Denial of Exemption benefit to Wipro not sustainable, if diversification made to production by adding New Machines in the Old Unit: CESTAT [Read Order]

exemption benefit - Wipro - production - CESTAT - taxscan

In the case of M/s. Wipro Enterprises Pvt. Ltd, the Chandigarh Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled that the denial of exemption benefit is not sustainable if only the diversification was made to production by adding new machines in the old unit. 

The appellant challenged the order dated 03.02.2021 passed by the Commissioner, CGST, Commissionerate, which has held that the appellant is not eligible to avail benefit of exemption from duty under Notification No. 50/2003CE dated 10.06.2003   in respect of new products which were manufactured/added by the appellant after the cut-off date.

The Commissioner also confirmed the demand of Rs. 6,28,16,499/- against the appellant under section 11A (1) of the Central Excise Act, 1944 and ordered its recovery with interest and penalty.

The Department denied 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.

It was contended by the counsels for the appellant that the appellant had not set up a new Unit and there was only diversification of production capacity by adding new machines and the old products continued to be manufactured, in addition to the new products.

A Coram comprising of Mr Justice Dilip Gupta, president and Mr P Anjani Kumar, member (technical) observed 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 to the appellant.

While allowing the appeal filed by the assessee, the Tribunal set aside the impugned order dated 03.02.2021 passed by the Commissioner. Shri B.L. Narasimhan, Advocate appeared for the Appellant and Ms Shivani and Ms Geetika appeared for the Department.

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