TaxTMI 
TaxTMI 
2009 (8) TMI 1046
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....arned Advocate for the respondents. 3. The respondents have their industrial units in the State of Uttranchal and are engaged in manufacture of uncoated kraft paper falling under sub-heading 4804.90 of the Schedule of the Central Excise Tariff Act, since the year 1988. The respondents with intention to enhance the production capacity commenced the expansion programme since August, 2002. Under letter dated 13th December 2002, they intimated the Range Office of the Revenue Department that the production would be held up due to major maintenance work of the Plant with effect from 12th December 2002. The expansion programme and the erection of the boiler was completed on 8th December 2002. The commercial production, pursuant to the installation of machinery for enhanced production from the unit, commenced from 15th January 2003. On 10th June, 2003, the Notification No. 49/2003 was issued consequent to which, the respondents sought to claim the benefit thereunder by referring to clause 2(b) of the said notification. The claim of the respondents was disputed by the Department and under order dated 15th June, 2004 while finalising the assessment, the said claim was rejected by the Depu....
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....d Policy, he submitted that it nowhere restricts the benefits under the Policy to the existing units which have undertaken expansion on or after 7th January 2003 but also takes into its fold, the existing units which had commenced the expansion even prior to 7th January 2003 but have started commercial production on or after 7th January 2003. Further, referring to the Notification No. 32/99-C.E., dated 8th July, 1999 and the Circular dated 9th July, 1999 issued by the Board in relation to the said Notification No. 32/99, he submits that it was also the understanding of the Department itself that it was not related to the actual expansion programme of the units but it related to the date of commencement of the commercial production and the same has to be considered with reference to the date specified under the notification. Being so, according to the learned Advocate for the respondents, the existing units which had commenced expansion prior to 7th January 2003 but had completed the same thereafter and had started commercial production only on or after 7th January 2003 even those would be entitled to claim exemption in terms of Notification No. 49/2003, and hence, according to the ....
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....ears for the entire state of Uttranchal and Himachal Pradesh from the date of commencement of commercial production." Referring to the expression "the date of commencement of commercial production" it is sought to be contended that the reference to 7th January 2003 in the notification has to be construed as referring to the date of commencement of the commercial production. Otherwise, the very purpose behind the grant of exemption under notification to the units who have carried out expansion in the production capacity would be defeated. In that connection, attention was also drawn to clause (a) of clause 3.1 of the said Industrial Policy which reads - "100% outright excise duty exemption for a period of 10 years from the date of commencement of commercial production". 10. The relevant portion of the Notification No. 49/2003 read thus - "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act....
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....date on which the notification was published in the Official Gazette. 11. Undoubtedly, the expression used in sub- clause (b) is that "which have undertaken" substantial expansion in their installed capacity on or after 7th day of January 2003 even though the industrial units might have been in existence prior to the 7th day of January 2003. In other words, the plain reading of sub-clause (b) of clause 2 of the notification thereof reveals that whatever industrial units were in existence on 7th day of January 2003, if the same have undertaken to increase the installed capacity by not less than 25% and if the same has been undertaken on or after 7th day of January 2003 then they would be entitled to avail the benefit under the said notification. 12. It is to be noted that the Industrial Policy itself does not grant any exemption from any excise duty as such. The Industrial Policy only lays down the guidelines for the purpose of making necessary provision as regards the benefits which can be granted to the industrial units including the tax benefits. Being so, merely because in the Industrial Policy it is provided that 100% excise duty the benefit can be granted for 10 years fr....
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.... entitled for the benefit, it would have obviously been understood that such expansion could have been either prior to or after 7th January 2003. The framers of notification have further specifically specified that expansion has to be undertaken on or after 7th day of January 2003. Being so, the contention that the benefit under the clause 2(b) of the notification would apply even to the expansion which had commenced prior to 7th day of January 2003 cannot be accepted. 15. There is yet another reason which lends support to the contention on behalf of the appellants. Clause 3 of the notification prescribes the period of 10 years as the period for which the exemption can be availed. However, the date of commencement of the period of 10 years has been specified as either from the date of publication of the notification in Official Gazette or from the date of commencement of commercial production. The Notification was published in Official Gazette on 10th June, 2003. Evidently, there is a period of about six months contemplated between the date on which the expansion could be undertaken and the date on which the commercial production could commence in order to enable the manufacture....
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....entation of the expansion programme. 19. The clarifications as quoted above from the Board circular do not relate to the issue which is sought to be canvassed in the matter in hand. Merely because the clarification states that the commercial production should be on or after the relevant date that will not lead to the conclusion that expansion programme also can be prior to the relevant date. Added to this, as already observed above, clause 3 in the notification in question does not entitle the manufacturing units to claim the benefit prior to 10th June, 2003 whereas under the Notification No. 32/99, which granted benefit from 24th day of December 1997, the same date itself was held to be the date to claim benefits therunder. Even assuming that the commercial production had started on 7th January 2003, the manufacturing units could not have availed the benefit since January 2003 itself. Being so, the clarification given in relation to Notification 32/99 under para 2, in our considered opinion, by no stretch of imagination can be of any help to understand the meaning of clause 2 (b) of the notification in question. 20. It is however sought to be argued that Notification No. 32/....
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....ion 7 of the Bihar Finance Act was to carry out the objectives of the Policy decision taken in the Industrial Policy itself and therefore, it was not open to the Government to issue Notification in exercise of such powers to override an Incentive Policy itself. Obviously, the validity of the notification vis-a-vis the incentive policy under which the notification was issued was in issue before the Apex Court in the said matter. The issue before us does not relate to the validity of the notification. We are concerned with the meaning of the words used in the notification. Undoubtedly, while understanding the meaning thereof, the same are to be understood and construed in the context in which the relevant expressions are used in the notification and the simple and plain meaning which can be derived from the notification itself has to be accepted. Besides, even Dictionary meaning, as has been submitted on behalf of the appellant, discloses that the term "undertake" is to be understood to mean "to engage in; to enter upon; to take in hand; set about; attempt etc. Being so, the decision of the Apex Court in Suprabhat Steel Ltd. is of no help to the respondents. 22. As regards the dec....
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....pondents' industrial unit and actual implementation thereof commenced much prior to 7th January 2003 and therefore, the respondents are not entitled to claim the benefit under notification in question and therefore, order of the original authority needs to be restored. 24. In Novapan India Ltd. the Apex Court held as under : "18. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Papers referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the com....