UTTARANCHAL IRON AND ISPAT LTD., Vs. CCE

JUDGEMENT

(1.) HEARD both sides.

(2.) APPELLANTS filed these appeals against the impugned order whereby demand is confirmed and penalties are imposed after denying the benefit of Notification No. 50/2003 -CE dated 10.6.2003.

(3.) CONTENTION of the appellants is that the plant was inspected by Chartered Engineer at the request made by Dy. Commissioner, Central Excise and the Chartered Engineer appointed by the Revenue submitted the report dated 10.9.2004 accepted the changes made by the appellants in respect of furnace and other machinery. The Chartered Engineer, however, pointed out that increase in the capacity is not due to installation of any additional plant and machinery but, if at all by modification of existing machinery. The appellants relied upon the Board's -CX dated 21.1.2004 whereby Board has clarified, the term 'substantial expansion' in the area based notification. The circular clarified that the scope of substantial expansion, as it relates to applicability of notification also includes additional investment in the plant and machinery for modernization or improving quality of existing products and unless it leads to increase in installed capacity of 25% or more of would not tantamount to substantial expansion. The contention is that the appellants invested Rs. 85 lakhs for expansion of the plant and as per Board's Circular as their annual capacity has been increased which is more than 25%, by increase in length of furnace and by replacing main drive motor of 460 KW with 1250 KW motor and by installing other capital goods. In these circumstances, contention is that as the appellants had undertaken substantial expansion by way of increase in their annual capacity more than 25%, therefore, denial of benefit of notification is not sustainable.