Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs Bhandari Deepak Industries Pvt. Ltd on 12 December, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
COURT-II
Excise Appeal No.E/1578/2007-EX[DB]
[Arising out of Order-in-Appeal No54/CE/CHD/2007 dated 07/03/2007 passed by the Commissioner (A), Central Excise, Chandigarh]]
For approval and signature:
HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
1. Whether Press reporters may be allowed to see the
order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
_____________________________________________
CCE, Chandigarh Appellant
Vs.
Bhandari Deepak Industries Pvt. Ltd. Respondent
Present for the Appellant : Shri.M.S. Negi, DR
Present for the Respondent: Shri.Jay Kumar, Advocate
Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)
HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing/Decision: 12/12/2014
FINAL ORDER NO. 54951/2014
PER: RAKESH KUMAR
1.1 The facts leading to filing of this appeal are, in brief, as under:-
1.1 The respondent are manufacturers of semi craft paper and corrugated sheets made out of semi craft paper. Their unit is located at 36, Industrial Area, Baddi Distt., Solan which is specified under Notification No.50/03-CE. They claimed exemption under Notification No.50/03-CE on the ground that they have undertaken substantial expansion on or after 07.01.2003 by the way of increase in installed capacity of unit by not less than 25%. They backed this claim by producing a letter dated 02.01.2004 issued by Directorate of Industries, Himachal Pradesh, Shimla acknowledging that the respondent had undertaken expansion of the production capacity of the semi craft paper and corrugated boxes after 07.01.2003 and had completed the expansion on 26.12.2003 and after completing the expansion, the installed capacity of semi craft paper was 9000 M.T. Per annum as against their earlier production capacity of 7200 MT per annum and that their production capacity of corrugated boxes became 1800 M.T. per-annum as against their earlier production capacity of 1200 M.T. per-annum. The Jurisdictional Asstt. Commissioner vide Order-in-Original dated 23.11.2006 denied the exemption under this Notification on the grounds (a) the increase in production capacity has been achieved only in respect of intermediate product corrugated sheets and there is no increase in the installed capacity of the final products corrugated boxes, (b) the power load of the unit, and the number of workers has remained same as before and (c) the capacity of the digester has also remained the same. On appeal being filed to Commissioner (Appeals) against this order of the Asstt. Commissioner, the Commissioner (Appeals) vide Order-in-Appeal dated 08.03.2007 set aside the Asstt. Commissioners order. Against this order of the Commissioner (Appeals), this appeal has been filed by the Revenue.
2. Heard both sides.
3. Shri M.S.Negi, the ld. DR assailed the impugned order by reiterating the grounds of appeal and pleaded that even the Directorate of Industries letter dated 02.01.2004, mentions only the Respondents proposal to undertake substantial expansion and this letter does not indicate actual expansion of their installed capacity, that even as per the letter of Directorate of Industries, the power of load of unit and number of workers in the Respondents unit has remained the same as before which also creates doubt about the Respondents claim of having achieved more than 25% increase in installed capacity, that the respondent have merely changed the old digester by a new digester of the same capacity without any addition of new plant and machinery, that whatever increase in capacity has been achieved is in respect of intermediate product and as such there is no increase in the installed capacity in respect of final products i.e. corrugated boxes, that in terms of Boards Circular No.772/5/2004 dated 02.01.2004 for extending the benefit of exemption Notification No.50/2003-CE to the Units who claim to have undertaken substantial expansion by the way of increase in installed capacity by not less than 25% on or after 07.01.2003, the increase in the installed capacity should be by addition of plant and machinery and any increase in the installed capacity by means other than installation of additional plant and machinery would not qualify for the benefit of exemption under substantial expansion, that in this case whatever increase been claimed by the respondent, has been achieved by means other than installation of additional plant and machinery and hence the impugned order extending the benefit of this exemption is not correct.
4. Shri Jaikumar, Advocate, the learned Counsel for the respondent, pleaded that the increase in installed capacity has been achieved not merely by replacing the digester but by addition of a number of other machinery whose details have been given to the Directorate of Industries, that the details of additional machinery to be installed and the existing machinery to be replaced had been given by the appellant to the Directorate of Industries for obtaining the necessary approval and the fact that the appellant, in addition to replacing the existing digesters with new digesters, want to install certain new machinery had been specifically mentioned, that Inspection team of the Directorate of industries had inspected the respondents plant prior to starting of work and after the completion of expansion, that the inspection reports of the officers of Directorate of Industries before expansion and after completion of expansion had also been placed on record with the Department, that the letter dated 02.01.2004 of the Directorate of Industries acknowledging the expansion of installed capacity of semi craft paper and corrugated boxes has been issued only after the inspection by the Directorate of Industries team, that the Department cannot doubt the correctness of the letter dated 02.01.2004 of the Directorate of Industries, that for the benefit of Notification No.50/2003-CE, it is not necessary that there should be expansion in each and every section of the plant, that the respondent had installed additional machinery and replaced old digester with new digester so as to increase the installed capacity for manufacture of semi craft paper and corrugated sheets, and for manufacture of the corrugated boxes, the existing machinery was adequate, as the same machine could produce more corrugated boxes, and that the Tribunal in the cases of CCE, Shillong vs. M/s.Dorria Tea Estate [2003 (156) ELT 999 (Tri.-Kolkata), CCE, Shillong vs. MKB (Asia) Pvt. Ltd. [2003 (158) ELT 616 (Tri.-Kolkata) , CCE, Shillong vs.M/s.Hindustan Coca Cola Beverages [2004 (169) ELT 152 (Tri. Kolkata) and CCE, Dibrugarh vs. M/s. Hindustan Coca Cola Beverages (P) Ltd. [2005 (186) ELT 242 (Tri.- Kolkata) has held that for availing the benefit of Notification No.32/1999-CE and Notification No.33/1999-CE, which are similar to the exemption Notification No.50/2003-CE, it is not necessary that the capacity expansion should be in each and every section of the manufacturing unit.
4.1 Shri Jaikumar also relied on the judgement of this Tribunal in the case of CCE, Chandigarh vs. Sudershan Pine Products reported in 2014 (305) ELT 158 (Tri.-Del.) and CCE, Shillong vs. Hatikuli Tea Estate reported in 2008 (230) ELT 497 (Tri.-Kolkata). He also cited judgement of Honble Uttaranchal High Court in the case of CCE vs. Uttaranchal Iron & Ispat Ltd. Reported in 2011 (266) ELT 331 (Uttarakhand) wherein Honbble High Court held that when the appellant assessee modified its existing furnace by increasing its length from 70 ft. to 120 ft. and replaced the old gear box and motor by a new gear box and a heavier motor and by these changes their production capacity increased by more than 25%, it is to be treated as having undertaken substantial expansion of capacity by more than 25% and this cannot be treated as the case where capacity increase was achieved by merely improvement in the process. He therefore, pleated that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records. The Notification No.50/2003-CE permits its benefit to the existing units which have undertaken substantial expansion by way of increase in their installed capacity by not less than 25% on or after 07.01.2003. In this case, there is no dispute that the appellant undertook the expansion work after 07.01.2003. According to the appellant, they had made an application to the Directorate of Industries for the necessary approval for substantial expansion, and in that application they had furnished the details of the new machinery to be installed and the machinery (digester) to be re-placed. They have also placed on record the copies of these applications. As per the documents on record, the officers of inspection team of Directorate of Industries inspected the factory before they started expansion work and also inspected their factory after completion of expansion work in December, 2003. There is a letter dated 02.01.2004 of the Directorate of Industries addressed to the respondent unit acknowledging that their installed capacity in respect of semi craft papers and corrugated boxes has increased and that installed capacity for manufacture of semi craft papers has increased from 7200 M.T. to 9000 M.T. per annum and the installed capacity for manufacture of corrugated boxes had increased from 1200 M.T. to 1800 M.T. per annum. The letter also mentions the additional investment of about Rs.34.00 Lakhs made by the respondent. It is not the contention of the Revenue that the letter regarding inspection mentioned in the Directorate of Industries letter dated 02.01.2004 is false. When this letter dated 02.01.2004 acknowledging more than 25% increase in the installed capacity of semi corrugated paper and corrugated boxes was preceded by the inspection of the unit on 26/12/2003, in our view, it is absurd to doubt the correctness of this letter of the Directorate of Industries. As regards the Departments allegation that enhancement of capacity is only in respect of semi craft papers and corrugated sheets and there is no enhancement of capacity in the manufacture of corrugated boxes, the same is not correct as the directorate of Industries letter dated 02.01.2004 also mentions enhancement of installed capacity for the manufacture of corrugated boxes from the earlier 1200 MT Per annum 1800 M.T. Per annum, just because the machinery no additional machinery for manufacture of corrugated boxes was installed, it cannot be presumed that there was no enhancement in the manufacturing unit capacity to manufacture corrugated boxes. Moreover the Tribunal in series of judgments, as mentioned above has held that for achievement of 25% or more enhancement in installed capacity for the purpose of exemption under notification No.50/2003-CE it is not necessary that the expansion should be in each and every section of the manufacturing plant.
7. In view of the above discussion, we do not find any merit in the Revenues appeal, the same is dismissed.
[Dictated & Pronounced in the open Court].
(S.K.MOHANTY) (RAKESH KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) Anita ?? ?? ?? ?? 0 8