Substantial Expansion by way of increase in installed capacity for the units
availing area based exemption
CIRCULAR NO 912/02/2010-CX
Dated: January 22, 2010
Subject: Substantial Expansion by way of
increase in installed capacity for the units availing area based exemption.
Area based exemption is available to the units in the
specified areas in the North-East region, Jammu & Kashmir, Himachal Pradesh and
Uttarakhand under different notifications. The exemption is applicable to the
new industrial units set up after the specified date and also to the existing
units which have undertaken substantial expansion by way of increase in
installed capacity by not less than 25%.
2. References have been received regarding the units
manufacturing specified goods as well as non-specified goods as to whether the
substantial expansion should take place only for specified goods or of overall
capacity of the unit. Following two situations have arisen in such cases:
(1) 25% expansion is undertaken only
in respect of specified goods, and not overall capacity of the unit.
(2) The expansion is undertaken in
respect of non-specified goods only, but overall capacity of the unit increases
by 25%.
3. The issue was discussed in the Chief Commissioner's
Conference held at Shillong on 30th and 31st October, 2009 and thereafter in the
Boar on the basis of inputs received from field formations.
4. The matter has been examined. The exemption notification
is applicable only to the specified goods. Therefore, the condition of
substantial expansion should also be applicable to the specified goods only.
Therefore, it is clarified that only when the substantial expansion of the
installed capacity of the specified goods is undertaken, then only the benefit
of notification would be applicable. To illustrate, if a unit is making tobacco
product (say- gutkha, a non-specified goods, which is not allowed benefit of
exemption) and also iron and steel articles ( specified goods, which are lowed
benefit of exemption), in that case, only when units increase installed capacity
of iron and steel articles by 25%, benefit would be available. But if it
increases production of gutkha by 100%, then it would not get benefit.
5. Trade and Industry as well as field formations may be
suitably informed.
6. Receipt of this Circular may kindly be acknowledged.
7. Hindi version will follow.
F.No.101/22/2008-CX-3
(Dr.Ravindra
J Dange)
Under
Secretary to Government of India(CX-3)
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