GST India Solution

912/01/2010-CX, Dated: 22/01/2010

Circular No.912/02/2010-CX

F.No.101/22/2008-CX-3

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

***

New Delhi dated the 22nd January, 2010

All Chief Commissioners of Central Excise (including LTU),

All Commissioners of Central Excise (including LTU),

All Director Generals.

Subject: Substantial Expansion by way of increase in installed capacity for the units availing area based exemption.

***

Madam/ Sir,

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.

Yours faithfully,

Sd/-

(Dr.Ravindra J Dange)

Under Secretary to Government of India (CX-3)

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GST India Solution is an effort of firm of professionals who welcome implementation of GST. This is an interactiveplatformthat aspires to disseminate right knowledge to professionals, practitioners and public at large. This platform has beenfloatedbya firm of Chartered Accountants relentlessly working in field of direct and indirect taxes since early 1985.

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Goods & Service Tax

Our core competence is statutory compliance, advisory, corporate tax planning and appellate matters of direct and indirect taxesandcorporate training sessions on GST.

The senior partner of the firm has to his credit several professional publications viz., Delhi Sales Tax Right to Use Goods Act, Delhi VAT, Maharashtra VAT, West Bengal VAT, Haryana VAT published by Taxmann. Madhya Pradesh VAT and Chhattisgarh VAT were published by Suvidha Law House, Bhopal. He has also addressed seminars on indirect taxes organized by professional bodies like ICAI, IMA, NIFM etc. and has also contributed articles on subjects of pro. . . . .