Circular No.977/01/2014

F.No.332/09/2013-TRU

Government of India

Ministry of Finance

Department of Revenue

Tax Research Unit

*****

New Delhi, the 3^rd January, 2014

To,

Chief Commissioners of Central Excise (All),

Chief Commissioners of Central Excise and Customs (All),

Director General, Directorate General of Central Excise Intelligence,

Commissioners of Central Excise (All),

Commissioners of Central Excise and Customs (All).

Madam/Sir,

Subject: Availability of excise duty exemption to the units which have already availed of exemption under New Industrial Policy for another 10 years by way of 2^nd substantial expansion in the State of Jammu & Kashmir – Clarification – Regarding.

Representations have been received from trade and industry associations and field formations seeking clarification as to whether an existing unit which has availed of excise duty exemption under notification No.56/2002-CE & 57/2002-CE, both dated 14.11.2002 by way of substantial expansion can avail of excise duty exemption under notification No.1/2010-CE, dated 06.02.2010, again by way of second substantial expansion.

2.         The matter has been examined by the Ministry. In pursuance of the New Industrial Policy and other concessions for the State of J&K announced by the Department of Industrial Policy and Promotion (DIPP) in June 2002, notification No.56/2002-CE (location specific exemption to all goods other than the exclusion list) & No.57/2002-CE (non-location specific exemption to specified industries other than the exclusion list), both dated 14.11.2002 were issued to provide exemption from excise duty equivalent to the duty payable on value addition undertaken in the manufacture of the goods to the new units and units undertaking substantial expansion, for a period of ten years from the date of commencement of commercial production. The exemption operates through a refund mechanism.

2.1        Subsequently, pursuant to a review of the exemption, notification No.1/2010-CE was issued so as to extend the excise duty exemption to all goods barring the exclusion list to units located anywhere in the State of J&K subject to the same conditions and modalities as are applicable to the existing area-based exemptions for the State. Thus, notification No.1/2010-CE was basically an extension of the existing special package of incentives for the State of J&K with certain modifications.

2.2        Notification Nos.56/2002-CE & No.57/2002-CE and notification No.1/2010-CE does not specifically provide any cut-off date (sunset clause) for setting up of new units or for units undertaking substantial expansion. Further, notification No.1/2010-CE does not debar an existing unit which has availed of excise duty exemption under notification No.56/2002-CE & 57/2002-CE, both dated 14.11.2002 by way of substantial expansion, to avail of excise duty exemption again by way of substantial expansion.

3.         It is, therefore, clarified that an existing unit which has availed of excise duty exemption under notification No.56/2002-CE & 57/2002-CE, both dated 14.11.2002 by way of substantial expansion can avail of excise duty exemption under notification No.1/2010-CE, dated 06.02.2010 again by way of second substantial expansion so long as it satisfies the conditions stipulated under notification No.1/2010-CE, dated 06.02.2010.

4.         Trade Notice/Public Notice may be issued to the field formations and taxpayers.

5.         Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board.

(P.K. Mohanty)

Joint Secretary (TRU)

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