2018 (4) TMI 1092 - AT - Central Excise

Substantial expansion - N/N. 1/10 CE dated 06.02.2010 - respondent increased their employment more than 25% - case of Revenue is that there should be an increase of more than 25% in the production capacity of the respondent-assessee - Held that - the notification stipulates that there should be investment and that the investment should be directly attributable to generation of employment. The said notification does not speak about direct attribution to generation of production or machine-wise production - the ground taken by the Revenue is contrary to spirit of the notification - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against granting exemption under Notification No. 1/10 CE for substantial expansion based on employment increase.

Analysis:

Issue 1: Granting of Exemption
The case involved an appeal by the Revenue against an order granting exemption under Notification No. 1/2010-CE for substantial expansion by the respondent based on an increase in employment by more than 25%. The respondent, located in Jammu & Kashmir, had increased employment in 2015 and claimed the benefit of the said notification. The lower authorities had granted the benefit, which was challenged by the Revenue.

Issue 2: Interpretation of Notification
The main contention raised by the Revenue was regarding the interpretation of the notification's requirement for an increase of more than 25% in production capacity through employment of more than 25% employees. The Tribunal analyzed the relevant clause of the notification, which specified conditions for granting exemption to industrial units based on substantial expansion through employment generation.

Issue 3: Compliance and Decision
Upon examining the notification's provisions, the Tribunal found that the requirement for investment directly attributable to the generation of employment was met by the respondent. The Tribunal noted that the notification did not mandate a direct attribution to production or machine-wise production. Consequently, the Tribunal held that the Revenue's argument was contrary to the notification's spirit. As the respondent had fulfilled the conditions of the notification, the Tribunal upheld the order granting exemption and dismissed the Revenue's appeal.

In conclusion, the Tribunal's decision emphasized the importance of strict adherence to the conditions specified in notifications for availing exemptions. The judgment clarified the interpretation of the notification's provisions regarding substantial expansion through employment generation, ultimately ruling in favor of the respondent based on compliance with the stipulated requirements.