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TMI Blog2003 (10) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... Vihar, Sri Ganganagar with a capacity of 14 MT production of Gwar Gum Powder per day, which was not a new manufacturing undertaking. 2. The brief facts necessary for the purpose of present controversy needs to be noticed. A Gwar Gum Powder unit was set up on 22.6.88 by M/s. Vikas Chem. (P) Ltd. at plot No. B/87. It started its commercial production on 18.2.89. At that time its production of Gwar Gum Powder capacity was 7 MT per day. On 29th Sept. 1990 on the same Plot No. B/87 another unit was set up with the capacity of 7 MT production per day. The second new plant went in production in June 1992 and total capacity of two plants situated at Plot No. B/87 cumulatively became 14 MT Gwar Gum Powder production per day. 3. Thereafter M/s Vikas Chem. (P) Ltd. under went the change and it was converted into public limited, under the name and style of M/s Vikas WSP Ltd., it is that company which is now Assessee in this case. . 4. In September 1992 vide application dated 8th Sept., 1992, said company applied for registration before the Directorate of Ministry of Industries, Government of India, to establish a 100 % Export Oriented Unit (in short EOU) with the production capacity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to the Department of Industries, Government of India, for permission to set up a 100% EOU which was granted to it on 30.10.92. The existing unit did produce 14 MT Guawar Gum Powder. Later it had the capacity to produce 42 MTD including 14 tones per day capacity it had earlier. Its industrial units are situated at Plot Nos. 86 and 87 at Sri Ganganagar and it has been registered as a 100% ESU with the Department of Industries, Government of India. On these premises, the Tribunal reached its conclusion that installation of plants on Plot No. B-86 with the capacity to produce 28 MT per day was set up after application for registration as 100% EOU was made therefore, is the new Industrial Unit which is eligible for all benefits under Notification dated 13.6.94 whereas units producing 14 MT Gwar Gum Powder were existing, prior to making of the application for the registration of the Units as 100% EOU, they cannot be considered be new manufacturing unit within the meaning of said Notification. On these findings, the Tribunal held that industrial unit set up on B-86 with 28 MT capacity shall be treated to be a new manufacturing unit for the purposes of notification dated 13.6.94. It ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee has 3 units; in Plot No. B-87 two units and one at Plot No. 86. All the 3 units are registered as 100% EOU in the name of the Assessee Company under a single application, and, therefore, legitimate question arises what is the meaning given to the 'new' as pre-fix to manufacturing units for the purpose of Notification. 12. This takes us to the gamut of registration of 100% EOU with Government of India under the Export Import Policy 1992-97. Substantive provisions of Export Importy Policy 1992-97 are contained in Chapter IX. Clause 93 of the policy state that Units undertaking to export their entire production of goods may be set up under the Export Oriented Unit (EOU) Scheme of Export Processing Zone (EPZ) Scheme. Such units may be engaged in manufacture, production of software, agriculture, acqaculture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Units engaged in service activities may also be considered on merits. 13. This scheme also provides for conversion of existing units. Clause 118 of the Scheme provides that existing DTA (Domestic Tariff Area) units may also apply for conversion into EOU. So also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on capital goods, components and raw materials; and (c) Discharge of export obligation, if any, on the supplier. (ii) EOU/EPZ units shall, on production of a suitable disclaimer from the DTA supplies, be eligible for obtaining the benefits specified in paragraph 122(b) and (c) of the Policy. For this purpose, they shall get Brand Rates fixed by the DGFT. Such supplies would, however, be eligible for benefits specified in para 106(i) above. Clause 107: The benefits stated under paragraph 106 shall be available provided the goods supplied are manufactured in the country. 16. Perusal of the aforesaid clauses reveal of concession on any supplies made to ESU by units set up in DTA. These supplies include supply of 'raw material' for ESUs supplies from Domestic Tarriff Units to EOU/EPZ units will be deemed exports for the supplier, Manufacturer, to fulfil its export quota if any. Such supplies apart from being eligible for the relevant benefits under paragraph 122 of the policy, also becomes entitled to refund of Central Sales Tax and exemption from payment of Central Excise Duty on capital goods, components and raw materials. Apparently, supplies f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune with proposed tax holidays in export or axim policy. 20. Once supplies from DTA to EOU/EPZ are Deemed Export , the benefit under Export Policy envisages refund of Central Sales Tax, as the sale tax on inter State sales or in the course of for export out India is permissible to be levied only by an Act of parliament by virtue of Article 286. State legislature do not have legislative competence in levy tax on sale or purchase forming part of export out of India or Import within India. But for said provision such supplies of raw material would become subject to Central Sales Tax Act. It also envisaged exemption from payment of Central Excise Duty on supply to E.O.U. of raw materials amongst other goods. Not only exemption from Central Tax and Excise Duty is envisaged, it is also envisaged that where supplies of such capital goods or raw material to E.O.U. Units itself have any export obligations, said supplies are deemed in discharge of export obligation. The benefit of paragraph 106 are made available only to supply of goods to EOU engaged in manufacturing of goods for the purpose of export and is available if the goods are manufactured in the country. We have noticed above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be divorced from the Export Import Policy 1992-97. If any other view is taken, the very purpose of extending export promotion benefit to 100% EOU registered with Government of India will be defeated if the 100% E.O.U. are classified de hors the policy statement. The reason is apparent. The primary purpose of the Export Import Policy 1992-97 is not to install new units but to expand the sphere of 100% EOU whether by converting or extending existing units to 100% EOU or by installing a new or additional units after registration. Once they are registered as 100% EOU, whether by conversion or as a unit yet to be installed, they fall in the same category of unit registered as 100% EOU. It is registration with the Government of India as 100% EOU which casts obligation on the unit whether it is converted or newly installed before registration to export all its manufactured goods out of India. Benefits extend to manufacturer of goods flows under scheme uniformly. No benefits of tax concessions flows in respect of already installed plant, machinery and building. But such benefits also flows to plants machineries or equipments installed after registration even to existing units. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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