2015 (4) TMI 568 - SC - Central Excise

Benefit of exemption from payment of central excise duty to factories in North Eastern States vide Notifications viz. Notification No.32/99-CE and Notification No.33/99-CE both dated 8.7.1999 - Held that - No ambiguity in the language of the Notifications. The Notifications as well as C.B.E.C. s clarifications relied upon by the appellants are very clear that in the case of existing manufacturing units, the date on which the capacity of the unit is enhanced, should be the relevant date in terms of Clause 3(b) of the Notifications. The date of commencement of commercial production is mentioned in Clause 3(a) of the Notification, is applicable to the new industrial units only. We also agree with the Commissioner (Appeals) that Clause (4) of the Notifications regarding commercial production applies only to new units. The appellants unit is existing unit and the expansion was completed prior to 24.12.97 - Decided against assessee.

Summary

Issues: Interpretation of Notification No.32/99-CE and Notification No.33/99-CE regarding exemption from central excise duty for industrial units in North Eastern States.

In this judgment, the Supreme Court addressed the issue of whether an existing industrial unit, which extended its production capacity before a specified cut-off date but commenced production after that date, was eligible for the benefit of exemption from central excise duty under Notification No.32/99-CE and Notification No.33/99-CE. The Notifications provided exemptions to new industrial units starting production after December 24, 1997, and existing units undertaking substantial expansion after the same date. The appellant, an existing unit in Assam, increased its capacity by over 50% with machinery installed in September 1997 and production starting in February 1998. The Department denied the benefit, citing the installation date as the relevant factor, leading to appeals before the CESTAT. The Tribunal emphasized the distinction between clauses 3(a) and 3(b) of the Notifications, highlighting the requirement of substantial expansion post-December 24, 1997, for existing units. Referring to a clarification letter from the Central Board of Excise and Customs, the Tribunal concluded that the expansion date was crucial for existing units, dismissing the appeal. The Supreme Court upheld the Tribunal's interpretation, affirming that the expansion date determined eligibility for the exemption, not the production commencement date. Consequently, the appeal was dismissed based on the clear language of the Notifications and the specific requirements outlined for existing industrial units seeking exemption benefits.