2022 (3) TMI 323 - HC - Central Excise

Area Based exemption - new unit setup in a non-industrial area, but notified the Khasra No. in General Exemption No.51 - benefit of the New Industrial Policy of remission of the Central Excise, or only an existing unit doing 25% of development in a non-industrial area is only entitled to such remission to be exclusion of the new units? - benefit of N/N. 50/2003 - HELD THAT - Tthe controversy involved in this case has already set at rest by the Full Bench of this Court in OM ISPAT, JITENDRA KUMAR AND KUCHHAL CAMPUS IQBALPUR SUGAR MILLS VERSUS GOVERNMENT OF UTTARAKAND AND ORS. 2011 (8) TMI 795 - UTTARAKHAND HIGH COURT , and it has, vide its aforesaid judgment, categorically come to the conclusion that remission of Central Excise is also available to a new industrial unit setup in a non-industrial area, but where the Khasra No. is specified in General Exemption No.51 - the judgment of the Full Bench is also agreed upon that the petitioner is entitled to exemption under Notification No.50/2003, dated 10.06.2003. Also, there is neither plausible rationale, nor it is an intelligible differentia to uphold the contention that only existing units with substantial development are eligible to get the tax/duty remission and holiday. The very purpose of devising the industrial policy, i.e. Notification No.50/2003 is to give incentive to growth of industry in the two States. It should also apply to new units in non-industrial areas. The writ petition is a meritorious one, and should be allowed - the opinion of the respondent No.3 in expression to the respondent No.2 his opinion on extension of benefit of exemption to new industrial units established in the category industrial activities in non-industrial areas are, hereby, quashed - petition allowed.

Summary

Issues Involved:
1. Eligibility for Central Excise Duty exemption under Notification 50/2003.
2. Applicability of the Industrial Policy dated 07.01.2003 to new industrial units in non-industrial areas.
3. Interpretation of the notification categories and the role of the Nodal Agency (SIDCUL).

Detailed Analysis:

1. Eligibility for Central Excise Duty exemption under Notification 50/2003:
The petitioner, a partnership firm, sought a writ of certiorari to quash the order by the Deputy Commissioner of Customs & Central Excise, which directed the petitioner to start paying Central Excise duty on future clearances and imposed duty on past clearances under Notification 50/2003. The petitioner argued that their case was covered by a Full Bench Judgment of the Court in the case of "M/s Om Ispat vs. Secretary, Industrial Department, Government of Uttarakhand," which supported their eligibility for exemption.

2. Applicability of the Industrial Policy dated 07.01.2003 to new industrial units in non-industrial areas:
The Government of India's Industrial Policy dated 07.01.2003 provided fiscal incentives to new industrial units and existing units on substantial expansion. The policy specified that units in certain notified areas were entitled to 100% excise duty exemption for ten years. The petitioner’s unit was located in Khasra Nos. 610 and 624, which were notified areas. The respondents argued that the petitioner’s unit did not qualify as it was a new unit in a non-industrial area, and the exemption was intended only for existing units undergoing substantial expansion.

3. Interpretation of the notification categories and the role of the Nodal Agency (SIDCUL):
The Deputy Commissioner and SIDCUL clarified that the notification applied to existing units in non-industrial areas, not new units. The Full Bench in the "M/s Om Ispat" case had previously ruled that the notification did not differentiate between new and existing units in non-industrial areas, and new units were also eligible for exemption if located in specified areas.

Judgment Analysis:

Issue 1:
The Court found that the petitioner’s case was indeed covered by the Full Bench Judgment in "M/s Om Ispat," which had settled that new units in notified non-industrial areas were eligible for the exemption under Notification 50/2003.

Issue 2:
The Court referred to the Full Bench Judgment, which clarified that the Industrial Policy and Notification 50/2003 did not restrict exemptions to existing units only. The policy aimed to incentivize industrial growth, applying equally to new units in specified non-industrial areas.

Issue 3:
The Court noted that the Full Bench had rejected the interpretation that the notification applied only to existing units. The clarification by SIDCUL, stating that the notification applied to existing units only, was deemed a typographical error and not binding. The Court emphasized that the notification itself was sufficient to claim the benefit of exemption without requiring further notifications.

Conclusion:
The Court concluded that the petitioner was entitled to the Central Excise Duty exemption under Notification 50/2003. The order dated 16.03.2005, passed by the Deputy Commissioner, and the opinion of SIDCUL were quashed. The writ petition was allowed, and the rule was made absolute.

Final Order:
The writ petition was allowed, quashing the impugned order and opinion, and confirming the petitioner’s entitlement to the exemption under Notification 50/2003. Urgent certified copies of the order were directed to be issued to the parties.