1. The present appeal is filed against the Order-in-Original No. 04/05/ dated 29.03.2007. The period of dispute is December, 2002 to November, 2003. The Miscellaneous Application is filed for additional ground and documents.
2. The brief facts of the case are that during the period in dispute the appellant was engaged in the manufacturing of food items namely Jams, Jellies and Squash falling under Chapter 20 and Vinegar under Chapter 22 of Central Excise Tariff Act, 1985. The appellant was enjoying the areas based exemption as per Notification No. 32/99 dated 08.07.1999. It is alleged by the Department that the appellant has wrongfully availed the benefit of the refund of the Central Excise duty under the said notification to the tune of Rs. 79,45,526/- only, by willful suppression of the fact. So they demanded duty as well as levied penalty. Being aggrieved, the appellant has filed the appeal before the Tribunal.
3. Earlier the dispute came up before Tribunal who vide its Final Order No. F/337/2006 dated 04.07.2006 observed that the appellant (M/s. ATC Agro) is not entitled for the benefit under Clause-3(b) of the Notification No. 32/99 dated 08.07.99 but the Tribunal has directed the Adjudicating Authority to examine whether they would be eligible under Clause-3(a) of the said notification which extends the benefit to new industrial units and decide the matter denovo.
4. In compliance of the order passed by the Tribunal, the Adjudicating Authority has passed the impugned order where the benefit to the appellant has been denied. Being aggrieved, the appellant had again knocked the door of the Tribunal by filling this Appeal.
5. With the background, we heard both the parties and perused the bulky record, from which it appears that the Tribunal has remanded the matter on a limited issue whether the appellant can take the benefit of being a New Industrial Unit or not. In the instant case, the factory was established before 24.12.1997 but has not taken the substantial expansion by way of increase in installed capacity by not less than 25% on or after 24th day of December, 1997.
6. However, the appellant was having an understanding with M/s. Hindustan Lever Ltd. (M/s. HLL) to manufacture their product under their brand name KISSAN and accordingly, M/s. HLL during the period Aug/Sept 2000 has installed some additional plants and machineries of their own, in the factory of M/s. ATC Ltd. to produce more material. But the said factory was removed in the year Aug/Sept, 2002 without informing to the Department. Thus, M/s. ATC has removed a sizeable portion of plant and machinery of Rs. 20 lakhs vide bill dated 30.09.2002 from their unit.
7. In the month of December, 2002, the appellants switchover to a new product namely synthetic food colour and fragrances which basically involves a process of admixing high value ingredients but continued in availing refund under above said notification in the name of PP Food Products. It is alleged that the appellant falsely claimed the benefit of the notification in question and availed wrongful benefit.
8. During the course of arguments, Ld. Counsel for the appellants submits that unit of PP Food products can be treated as new unit when entering into manufacture of fragrances and flavors. The appellant has expended Rs. 34 lakhs on their new unit. To support his arguments, Ld. Counsel for the appellant relied on the ratio laid down in the following cases:-
1) CCE, Shillong vs. Jellalpore Tea Estate [2011 (268) E.L.T. 14 (Gau.)];
2) Devidayal Electronics & Wires Ltd. And Ors. Vs. Union of India and Another [1984 (16) E.L.T. 30 (Bom.)];
3) Collr. Of Central Excise vs. Reckitt Colman of India Ltd. [1997 (92) E.L.T. 457 (S.C.)];
4) Collector of Central Excise vs. Himalayan Co-Op. Milk Product Union ltd. [2000 (122) E.L.T. 327 (S.C.)];
5) Purolator India Ltd. vs. Collector of Central Excise, Chandigarh [1996 (85) E.L.T. 275(Tri.)];
6) Nizam Sugar Factory vs. Collector of Central Excise, A.P. [2006 (197) E.L.T. 465 (S.C.)]; and
7) Commissioner of C. Ex. Meerut-II vs. Prakash Straw Board Pvt. Ltd. [2016 (332) E.L.T. 741 (Tri.-Del.)]
Lastly, Ld. Counsel for the appellant made a request to set aside the impugned order.
9. On the other hand, Ld. Counsel for the Department submits that Tribunal has remanded the matter for determining whether the assessee can be eligible as New Industrial Unit under Clause 3(a) of the said notification since the assessee had new line of production. Ld. Counsel submits that the unit for manufacturing of Fragrances & Flavours was set up in the same premises/shed with the support of Rs. 34.00 lakhs only where they had earlier manufactured P.P.Food. It is also on record that some of the plant machinery of P.P.Food unit were used for the manufacture of Fragrances and Flavours. The entire plant of manufacturing Fragrances & Flavours is not a separate unit which can be otherwise considered as separate or isolated part. It is also the submission of the Department that there is no dispute that the appellant had commenced their commercial production much before the cut off date of 24.12.1997 and therefore, the manufacturing unit of Fragrances & Flavours cannot be termed as a New Industrial Unit in strict terms of the clause. For the purpose, Ld. Counsel for the Department relied on the ratio laid down in the case of Commissioner of C.Ex., Shillong vs. North-Eastern Tobacco co. Ltd. [2002 (146) E.L.T. 490 (S.C.)]. Where it was observed that if the earlier existing unit has been closed and subsequently another unit started at the different location with new machinery and new work force then the unit can be considered as New Industrial Unit. But in the instant case, the partly old machineries were used in the same premises/shed, so, it cannot be treated as New Industrial Unit. Lastly, he justified the impugned order.
10. We heard both sides and gone through the bulky materials available on record, from which it appears that a part of the plant and machineries were removed by the HLL from the unit of M/s. ATC Ltd. which includes air curtain, bottle washer, roto pump, conveyors, cap sealing machines, screw capping machine etc. and all were sold at Rs. 20 lakhs. The remaining parts in the same premises/sheds were used by the appellants to start a new factory pertaining to the Fragrance and food colour by investing only Rs. 34 Lakhs. But the fact remains that M/s. ATC Ltd. never informed the Department about this development i.e. for the removal of the plant and machineries from the premises and appellant has willfully suppressed the facts. Hence, the extended period was rightly revoked in the instant case.
11. It may be mentioned that in the case of M/s. Reckitt Colman of India Ltd. vs. Commissioner of Central Excise [1997 (92) ELT 457 (SC)], it is observed that Industrial Unit is an expression well understood in the Excise Department, though the word of New Industrial Unit has not been defined in the Central Excise Act. From the record, it appears that the initial capacity of the plant was 2 MT (0.5 MT of P.P. Food plus 1.5 MT of vinegar) which was increased to 15 MT of P.P. Food and 5.0 MT of Vinegar with machineries from HLL. The duty on P.P. Food was abolished in March, 2001 and thereafter HLL removed their 7 MT worth capacity Plant & Machineries producing P.P. Food, which were brought by them during expansion. Now they were left with 8 MT of P.P. Food out of which 1.5 (approximately) MT of P.P. Food manufacturing machineries along with ancillary machineries worth Rs. 20 lakhs (including margin profit) which was removed in September 2002 and thus 6.5 MT of P.P. Food manufacturing Plant and machineries remained till the end. Similarly the Plant and Machineries manufacturing Vinegar having capacity of 5 MT remained with them till the end. During the month of October & November, 2002 they installed the machineries which were capable to manufacturing food colour preparations and fragrance and flavor. In the case of Food Coloring preparations they have not used any part of existing Plant & Machineries but however, in the case of Fragrance & Flavour they have used 2 mixing tanks having capacity of 2.5 MT each whereas, they bought 3 mixing tanks (SS vessels) having capacity of 600 Kgs. Each along with three Mixing Tanks (SS vessels) of capacity of 100 Kgs. Each for manufacture of Fragrance & Flavour. The Deputy Commissioner, issued the eligibility order taking into consideration the new expansions i.e. on food colour preparations & fragrance and flavor items on 03.03.2004 and inspite of that show cause notice dated 16.04.2004 has been issued to them for recovery of 79 lakhs rupees which was refunded on account of clearances of Food colour preparations & fragrance and flavor because it is alleged in the show cause notice that they are not eligible for the N.E. Notification since their enhancement of capacity came down from 25% as required under the said notification. They have also been asked to pay the duty of Rs. 23,150.00 on account of non-reversal of CENVAT credit on the machineries which was sold in the month of September, 2002 which in fact they have reversed before the issuance of the Show cause notice.
12. After removal of machineries by the HLL, the capacity of the appellant 2.4 MT Jam & Jelly has come down from the original 2.5 MT which is not at the desired quantity of admissibility under the said notification.
13. The spirit of the notification is to boost the growth of industries in the North East Region by way of expansion of the old units as well as to set up the new units. The intention of the legislation is very clear that the new unit should not be set up at the expenditure of old units. Needless to mention that the purpose of the area based exemption in the North East is to invest finance in the New Industrial Unit. That is why various tax exemption and facilities were provided to the investors for the period of 10 years.
14. In the instant case, the total investment in the subsequent plant is of Rs.
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34 lakhs as said above. Earlier parts and machineries were sold for Rs. 20 Lakhs. Thus the fresh investment is minimum for Rs. 14 lakhs only. So this is against the spirit of the notification. The Tribunal vide its earlier order has clearly observed that the appellant is not eligible for keeping exemption under Clause 3(b) of the Notification No. 32/99. The matter was remanded to examine only for a limited issue whether they would be eligible of the said notification which extends benefit to new industrial units. 15. From the above discussions, it is evident that appellant never started a new unit the appellant has used partly old machinery as stated above in the same premises/shed. Nature of the product is not meaningful to get the benefit of the notification. It is the investment in North East States to boost the economy. 16. In view of the above, we find no merit of the appeal. The same is rejected for the reasons mentioned in the earlier order of the Tribunal (supra). In the result the appeal filed by the appellant is dismissed. The application for additional ground/document is also rejected.