Exemption for new manufacturing unit applies only to genuinely new capacity, with relief granted pro tanto to the added unit.

A petition challenging an exemption dispute was held maintainable despite the availability of an appeal, because the matter raised a substantial question of law on the interpretation of the exemption notification and refusing review would have risked avoidable multiplicity of proceedings. On the merits, the notification applied only to a new manufacturing unit, and mere registration as a 100% export-oriented unit was not sufficient. The tribunal declined to import the definition from section 10-B of the Income-tax Act because the fiscal scheme was distinct. Exemption was therefore allowed only pro tanto for the genuinely new and separable additional 28 TPD capacity, while the existing 14 TPD capacity was excluded.

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Issues: (i) Whether the petition was maintainable despite the availability of an appeal before the Tax Board. (ii) Whether the industrial unit was a new manufacturing unit entitled to exemption under the notification dated 13 June 1994, and if so, to what extent.

Issue (i): Whether the petition was maintainable despite the availability of an appeal before the Tax Board.

Analysis: A substantial question of law arose on the interpretation of the exemption notification. The impugned revision order had the effect of foreclosing the assessment officer's course in a manner that could prejudice the parties, while the appellate forum lacked power to stay the assessment proceedings effectively. Refusal to examine the issue would have led to avoidable multiplicity of proceedings.

Conclusion: The preliminary objection to maintainability was rejected, and the petition was held maintainable.

Issue (ii): Whether the industrial unit was a new manufacturing unit entitled to exemption under the notification dated 13 June 1994, and if so, to what extent.

Analysis: The exemption notification was confined to a 100 per cent export-oriented new manufacturing unit. Mere registration as a 100 per cent EOU was not enough; the unit had to satisfy the further condition of being a new manufacturing unit. The Court declined to import the definition from section 10-B of the Income-tax Act, 1961, because the fiscal scheme under that Act was distinct. At the same time, the old 14 TPD capacity was not an insignificant or purely incidental part of the later unit. Balancing the object of the exemption with the factual position that a fresh 28 TPD capacity had come into existence, the Court held that complete denial of exemption was unwarranted.

Conclusion: The unit was treated as a new manufacturing unit only in respect of the additional 28 TPD capacity, and exemption was denied for the remaining 14 TPD capacity.

Final Conclusion: The challenge succeeded only in part: the exemption was upheld pro tanto for the new additional capacity, while the remainder of the claimed benefit was not sustained.

Ratio Decidendi: An exemption notification granted to a new manufacturing unit must be construed by its own terms, and where a unit is partly new and partly an expansion of an existing unit, the exemption can be granted only to the genuinely new and separable portion of the undertaking.

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