Tax exemption under an eligibility certificate continues beyond enhanced capacity where only the cumulative ceiling governs the benefit.

An eligibility certificate for an expanded unit permitted enhanced installed capacity up to 5100 M.T. and did not state that tax exemption would stop once annual production crossed that level. The only production-based restriction was that exemption would not apply in any year when production remained below the original 4189 M.T. capacity. The governing limit was the cumulative exemption ceiling of 250% of capital investment in fixed assets, or the 9-year period, whichever ended earlier. The revisional authority wrongly read an additional restriction into the certificate, so the denial of exemption was quashed and reassessment directed.

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Issues: Whether the eligibility certificate dated 29.5.2014 entitled the petitioner to exemption from tax on production beyond 5100 M.T., subject only to the stipulated ceiling of cumulative exemption.

Analysis: The certificate granted exemption for the expanded unit and permitted enhancement of installed capacity from 4189 M.T. to 5100 M.T., but the only production-related rider was that exemption would not be available for any period in which annual production did not exceed the original capacity of 4189 M.T. The certificate did not impose any further restriction that exemption would cease once production crossed 5100 M.T. The governing limit was the overall monetary ceiling of exemption, namely 250% of the capital investment in fixed assets, or the expiry of the 9-year period, whichever occurred earlier. The revisional authority read into the certificate a limitation that was not expressed therein.

Conclusion: The petitioner was entitled to exemption even where annual production exceeded 5100 M.T., subject to the maximum cumulative exemption prescribed in the certificate. The revisional order denying such benefit was unsustainable and was quashed, with the matter remitted for reassessment.

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