TaxTMI 
TaxTMI 
2010 (4) TMI 641
X X X X Extracts X X X X
X X X X Extracts X X X X
....(40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the Schedule appended hereto, other than the goods specified in the Annexure appended hereto; and cleared from a unit located in the State of Uttaranchal or State of Himachal Pradesh, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts. 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) new industrial units which have commenced their commercial production on or after the 7th day of January, 2003; (b) industrial units existing before the 7th day of January 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January, 2003. 3. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'s industrial unit remained suspended on account of its maintenance and expansion programme upto 14.01.2003. The appellant's unit thereafter recommenced production on 15.01.2003. On the basis of the expansion programme carried out by the appellant, an application dated 16.07.2003 was filed by the appellant, seeking exemption under the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, dated 10.06.2003. Relevant extract of the application for exemption dated 16.07.2003, is being reproduced hereunder: "Sub.: Application for Exemption under Notification No. 49/2003 and 50/2003 Dt. 10.06.2003. Dear Sir, In reference to your letter No. CNO:20-CE/KPRII/Exemption/03/209 Dt. 26.06.2003 for the Exemption under Notification No. 49/2003 and 50/2003 Dt. 10.06.2003, in this regards we inform your good self that our unit qualify for Excise Exemption under Notification No. 49/2003 and 50/2003 dt. 10.06.2003. We have completed the expansion as on 15.01.2003 and started the expended production from 15.01.2003. We are enclosing here with application for Excise Exemption under the Notification No. 49/2003 and 50/2003 Dt. 10.06.2003. As per above said Notifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, both dated 10.06.2003. 8. The custom authorities assailed the appellate order, rendered by the Commissioner of Central Excise (Appeals-II), Meerut on 10.08.2004, before the Tribunal. The Tribunal, by its order dated 18.08.2009, accepted the aforesaid appeal by upholding the order rendered by the Deputy Commissioner, Central Excise Division, Haldwani dated 15.06.2004. 9. Through the instant appeal, the appellant herein has assailed the order rendered by the Tribunal on 18.08.2009. 10. While adjudicating upon the controversy, only one issue was determined by the Tribunal. The Tribunal was of the view that the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, both dated 10.06.2003, would entitle an existing industrial unit to exemption, only if the programme for expansion (so as to increase the existing installed capacity), had commenced on or after 07.01.2003. Since, admittedly, the programme for expansion of the industrial unit of the appellant had commenced prior to 07.01.2003, the Tribunal arrived at the conclusion, that the appellant was not ent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tions bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, inasmuch as, they got prepared the layout plan for the expansion programme on 15.08.2002, whereupon they commenced the purchase of the required plant and machinery. It was also noticed, that although the erection work of the new boiler installed by M/s Steamatic Resources had commenced in the first week of November, 2002, yet all civil works connected with the aforesaid erection had already been completed by M/s Vishvakarma Paper and Boards Ltd. as per the norms of M/s Thermax Ltd., Pune, who had manufactured the boiler, which was to be installed prior to the commencement of the erection work. It was further noticed that slow firing was done in the boiler in the first week of January, 2003, which would lead to the inference that the boiler had been fully erected in the first week of January, 2003, as slow firing could commence only after conclusion of the erection of the boiler. The Deputy Commissioner, Central Excise Division, Haldwani, also noticed in his conclusions drawn from the inquiry conducted from M/s S.V. Engineering Company, Ghaziabad, that dismantling and reinstallation of the mechanical producti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined, so as to determine the real intention expressed therein. Examined minutely, there can be no doubt, that the expansion conceived of under paragraph 2(b) pertains to a unit, which was in existence prior to 07.01.2003. Additionally, it envisages that the installed capacity in the said existing unit should have been increased by not less than 25%. The notification expressly envisages, that the industrial unit under reference should "...have undertaken substantial expansion..." so as to increase the installed capacity "...on or after the 7th day of January, 2003...". It is, therefore, apparent that the words "...have undertaken substantial expansion..." have been further classified by the words "...on or after the 7th day of January, 2003...". We have, therefore, no hesitation in concluding, that the commencement of the increase in installed capacity should have commenced after 07.01.2003 so as to enable an industrial unit to claim exemption by way of increase in installed capacity under notifications bearing Nos.49/2003-Central Excise and 50/2003-Central Excise, both dated 10.06.2003. Insofar as the instant aspect of the matter is concerned, there is ample material on the record ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sought to be achieved, would therefore be defeated, if expansion programmes had been undertaken before 07.01.2003. The incentive was aimed at luring the setting up of new industries in the State, as well as, persuading established industrial units in the State to go in for substantial expansion. There is material on the record of this case on the basis of which, it can legitimately be concluded that the expansion programme, under reference, was conceived of in July, 2002, when the negotiated contract of Rs. 4 lacs was entered into by making an advance payment of Rs. 50,000/-. If, in the present case, the commencement of the increase in installed capacity in July, 2002 is legitimized, on the same analogy, in an another industrial establishment, a programme for expansion initiated a year or two prior to the issuance of the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, would be entitled to avail of the stipulated exemption, if the expansion programme had culminated after 07.01.2003. Secondly, we are afraid that such classification may not be able to stand the test of constitutional validity, inasmuch as, if two different industrial units commence progr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rence issued in exercise of powers conferred under Section 5A(1) of the Central Excise Act, 1944. Secondly, no such clarification has been issued insofar as the present notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, both dated 10.06.2003, are concerned. Thirdly, for the same three set of reasons, as have been considered by us while rejecting the first contention advanced by the learned counsel for the appellant, we are satisfied that the second submission made by the learned counsel for the appellant, based upon a similar clarificatory note, would not render the appellant eligible for exemption under the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, dated 10.06.2003. 18. The third submission advanced by the learned counsel for the appellant was, that the Tribunal was not justified in narrowly construing the phrase "have undertaken" occurring in paragraph 2(b) of the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, dated 10.06.2003, to mean "beginning" of substantial expansion by way of increase in installed capacity on or after 07.01.2003. Insofar as the instant issue is concerned, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....object for granting exemptions is for alluring industrialization within the territory of the State of Uttarakhand. The incentives under reference are for establishing new industrial units and for substantial expansion of existing industrial units. If the object was to allure industrialization or substantial expansion of the existing industrial units, then the interpretation sought to be placed on paragraph 2(b) of the notifications bearing Nos. 49/2003-Central Excise and 50/2003-Central Excise, dated 10.06.2003, would be impermissible. It is not possible for us to accept that paragraph 2(b) of the notifications under reference has been narrowly construed. We are of the view, that the Tribunal gave meaning and effect to each of the words expressed in paragraph 2(b) of the aforesaid notifications, and was justified. In our considered view, the exemption under the aforesaid notifications was permissible only for such industrial units, which had undertaken substantial expansion after 07.01.2003. In the present case, on the factual matrix, there is no dispute whatsoever, that the expansion programme at the hands of the appellant, of its existing industrial unit commenced prior to 0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onferred by Clause (b) of sub-section (3) of Section 7 of the Bihar Finance Act, 1981, the High Court further came to the conclusion that the notification so far as it imposes a condition that the facility of sales tax exemption on purchase of raw material will be available only to those industrial units who have not availed of any facility/benefit on the earlier incentive policy is bad and struck down that part of the notification." Learned counsel for the appellant then invited our attention to the conclusions drawn in paragraph 7 of the aforesaid judgment, which are being extracted hereunder: "7. Coming to the second question, namely the issuance of notification by the State Government in exercise of power under Section 7 of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the Incentive Policy itself. The Industrial Incentive policy is issued by the State Go....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 21. Insofar as the industrial policy under reference is concerned, learned counsel for the appellant invited our attention to the Office Memorandum dated 07.01.2003, issued by the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion), Government of India, and referred to paragraphs 1, 2, 3 & 3.1 thereof, which are being extracted hereunder: "Subject: New Industrial Policy and other concessions for the state of Uttaranchal and the state of Himachal Pradesh. The Hon'ble Prime Minister, during the visit to Uttaranchal from 29th to 31st March, 2002, had, inter-alia made an announcement that 'Tax and Central Excise concessions to attract investments in the industrial sector will be worked out for the Special Category States including Uttaranchal. The industries eligible for such incentives will be environment friendly with potential for local employment generation and use of local resources. 2. In pursuance of the above announcement, discussion on Strategy and Action Plan for Development of Industries and generation of employment in the states of Uttaranchal and Himachal Pradesh were held with the various related Ministries / agencies on the issue,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dustrial units on their substantial expansion. Learned counsel for the appellant, then, referred to the notification dated 08.01.2003 issued by the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) Government of India, wherein various terms, relevant to the industrial policy, were defined. The definitions incorporated in the notification dated 08.01.2003 are being reproduced hereunder: "5. Definitions:- a. 'Industrial Unit' means any industrial unit where a manufacturing programme is carried on or suitable servicing unit as defined in M/o SSI letter No. 2(3)/91-SSI.Bd dated 30.9.1991, other than that run Departmentally by Government. b. 'New Industrial Unit' means an industrial unit for the setting up of which effective steps were not taken prior to 7th January, 2003. c. 'Existing Industrial Unit' means an industrial unit existing as on 7th January, 2003. d. 'Substantial Expansion' means increase by not less than 25% in the value of fixed capital investment in plant and machinery of an industrial unit for the purpose of expansion of capacity / modernization and diversification. e. 'Effective steps' means one or more of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich existed as on 07.01.2003. "Substantial expansion" thereof would necessarily entail expansion carried out after 07.01.2003. But then, at best, learned counsel for the appellant could place reliance on the Office Memorandum dated 07.01.2003 and the notification dated 08.01.2003 to support his present submission. If these two are the basis of his instant contention, that, relying on the impression given in the industrial / incentive policy, the appellant had gone in for "substantial expansion" to reap the benefit of the declared incentives, then the said impression came to be entertained on 07.01.2003 / 08.01.2003 and not before that. Then the process of expansion, as per the appellant's own showing, should have commenced after 07.01.2003 / 08.01.2003, as according to the instant submission, the appellant was persuaded to enhance its existing capacity on the basis of the said industrial / incentive policy. From the factual position noticed in paragraph 11 of the instant order, it is clear that the appellant had contacted M/s Steamatic Resources on 10.07.2002 for the proposed expansion. Whereupon a contract was executed for the installation and commissioning of the expansion for a....