Capital investment for industrial exemption runs up to first sale when the notification makes that date the trigger.

Capital investment for an industrial exemption had to be reckoned up to the date of first sale where the notification made the exemption period commence from that date. The notification treated first sale within six months of production as the trigger for the exemption period, and Explanation (1)(e) required all exemption conditions, including investment, to be satisfied on the date the facility was granted. Accordingly, machinery and other investment costs incurred before the first sale could not be excluded. The correct basis was capital investment up to the first sale, not merely up to the first production date.

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Issues: Whether, for determining the period of exemption under the relevant notification, the capital investment in an eligible industrial unit was to be reckoned up to the date of first sale or only up to the date of first production.

Analysis: The notification provided that where the first sale occurred within six months from the date of starting production, the exemption period would be reckoned from the date of first sale. Explanation (1)(e) required that the conditions for exemption, including capital investment, be satisfied on the date from which the facility was to be granted. Since the facility was to commence from the date of first sale in the present case, investments made up to that date had to be included while determining the exemption period. The exclusion of machinery cost incurred before the first sale was therefore incorrect.

Conclusion: The capital investment made up to the date of first sale had to be taken into account for determining the period of exemption, and not merely the investment up to the date of first production.

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