Custom, Excise & Service Tax Tribunal
C.C.E., Chandigarh vs M/S. Sudershan Pine Products on 21 November, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Date of Hearing/decision: 21.11.2013
E/CO/150/2009 & COD/161/2009 in
Appeal No. E/1117/2009 - EX[DB]
[Arising out of Order-in-appeal No.97/CE/CHD/2009,dt. 11.02.2009, passed by Commissioner (Appeals), Central Excise- Chandigarh]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Honble Mr. Rakesh Kumar, Member(Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
C.C.E., Chandigarh Appellants
Vs.
M/s. Sudershan Pine Products Respondent
Appearance:
Sh. M.S.Negi, DR - for the Appellants Sh. S.K.Pahwa, Advocate - for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Sh. Rakesh Kumar Member (Technical) FINAL ORDER NO:- 58619/2013 Per Rakesh Kumar:-
The facts leading to these appeal by the Revenue and Cross Objection by the Respondent, are, in brief, as under:-
1.1 The respondent are a manufacturing unit and are engaged in manufacture of Rosin and Turpentine Oil chargeable to Central Excise duty under Chapter 38 of the Central Excise Tariff Act, 1985. They were availing duty exemption under Notification No.50/2003-CE dt. 10.06.2003 w.e.f. 09.01.2007. The respondent sent letter from Central Excise Division, Shimla on 11.01.2007, informing the Central Excise Authorities about their intention to avail of the exemption under Notification No. 50/2003-CE w.e.f. 09.01.2007 on the basis that they have expanded the installed capacity of their manufacturing unit by more than 25%. The letter was accompanied by a number of documents in support of their claim regarding capacity expansion and among the letter enclosed was letter dt. 06.01.2007 issued by General Manager, District Industries Centre, Una(U.P.) certifying that their capacity to manufacture Rosin and Turpentine Oil has increased by 65% from 170 MT and 30 MT respectively to 275 MT and 55 MT respectively. The letter also mentioned that the value of plant and machinery as inspected by the Committee has also increased by 91% and the Power Load has increased from 2.22o KW to 5.95 KW. The respondents claim of expansion was examined by Jurisdictional Range Officers who studied the manufacturing process. As per the Range Officers verification, the respondent have installed additional machinery and equipment which include two Melting Tanks, two Settling Tanks, one Steam Boiler along with two Melting Furnaces which have been fabricated in the factory itself. However, according to the Range Staff, the capacity of the Copper Kettle in which the distillation is done and discharge Kettle in which the Rosin is discharge is 1000 Kgs. And 1500 Kgs. respectively. The Department was, therefore, was of the view that the capacity expansion is not by the way of additional plant and machinery but by process improvement only and accordingly respondent would not be eligible for exemption. The matter was adjudicated by the Additional Commissioner vide order-in-original dt. 02.12.2008 by which he denied the exemption. On appeal being filed to Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dt.11.02.2009 set aside the Assistant Commissioners Order and allowed the appeal, observing that the respondent have undertaken expansion by installation of additional machinery and equipment, Melting Tanks, Melting Furnace, Settling Tanks, Steam Boiler, Water Pipe Line for cooling, Electric Motors, and that for enhancing the installed capacity it is not necessary that the Copper Kettle capacity or the capacity of the discharge Kettle should also have been increased. Against this order of the Commissioner (Appeals), the Revenue have filed the present appeal and respondent has filed a Cross Objection.
2. Heard both the sides.
3. Sh. M.S.Negi, learned DR, assailed the impugned order by reiterating the grounds of appeal and pleaded that the capacity of the plant and machinery of the respondent depends upon the capacity of Copper Kettle in which distillation is done and the discharge Kettle in which the Rosin manufactured is discharged and that since the capacity of these two has remained the same, the additional production has been achieved only by way of processed improvement which would not make the respondent entitled for exemption Notification. He also pleaded that Commissioner (Appeals) has failed to appreciate that the assessment of capacity by the District Industries Centre is only recommendatory and is not binding and that for being eligible for exemption substantial expansion of installed capacity must be achieved by installation of additional machinery. He emphasized that since the capacity of the distillation Kettle and discharge Kattle has remained the same, there has been no increase in the installed capacity. He cited the judgment by the Tribunal in case of Bernelt Coleman & Co. reported in 1997 (94) ELT- 661 wherein the Tribunal held that installation of imported goods result in modernization and renovation and thus increasing production capacity does not amount to substantial expansion. He, therefore, pleaded that the impugned order is not correct.
4. Sh. S.K.Pahwa, learned counsel for the respondent, defended the impugned order by reiterating the findings of Commissioner (Appeals) and cited the judgment of Tribunal in case of Uttaranchal Iron & Ispat Ltd. Vs. Commissioner of Central Excise, reported in 2008(229) ELT-253 (Tri.- Del.) wherein it was held that there is nothing in the Notification No. 50/2003-CE to suggest that there should be an increase in each and every unit of the plant to qualify for exemption by the way of 25% enhancement of capacity of production and that when as per the opinion obtained by Revenue from Chartered Engineer, annual capacity of production has been enhanced by more than 25%, the benefit of exemption cannot be denied. Besides this, he also cited the judgment of the Tribunal in case of Commissioner of Central Excise Vs. Hetikuli Tea Estate reported in 2008 (230) ELT- 497 (Tri. Kolkata) wherein the same view had been taken. He, therefore pleaded that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records. It is not disputed that in terms of the letter dt. 06.01.2007 of General Manager, District Industries Centre, Una (U.P.) not only additional machinery and equipment has been installed by the respondent unit, but their production capacity has increased by 65% and this is also evidenced by their power consumption as the power load has increased from 2.220 KW to 5.95 KW. It is also not disputed by either side that while before the expansion, there was only one Melting Tank of 800 Kg capacity, one Water works of 1000 Kg capacity, One Copper Kattle of 1000 Kg capacity and one Discharge Tank of 1500 Kg capacity, after the expansion there are two Melting Tanks of 1000 Kg each capacity in which Rosin is put for melting, two Melting Furnaces for hearing the Rosin, two Settling Tanks for filtration and one Steam Boiler of 300 Kg per hr capacity for distillation of Rosin in the Kettle. Before expansion that the size were 800 kg and the heating of Rosie was done by using fuel wood, but after expansion/hearing is done by steam boiler in addition to fuel wood and the batch size has increased to 1000 Kg. The Installation of the above additional machinery is also confirmed by the Jurisdictional Range Officer. In view of this, just because the size of the Kattle in which the Rosin is heated and Discharge Kettle in which the Rosin is poured has remained the same, it cannot said that the additional capacity has been achieved merely by process improvement but not by installation of additional machinery and equipment. Only when without installation of any additional machinery or equipment whatsoever, capacity is increased by increased efficiency or improving process that the Revenues plea for denying the exemption would be valid. In this case when, un-disputedly the respondent have installed additional equipment and machinery by making additional investment, as a result at which the capacity of production has increased about 65%, it would not be correct to deny the exemption on the ground that enhancement capacity of production is merely by processed improvement. In our view the ratio of the Tribunal judgment in case of Uttaranchal Iron & Ispat Ltd.(Supra) and Hetikuli Tea Estate (Supra)is squarely applicable to the facts of this case. We do not find any infirmity in the impugned order. The Revenues appeal is dismissed. The cross objection is also stands dispose off.
(Archana Wadhwa) Member (Judicial)
(Rakesh Kumar) Member(Technical)
S.Kaur
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