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of <h1>Clarification on 'Substantial Expansion' for Excise Duty Exemptions: 25% Capacity Increase Required, Second-Hand Machinery Allowed.</h1> The circular provides clarifications on the term 'substantial expansion' concerning area-based exemptions from central excise duty applicable to certain regions under specific notifications. It specifies that substantial expansion requires an increase in installed capacity by at least 25% through the installation of additional plant and machinery. The value of investment is not a criterion, and second-hand machinery can be used if it results in the required capacity increase. The guidelines emphasize that modernization or quality improvements do not qualify as substantial expansion unless they also increase capacity by 25%. These guidelines aim to ensure consistent application of the exemption criteria.
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