Dated : 09/07/99

F.No. 354/08/98-TRU

Subject: Exemption from excise duty on goods produced in the North East Region …reg.

I am directed to say that the Government has decided to grant certain exemptions from excise duty on goods produced in North East Region. The exemption notification Nos. 32.99 and 33/99, both dated 8.7.1999, have been issued in this regard.

Notification No. 32/99 exempts all excisable goods that are manufactured in the two types of industrial units mentioned in para 3 of the notification. These units are either new units which have commenced their commercial production on or after 24.12.97, of these are industrial units which have undertaken substantial by way of increase in installed capacity by not less than 25%. The increase in capacity should have been effective on or after 24.12.97.

It may be noted that the industrial unit referred to above should be located in any of the specific area mentioned in Annexure to the notification. In other words if a industrial unit is located outside the Integrated Infrastructure Development Centre (IIDC), Growth Centers, Export Promotion Industrial Parks, etc., mentioned in the above Annexure, the benefit of exemption under Notification No. 32/99 shall not be admissible.

As regards the question whether a new industrial unit has commenced commercial production on or after 24.12.97 or substantial expansion by 25% in installed capacity has taken place a decision may be taken after examination of the records and any other relevant information on this respect. In case of any doubt the Commissioner of Central Excise may consult the Department of Industries of the State Government for this purpose.

Notification No. 33/99 has been issued to exempt specified goods manufactured by new industrial units, or industrial units which have undertaken substantial expansion. The exemption contained in this notification is applicable to be entire North East Region comprising of seven States. However, here also the exemption is applicable only to new industrial units that have commenced production on or after 24.12.1997 or to industrial units that undertaken substantial expansion on or after 24.12.1997.

In both the cases, the exemption shall be applicable for a period not exceeding 10 years. To illustrate, for an already existing industrial unit, which qualifies for exemption, the benefit of exemption would be available for a period of 10 years starting from 8.7.1999. However, if a new unit commences commercial production for instance, on 21.12.1999, the exemption would be available for a period of 10 years starting from 21.12.1999.

It may be observed that the benefit of exemption under Notification No. 32/99 or 33/99 is to be given effect by way of refund of the duty paid by the manufacturer through the PLA. The refund is to be allowed every month, by the 15th of the month. If there is any delay in verification of the claim for refund of PLA duty, the Assistant Commissioner/Deputy Commissioner may allow the refund for that moth on provisional basis and thereafter adjustment, if necessary, may be made in the refund of the subsequent month. This is to ensure that there are no delays in sanctioning the refunds claims. It may be emphasised, at the cost of the repetition, that the refund is to be allowed only of the amount of duty paid in the PLA and not of any amount paid through the modvat account.

Notification No. 48/99-CE(NT) dated 8.7.1999 has been issued to amend the modvat rules. It has been provided that even though the PLA duty would be refunded to the manufacturers in terms of exemption notification No. 32/99 and 33/99, the users of these products would be eligible to modvat credit as usual. To illustrate if a manufacturer of production Z has paid excise duty of Rs.. 2500 from modvat account and Rs. 500 from PLA and another manufacturer uses X as inputs, the user would be allowed modvat credit of Rs. 3000.

Copies of the notifications are enclosed. (Not enclosed on the website)

Any difficult or doubt with regard to the implementation of the aforesaid notifications may kindly be referred to the undersigned.

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Category : Excise Duty (4040)
Type : Circulars (7450) Notifications/Circulars (29834)

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