M/S. Ruchira Papers Ltd vs Cce & St, Chandigarh

IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/ Decision:11.09.2015

Excise Appeal No.E/3979/2006-EX(DB)

[Arising out of order-in-original no.30-33/CE/CHD/2006 dated 25.09.2006 passed by the Commissioner of Central Excise, chandigarh].

M/s. Ruchira Papers Ltd. Appellants

Vs.

CCE & ST, Chandigarh Respondent

Appearance:

Rep. by Shri B.L. Narsimhan, Advocate for the appellant.

Rep. by Shri S. Naunthuk, Joint CDR for the respondent.

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

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?

Coram: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No.53047/2015 dated11.09.2015

Per Ashok Jindal:

The appellant is in appeal against the impugned order demanding duty by denying exemption under notification no.50/2003-CE dated 10.06.2003.

2. The facts of the case are that the appellant is manufacturer of craft papers at their factory which is located at Kala-Amb of Himachal Pradesh and clearing the goods duty free by claiming exemption under notification no.50/2003-CE dated 10.06.2003. The unit was installed by the appellant way back in 1980 and thereafter, their production installed capacity determined was enhanced from time to time. The appellant on 24.10.2003 filed an application for enhancement of the installed capacity from 26000 MTs to 33,000 MTs. The appellant filed certain documents in support of their claim and after going through the correspondences between the appellant and the departmental authorities, it was found that before expansion, the installed capacity of the appellant was 26000 Mts and the appellant has wrongly mentioned their installed capacity as 30000 Mts. in certain documents. Therefore, it is alleged that the appellant is not entitled to claim the benefit of the exemption notification no.50/2003-CE dated 10.06.2003. In these set of facts, show cause notices were issued demanding duty from the appellant along with interest and the penalty was also proposed. The matter was adjudicated, demand of duty was confirmed along with interest and equivalent amount of penalty was also imposed. Aggrieved from the said order, the appellant is before us.

3. Ld. Counsel for the appellant submits that the appellant started their unit in 1980 with a proposed capacity of 2310 MTS and their installed capacity was increased in the year 1990-91 and 2002-2003 from 16200 MTs to 21000 Mts p.a. and another expansion was taken and thereafter, in the year 1999-2000, their installed capacity was increased to 26400 MT. The Director of Industries vide letter dated 3.4.95 indicated that the proposed annual capacity of the appellant would be 30,000 MT but the only increase in the installed capacity was of 21,000 MT. He further submits that from the various documents it has been proved that their installed capacity was 26400 MT. In the month of October, 2003, the installed capacity was increased to 33000 MT, which is 25% increase in the existing installed capacity. Therefore, the appellant is entitled to the benefit of exemption notification no.50/2003-CE dated 10.06.2002. He further submits that in consequent to their application for increase in the installed capacity, the show cause notice was issued by the Asstt. Commissioner for denying the benefit of exemption notification, who ultimately denied the benefit of the exemption notification. The said order was challenged by the appellant before the ld. Commissioner who vide order dated 30.09.2001 after going through the various aspects allowed the benefit of the exemption notification no,50/2003 dated 10.06.2003 and the said order has been accepted by the Department. In that situation, the duty cannot be demanded from the appellant. Therefore, the impugned order is to be set aside.

4. On the other hand, ld. AR opposed the contention of the ld. Counsel and submits that letter from the Directorate of Industries dated 3.4.95 clearly indicates that proposed annual capacity of the appellant is 30,000 MT and their self-certification from time to time certified that the installed capacity was 30,000 MT. The appellant also submitted application to IPARA on 29.10.94 for approval of the product for expansion of the capacity from 16200 Mt per annum to 30000 MT per annum and the Ministry of Industries in their letter dated 11.1.96 mentioned the proposed capacity as 30,000 MT and the letter dated 3.4.95 issued by the Directorate of Industries also mentioned that the proposed annual capacity is 30,000 MT p.a. and as per IPARA proposal note for proposed expansion, there was increase in the capacity of 5400 MTs by way of expansion from 21000 MTs to 26400 MTs. and 2730 MTs by way of de-bottlenecking. Therefore, in terms of notification no.50/2003 dated 10.06.2003, the appellant is not entitled for the benefit of exemption notification.

5. Heard both the sides and considered the submissions.

6. In this case although the appellant sought proposed annual capacity in the year 1995-96 to 30,-000 MT p.a. but the installed capacity was only 26400 pm. As per various documents viz. Chartered Engineerss certificate dated 26.09.2003 which gives the production obtained by the appellant from 1993-94 to 2002-2003 and further shows that the installed capacity has been increased to 33000 TPA from 26400 TPA and to this effect, the CAs certificate vide dated 21.10.2003 also certifies that the existing installed capacity has been increased from 26400 MTs to 33000 MTs. To that effect, the Chartered Engineer has certified that vide certificate dated 21.10.2003, the Directorate of Industries vide letter dated 5.11.2003 also certified that existing capacity as on 6.1.2003 was 26400 MT and as on 5.11.2003 installed capacity after substantial expansion was 33,000 MT. The progress report filed by the appellant for the period June, 2003 with IFCI, shows 5400 MT/PA by way of expansion from 21000 MT to 26400 MT. We also find that audit report by the departmental officers clearly indicates that the licensed capacity and installed capacity of the appellant was 30,000 MT p.a. and 26400 MT. respectively. The letter dated 17.07.2001 issued by the IFCI supplied by CA also proposed that the installed capacity prior to October, 2003 was 26400 MT. We also observe that the ld. Commissioner (Appeals) in another proceedings also held that the installed capacity prior to extension took place in the month of October, 2003 was 26400 MT. and the said order has been accepted by the department. In these set of facts, we also hold that prior to October, 2003 when substantial expansion took place in the factory premises of the appellant the installed capacity was 26400 MT p.m. The installed capacity was increased to 33000 MTs in the month of October, 2003, which is substantial expansion i.e. more than 25% of the installed capacity. In that circumstances, the appellant is entitled for the benefit of the duty free under exemption notification no.50/2003-CE dated 10.06.2003. Therefore, the duty cannot be demanded from the appellant. As discussed above, the demand of duty along with interest is set aside and consequently and penalties are not imposable.

7. With these terms, the impugned order is set aside. The appeal is allowed with consequential relief, if any.

[operative portion of the order already pronounced in the court]

( Ashok Jindal )

Member (Judicial)

( B. Ravichandran)

Member (Technical)

Ckp.

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