Mohinder Verma
JAMMU, Jan 6: Resolving the three-year long confusion over the excise duty exemption, Union Finance Ministry has made it clear that existing industrial units in Jammu and Kashmir can avail excise duty exemption again by way of second substantial expansion under the New Industrial Policy. This would prevent the industrialists, who have made huge investments, from suffering any loss and subsequently help in industrial promotion in the State.
The confusion started following the issuance of Notification No.1 of 2010 as the local office of the Central Excise refused to provide excise duty exemption to the industrial units on second substantial expansion on the ground that they had already availed the benefit under the central package announced in 2002.
The stand taken by the local office of the Central Excise created wide-spread resentment among the existing industrial units covered under the industrial policy and other concessions announced by the Department of Industrial Policy and Promotion. This even led to litigations in the court of law as industrialists, who had made substantial investments were fearing huge losses due to the stand taken by the Central Excise Department’s local authorities.
During the past three years, the industrialists were vigorously pursuing the issue at different levels and even brought the situation to the notice of Chief Minister, Omar Abdullah and Member Parliament, Prof Saif-ud-Din Soz seeking their personal intervention in resolving the confusion.
The three-year long confusion came to an end with the Tax Research Unit of the Department of Revenue under the Union Finance Ministry issuing a Circular No.977/01/2014 making it clear that an existing unit which has availed of excise duty exemption under Notification No.56/2002-CE and 57/2002-CE both dated November 14, 2002 by way of substantial expansion can avail of excise duty exemption under Notification No.1/2010-CE dated February 6, 2010 again by way of second substantial expansion so long as it satisfies the conditions stipulated under Notification No.1/2010-CE.
The circular reads: The matter has been examined by the Ministry. In pursuance of the New Industrial Policy and other concessions for the State of Jammu and Kashmir announced by the Department of Industrial Policy and Promotion in June 2002, Notification No.56/2002-CE (location specific exemption to all goods other than the exclusion list) and No.57/2002-CE (non-location specific exemption to specified industries other than the exclusion list) 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 10 years from the date of commencement of commercial production.
“Notification Nos.56/2002-CE and 57/2002 and Notification No.1/2010-CE doesn’t specifically provide any cut-off date (sunset clause) for setting up of new units or for units undertaking substantial expansion”, the circular said, adding further Notification No.1/2010-CE doesn’t debar an existing unit which has availed of excise duty exemption under Notification No.56/57 of 2002 by way of substantial expansion, to avail of excise duty exemption again by way of second substantial expansion”.
In the circular, Joint Secretary Tax Research Unit of the Department of Revenue, Union Ministry of Finance has made it clear that any difficulty in implementation of the circular may be brought to the notice of the Board.
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