2017 and 18.01.2018.
12. The first issue that arises for consideration is as to whether the
appellant has fulfilled the conditions of the Exemption Notification.
13. Regarding the conditions specified in the preamble to the
Notification, the appellant satisfies the requirement that the goods
should be specified in the two Schedules to the Tariff Act and they
should not figure in Annexure 1 to the Notification. The requirement
15. the Tariff Act
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that the goods should be cleared from a Unit located in one of the
industrial centres specified in the Annexure to the Notification is also
satisfied. Thus, all the three requirements set out in the main portion
of the Exemption Notification stands satisfied.
14. The requirement of satisfying clause 2(a) of the Exemption
Notification also stands satisfied as the industrial Unit in question was
set up in the year 2008 and it commenced commercial production on
02.12.2009, much prior to the cut-off date i.e. 31.03.2010.
15. Thus, when these two conditions are satisfied and no dispute has
been raised regarding the other conditions mentioned in the
Notification, the appellant is entitled to claim benefit of the exemption
in respect of the products manufactured and cleared by the appellant
from the concerned Unit either before or after 31.03.2010. The
preamble to the Notification does not restrict its applicability to only
those goods which the Unit manufactures from its inception.
16. The CBEC, by its Circular dated 22.12.2010, clarified the scope
of the Exemption Notification dated 10.06.2003. It is reproduced
below:
"Central Board of Excise and Customs
New Delhi, dated the 22nd December, 2010
To
All Directors General
All Chief Commissioners of Central Excise
All Chief Commissioners of Central Excise and Customs
Sir/Madam,
Subject: Scope of Notification Nos. 49/2003-CE and
50/2003-CE both dated 10.06.2003
Kind attention is invited to Notification Nos.
49/2003-CE and 50/2003-CE both dated 10.06.2003
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which provide full exemption from excise duties to
goods cleared from industrial units in the states of
Uttarakhand and Himachal Pradesh for a period of ten
years from the date of commencement of commercial
production. The exemption is available to new units set up
or existing units which have undergone substantial
expansion in terms of the said notifications and commence
commercial production before the cut-off date, that is, on or
before 31.3.2010.
2. Representations have been received from Trade and
Industry Associations seeking clarification on the availability
of the exemption benefit under these notifications in the
following situations:
(i) Where a unit starts producing some new products
after the cut-off date 31.03.2010 using plant and
machinery installed up the said cut-off date and
without any further addition to the plant and
machinery.
(ii) Where the installed capacity in a particular unit is
upgraded after the cut-off date, so as to increase the
efficiency of the machinery by installing ancillary
machines or replacement of some parts etc but in
such a way that it does not lead to increase in
capacity of production.
(iii) Where new dosage forms are manufactured after
the cut-off date on the same line of production with
the same machinery.
(iv)Where a unit manufacturers a new product by
installing fresh plant, machinery or capital goods
after the cut-off date.
3. 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
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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."
(emphasis supplied)
17. It would be seen from the aforesaid Circular dated 22.12.2010
regarding the scope of Notification dated 10.06.2003 that the
provisions of the Notification dated 10.06.2003 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. In all such cases,
the benefit of the excise duty exemption under the Exemption
Notification would continue to be available to an eligible industrial Unit,
though, the period of exemption would remain to be ten years.
18. It needs to be noted that the words "addition/modification"
appearing in the aforesaid Circular dated 22.12.2010 are not preceded
by the words "existing machinery". It can thus safely be concluded
that the ambit of the Exemption Notification cannot be narrowed down
to allege that the assessee can only add on machinery to the existing
machinery to manufacture those products which were manufactured
prior to the sunset clause of 31.03.2010.
19. In the present case, the appellant had set up new plant and
machinery for manufacture of new products and, therefore, the
appellant was eligible to avail the exemption for the residual period on
the new products also.
20. In this connection, it would be appropriate to refer to the
decision of the Tribunal in Richfell Health. The appellant had
established a Unit in 2007 and availed the benefit of excise duty under
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the Exemption Notification dated 10.06.2003. In the year 2015, the
appellant purchased a Unit named RKS Industries which was engaged
in the manufacture of blow moulded and injection moulded plastic
products since 2010 and was availing excise duty exemption under the
aforesaid Notification. After taking over RKS Industries, the appellant
installed fresh machinery. The dispute that arose was whether the
appellant was entitled for exemption on the new products
manufactured through the new plant machinery. After referring to the
Circular dated 22.12.2010, the Division Bench of the Tribunal observed
as follows:
"11. On going through the said circular, we find that the
notification do no 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
cutoff date and during the exemption period of ten years.
Admittedly, the appellant has manufactured new products
by addition of plant and machinery, therefore, the items
sought to be added by the appellant in their exemption are
covered by the CBEC Circular dated 22.12.2010 and the
circular issued by the CBEC is binding upon the adjudicating
authority in the light of the decision of Ambuja cements ltd.
(Supra).
******
14. In view of the above, we hold that the CBEC circular
dated 22.12.2010 is binding on Ld. Commissioner and as
per the said circular, the appellant is entitled to add new
plant and machinery and he can manufacture of new
products in terms of Notification No, 56/2003-CE dated
10.06.2003."
21. It needs to be stated that the Department filed an appeal before
the Supreme Court against the aforesaid decision of the Tribunal in
Richfell Health, being Civil Appeal No. 5931 of 2019, which is said to
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be pending. The adjudicating authority has, however, distinguished
this decision on facts.
22. In Khurana Oleo Chemicals, a Division Bench of the Tribunal
observed as follows:
"We also note that in terms of Board's Circular dated 22-12-
2010, it is clear that the provision of the said notification do
not place any bar or restriction or any addition/alteration in
the plant or machinery or on the production of new product
by an eligible unit after cutoff date during exemption period
of 10 years as per notification. We further note that the
Board has clarified the scope of exemption in its Circular
dated 17-2-2012. It is noted that if the exemption is
extended to one unit, the change in its ownership would not
jeopardize the admissibility of exemption for remaining part
of the period. The guidelines have been issued with regard
to the shifting of eligible unit to new location. In the present
case, the evidence submitted by the appellant establishes
that the eligible unit has been acquired by the appellant and
manufacture of earlier specified product did continue in the
new appellant's unit also. In addition, the appellant
manufactured new product - OSAA."
23. It is not in dispute that the appellant has continued
manufacturing of the old products, which were initially manufactured
by Jayaz Electrical Motors.
24. The learned authorized representative appearing for the
Department has, however, submitted that in view of the subsequent
Circular dated 09.05.2016 the benefit of the earlier Circular on
22.12.2010 would only be available for bonafide needs of an eligible
Unit to enhance or diversify its production capacity but would not allow
the installation of a new Unit in the guise of enhancement or
diversification of production capacity beyond the cut-off date.
25. It would, therefore, be necessary to reproduce the Circular dated
09.05.2016 and it is as follows:
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"Central Board of Excise and Customs
New Delhi, dated 9th May, 2016
Sir,
Sub: Instruction regarding implementation of exemption
notification no 49/2003-CE and 50/2003- C.E both dated
10.6.2003-reg.
Kind attention is invited to Circular nos.
939/29/2010-CX dated 22.12.2010 and 960/03/2012-CX
dated 17.2.2012, wherein admissibility of exemption under
Notification nos. 49/2003-C.E and 50/2003-C.E both dated
10.6.2003 under certain circumstances was clarified. In
total, there are seven situations, four in the circular of 2010
and three in the circular of 2012, where it was clarified that
the benefit of exemption would continue to be available to
an industrial unit. The matter has been re-examined with
reference to sub-paragraph (iv) of paragraph 2 of the
circular dated 22.12.2010 and sub-paragraph(c) of
paragraph 2 of the circular dated 17.2.2012, which are
reproduced below, for ease of reference.
(i) "2.(iv): Where a unit manufacturers a new
product by installing fresh plant, machinery or
capital goods after the cut-off date."
(ii) "2.(c): When a Unit availing of the exemption
under an area-based Notification expands by
acquiring a plot of land adjacent to its existing
premises and installing new plant/machinery on
such land."
2. These clarifications were issued to assist bonafide needs
of an eligible unit to enhance or diversify its production
capacity. Instances have come to notice where the
clarifications referred to in the above two sub paras are
being attempted to be availed individually or collectively,
contrary to the purpose of the exemption notification. The
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notifications under reference do not allow installation of a
new unit in the guise of enhancement or diversification of
production capacity of an eligible unit beyond the cut-off
date. Such an interpretation of the circular would go much
beyond the conditions prescribed in the exemption
notifications and therefore would not be permissible.
3. Accordingly, it is hereby directed that any
application for manufacture of new products by installing
fresh plant, machinery or capital goods after the cut-off
date or expanding operations to an adjacent plot should be
examined carefully and allowed only after reaching a
conclusion that the application has been made for bonafide
reasons. Reasons for reaching such conclusion should be
recorded in the file and approved by the Commissioner.
Every such approval along with reasons for such approval
should be brought to the notice of the Chief Commissioner
also.
4. This issues with the approval of the Competent Authority.
Difficulty faced, if any in implementation of the above
instructions may be brought to the notice of the Board."
26. In this connection, the learned authorized representative pointed
out that the new products that the appellant had started
manufacturing at Unit II were either those that were being
manufactured at Unit I (exemption of which expired on 17.08.2014) or
Unit-III (exemption of which was denied on 08.10.2014). Learned
authorized representative further pointed out that the appellant did
not have the plant and machinery to manufacture the new products
and so it installed new plant and machinery as a result of which a
completely new Unit came into existence which was distinct from the
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existing Unit that was manufacturing the old products; from the
project reports submitted by the appellant it was clear that as against
the existing investment to the extent of .04%, the new investment
was to the extent of 99.95%; and as per the returns filed by the
appellant, the percentage of production of the old products was
.017% while that of the new products was 99.98% of the total
production. Learned authorized representative, therefore, submitted
that the functional section of the factory of the appellant that was
manufacturing new products can be said to be a different industrial
Unit that was established after the cut-off date and it does not comply
with the conditions specified in the Exemption Notification. Learned
authorized representative also submitted that the expressions
"factory" and "industrial unit" have different meanings. An "industrial
unit" would mean something other than a factory, which would be a
separate isolated and self-sustainable part of a factory/plant which is
manufacturing goods exclusively or capable of manufacturing goods
independently. For this reason also, learned authorized representative
submitted that two Units came into existence, one manufacturing the
old products and the other manufacturing the new products.
27. It is not possible to accept the contentions advanced by the
learned authorized representative appearing for the Department.
28. Reliance on the subsequent Circular dated 09.05.2016 is
misconceived. The Circular dated 09.05.2016 merely clarifies that the
earlier Circulars dated 22.12.2010 and 17.02.2012 were issued to
assist bonafide needs of an eligible Unit to enhance or diversify its
production capacity and that the Notification dated 10.06.2003 does
not allow installation of a new Unit in the guise of enhancement or
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diversification of production capacity of an eligible Unit beyond the cut-
off date. It would, therefore, be seen that the Circular dated
09.05.2016 only denies the benefit of the Exemption Notification dated
10.06.2003 if the new Unit is set up in the guise of enhancement or
diversification of production capacity.
29. The appellant had not set up a new Unit and there was only a
diversification of production capacity by adding new machines. The old
products were continued to be manufactured, in addition to the new
products. The fact that the investment for the new products was very
large and the percentage of production of the new product was also
very large cannot be made a ground to deny the benefit of the
Exemption Notification dated 10.06.2003 to the appellant.
30. Learned authorized representative appearing for the Department
also placed reliance upon the decision of the Tribunal in Wipro
Enterprises Ltd. in the case of the appellant to contend that the plant
manufacturing old products would be one Unit and the plant
manufacturing new products would be another Unit. Paragraph 24 of
the decision of the Tribunal is reproduced below:
"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 cannot be considered
as one unit. In fact in the factory, there are three different
units, therefore, we hold that the Unit No. III is separate
from Unit No. I is entitled for exemption under Notification
No. 50/03-CE."
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31. In the present case, neither there was a charge in the show
cause notice nor there is a finding in the impugned order that the old
products and the new products had separate manpower or finances.
It has, therefore, to be considered as a single Unit.
32. Thus, for all the reasons stated above, the impugned order dated
03.02.2021 passed by the Commissioner cannot be sustained and is
set aside. The appeal is, accordingly, allowed.
(Order Pronounced on 23.08.2022)
(JUSTICE DILIP GUPTA)
PRESIDENT
(P.ANJANI KUMAR)
MEMBER (TECHNICAL)
Shreya
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E/60202/2021
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH
EXICSE APPEAL NO. 60202 OF 2021
M/s. Wipro Enterprises ......Appellant
Pvt. Ltd. (Unit-II)
Versus
Commissioner, .....Respondent
Central Goods & Services Tax
Commissionerate, Shimla
APPEARANCE:
Shri B.L. Narasimhan, Advocate for the Appellant
Ms. Shivani and Ms. Geetika, Authorized Representatives for the Department
CORAM
HON'BLE MR.JUSTICE DILIP GUPTA, PRESIDENT
Date of Hearing: 18.08.2022
Date of Decision: 23.08.2022
ORDER
Order pronounced on 23.08.2022.
(JUSTICE DILIP GUPTA) PRESIDENT Archana