| Date: |
21-01-2004
|
| Notification No: |
Central Excise Circular No 772/2004
|
| Issuing Authority: |
Central Excise
|
| Type: |
Circular
|
| File No: |
|
| Subject: |
Clarifications on the term “Substantial Expansion” in the area based exemptions - Regarding
|
Area based exemptions from central excise duty are currently available under various notifications as follows :-
(a) for North Eastern States under 5540">notification No. 32/99-C.E. and 5541">33/99-C.E. both dated 8-7-1999;
(b) for Jammu & Kashmir under 12052">notification No. 56/2002-C.E. and 12053">57/2002-C.E. both dated 14-11-2002; and
(c) for Himachal Pradesh and Uttranchal under 14414">notification No. 49/2003-C.E. and 14415">50/2003-C.E. both dated 10-6-2003.
2. The exemption contained in these notifications is applicable either to the new industrial units or units undertaking substantial expansion by way of increase in installed capacity by not less than 25%.
3. Board has received representations from various quarters seeking clarifications on the term �substantial expansion�. With a view to ensure smooth implementation of the exemption schemes, following guidelines are circulated to explain the scope of �substantial expansion� so far as it relates to the applicability of above-mentioned notifications.
(a) Increase in installed capacity of an existing unit by not less than 25% should be the result of installation of additional plant and machinery. Any increase in the installed capacity by means other than installation of additional plant and machinery would not qualify for the benefit of exemption under �substantial expansion�.
(b) As substantial expansion is defined in terms of increase in installed capacity by 25% or more, value of investment in plant and machinery is not the criteria to define substantial expansion. So long as additional installation of plant and machinery results into increase in installed capacity by not less than 25% quantum or value of investment in plant and machinery is not very material in deciding the criteria of substantial expansion.
(c) There is no bar on use of second hand machinery for undertaking substantial expansion so long as it enhances the existing installed capacity by not less than 25%. What is relevant is the increase in installed capacity by not less than 25% by way of additional installation of plant and machinery.
(d) The term substantial expansion is not defined in terms of original or depreciated value of plant and machinery. The only criterion to be satisfied is accretion in installed capacity by atleast 25% with additional plant and machinery.
(e) Additional investment in plant and machinery for modernization or for improving the quality of existing products, unless it leads to increase in installed capacity by 25% or more, would not tantamount to substantial expansion.
4. You are requested to keep the above guidelines in view while deciding the applicability of the term �substantial expansion� in the context of area-based exemption notifications. Any difficulty in implementation may please be brought to the notice of the Board.
|
|
|