Substantial expansion exemption under Notification No. 1/2010-CE depends on new investment and additional employment, not increased production capacity.

Notification No. 1/2010-CE allows exemption to an existing industrial unit that makes new investment after the specified date and thereby generates additional regular employment of at least twenty-five per cent over the base level. The notification does not require proof of increased production capacity or machine-wise production enhancement where the employment condition is satisfied. On the stated facts, the record showed compliance with the additional regular employment requirement and possession of the requisite certificate, so the exemption was available despite the Revenue's objection.

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Issues: Whether the respondent was entitled to exemption under Notification No. 1/2010-CE dated 06.02.2010 on the basis of substantial expansion achieved by making new investment and creating additional regular employment, notwithstanding the Revenue's contention that increase in production capacity was required.

Analysis: Clause 8(b)(ii) of the notification applies where an existing industrial unit makes new investments after the specified date and such investment is directly attributable to generation of additional regular employment of not less than twenty-five per cent over and above the base employment limit. The notification does not require direct attribution to production increase or machine-wise production enhancement. The record showed compliance with the condition relating to additional regular employment, and the respondent had obtained the requisite certificate under the notification.

Conclusion: The Revenue's objection based on absence of increased production capacity was rejected, and the respondent was held entitled to the exemption under the notification.

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