Excise exemption under notification 50/2003
nitin jain
(Querist) 28 July 2012
This query is : Resolved
Notification No. 50/2003-C.E., dated 10th June, 2003. The said paragraph 2 reads as under :
"2. The exemption contained in this notification shall apply only to the following kinds of units, namely :-
(a) new industrial units which have commenced their commercial production on or after the 7th day of January, 2003;
(b) industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January, 2003."
In the above notification i want to know that if we are existing unit befor 7 jan 2003 and our production is 10 MT per month.We have some plant and machinery in our store before 7 jan 2003.we also make purchase of some additional plant and machinery from market till 10 jan 2003.and install the same from period 7 jan 2003 to 15 jan 2003.and our commercial production start from 16 jan 2003 which is more than 25 percent as desired in the notification.In this situation we are entitle to take excise exemption benefit or not?plxz reply
thanx
Anirudh
(Expert) 31 July 2012
Is this the same matter that you lost in the Supreme Court?
nitin jain
(Querist) 04 August 2012
dear sir,
we donot loose the matter in the supreme court.Our apeal is admitted there.plz reply
thanx
Anirudh
(Expert) 11 August 2012
I find from your posts, that your query stands sufficiently answered by one of the Experts in this forum at
http://www.lawyersclubindia.com/experts/Excise-case-223726.asp#.UCXU1aDiyXY
But you want to know whether the commercial production started after 7.1.2003, but expansion done prior to that date would be eligible for exemption or not.
BY THIS TIME, YOU WILL BE VERY EXPERIENCED AND KNOW HOW TO READ THE PROVISIONS.
The exemption is for units undertaking expansion and not for making commercial production. Therefore,if the expansion had taken place on or after 7.1.2003 the exemption would be available otherwise NOT.
nitin jain
(Querist) 11 August 2012
Dear Mr. Anirudh,
No doubt the provision says that we must undertake the substantial expansion on or after 7-1-2003 to avail the exemption but my point is that expansion is not a specific work/machine that u installed in the existing unit and production increased to desired level.It is basically a continous process in which we add up plant and machineries,processes, engineer services etc till the production comes to the desired level.our expansion programe start before the cut off date but our expansion to the desired level complete after the cut off date.so we must be entitled to the exemption.
Note: in my view if we start the expansion programme before the cut off date and our production to the desired level comes out before the cut off date we are not entitled the exemption.But in our case we hire the engineer to install the baught plant and machineries after the cut off date.Moreover we order more plant and machineries after the cut off date to install in our unit.
In the matter of the said notification CBEC issued a clarification on 21-01-2004 it has been stated that increase in installed capacity of an existing unit by not less than 25 percent should be the result of installation of additional plant and machinery, the clarification made it clear that the term 'substantial expansion' is not defined in terms of original or depreciated value of plant and machinery, and that the notification requires the only crieterion to be satisfied is accretion in installed capacity by atleast 25 percent with additional plant and machinery.
From the above it is clear that even though we purchased majority of plant and machineries before the cut off date and held in the mill store.and installed the same after the cut off date to avail the exemption benefit we are entitled the exemption.
In the case of Commissioner of central excise, shillong Vs Binnakandy Tea Estate. it is cleary given that in that situation we are entitled to the exemption.plz give ur opinion.
