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of <h1>Supreme Court affirms new industrial unit status under Exemption Notification.</h1> <h3>Commissioner Of C. Ex., Shillong Versus North-eastern Tobacco Co. Ltd.</h3> The Supreme Court upheld the decision of the CEGAT, ruling that the unit at the new location qualified as a 'new industrial unit' for the purposes of the ... ‘New Industrial Units’ in North-East' - Earlier Unit closed and subsequently another Unit started at different location without sifting of machinery or work force. Mere attempt to get earlier Industrial licence endorsed for the new Unit at new location will not deprive the new unit of exemption. Issues:1. Interpretation of the term 'new industrial unit' under the Central Excise Notification No. 32/99-C.E.2. Eligibility of a company for claiming exemption from payment of duty under the Exemption Notification.3. Consideration of the factory at a new location as a 'new unit' for the purpose of availing exemption benefits.Detailed Analysis:1. Interpretation of the term 'new industrial unit':The principal issue in this case revolved around the interpretation of the term 'new industrial unit' as per the Central Excise Notification No. 32/99-C.E. The Department of Central Excise contested whether the unit established by the company at a new location could qualify as a 'new industrial unit' within the meaning of the Exemption Notification dated 8-7-1999. The contention was based on the absence of a specific definition of 'new industrial unit' in the notification, leading to a debate on the industrial law provisions and the requirement for obtaining a license for setting up a new industrial undertaking under the Industries (Development & Regulation) Act.2. Eligibility for claiming exemption:The central question was whether the company, by setting up a new unit at a different location, was entitled to claim exemption from payment of duty under the Exemption Notification. The Customs, Excise, and Gold (Control) Appellate Tribunal (CEGAT) had ruled in favor of the company, allowing it to avail the benefits of the Exemption Notification and seek a refund of duty paid on manufactured cigarettes. The company's eligibility hinged on meeting the conditions specified in the notification, particularly regarding the status of the unit as a 'new industrial unit.'3. Consideration of the factory at a new location as a 'new unit':The case involved a detailed examination of the company's actions following a Disinvestment Agreement, which led to the closure of the existing unit at one location and the establishment of a new unit at a different location. The company's argument emphasized that the new unit was set up with fresh investments, new machinery, and a distinct labor force, qualifying it as a 'new unit' as understood in common industrial parlance. The company's position was supported by legal precedents highlighting the importance of contextual interpretation of exemption notifications and the need for a liberal approach in interpreting such provisions.In conclusion, the Supreme Court upheld the decision of the CEGAT, ruling that the unit at the new location qualified as a 'new industrial unit' for the purposes of the Exemption Notification. The court emphasized the lack of evidence indicating a transfer of machinery or workforce from the old unit to the new location, reinforcing the characterization of the new unit as distinct and eligible for exemption benefits. The court rejected the Department of Central Excise's arguments regarding the endorsement of the same industrial license for the new location, emphasizing that such administrative processes did not impact the unit's eligibility for exemption.
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