The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the modification of already existing machinery if installed capacity gets increased by more than 25% is eligible for excise duty exemption under exemption notification.
The Rishabh Velveleen Ltd, the appellant assessee engaged in the manufacture of flock fabrics and submitted the declaration to the Deputy Commissioner, Central Excise, Division Dehradun with a copy to Jurisdictional Superintendent, Central Excise, intimating that after undertaking substantial expansion for their installed capacity by more than 25% they started availing the benefit of exemption Notification No. 50/2003- CE on the clearances of their products.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand of excise duty of Rs.4,40,72,632/- for the period from 10.09.2003 to 08.07.2004 along with proportionate interest and appropriate penalties.
Jitin Singhal, the counsel for the assessee contended that the substantial expansion has been made by the appellant following the provisions of Notification No. 50/2003-CE dated 10.06.2003.
Also submitted that the report of the Indian Institute of Technology (IIT) Roorkee also falsifies the report of D.K. Jain. Professors of IIT Roorkee have corroborated the report of Shri Akhilesh Jain establishing the case of the assessee that all the processes, namely the processes of flock fabric drying, flock fabric brushing, and post-finishing were commissioned in September.
O.P. Bish, the counsel for the department contended that the assessee did not qualify for the exemption under Notification No. 50/2003-CE. Hence, it was alleged that by clearing their goods without payment of central excise duty, the appellants have attempted to evade the payment of excise duty by mis-declaring the facts about the substantial expansion of their units to wrongly fit in the requirement of the exemption notification.
The Bench observed that the benefit of notification is available to the unit existing before 07.01.2003 if the increase in its installed capacity by 25% or more has been effected after 07.01.2003 and in the case of Commissioner of Customs & Central Excise Vs. Uttaranchal Iron & Ispat Ltd, the court held that the modification of already existing machinery if the installed capacity gets increased by more than 25%, the assessee shall be entitled to the benefits of Notification No.50/2003-CE dated 10.06.2003.
The two-member bench comprising Rachna Gupta (Judicial) and Subba Rao (Technical) held that the benefit of clause 2(b) of Notification No. 50/2003 was wrongly denied to the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
