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J&K excise exemption scheme modified

K.R. Srivats

New Delhi , Feb. 6

THE Finance Ministry has further improved the existing excise exemption scheme for industrial units in Jammu and Kashmir (J&K) by introducing a new criterion — additional employment generated through new investments - for getting reliefs under the scheme.

The revenue department has now held that all industrial units existing before June 14, 2002 and whose investments after this date have resulted in additional regular employment of "not less than 25 per cent" over and above the "base employment limit" would also be entitled to the Central excise duty exemption ( 10-year excise holiday).

For the purpose of this criterion, "base employment limit" has been defined as maximum number of regular employees employed at any point of time, by the concerned industrial unit, during last five years.

Further, the Finance Ministry has held that "regular employment" would not include employment provided by the industrial unit to daily wagers or casual employees.

It has also been stipulated that "new investments" cannot include investments that are used for paying off old debts or making payments for the plant and machinery installed prior to June 14, 2002 or paying salaries to the employees.

Hitherto, the excise exemption i.e. the 10-year excise holiday was admissible only for new industrial units or those industrial units that existed before June 14, 2002 and have undertaken a "substantial expansion" on or after June 14 by way of increase in installed capacity by not less than 25 per cent.

The revenue department had in November 2002 announced the excise exemption scheme for units clearing certain specified goods in J&K.

The Finance Ministry has now held that industrial units located in specified industrial growth centres, industrial infrastructure development centres, export promotion industrial parks, industrial estates, industrial area and commercial estates and satisfying the "additional employment" criterion would also be entitled for the ten-year excise holiday.

The excise exemption under the new criterion would, however, be available only if certain conditions are met. First, the unit should not reduce regular employment after claiming exemption. As soon as such employment is reduced below 125 per cent of the base employment limit, then such unit would be barred from claiming the exemption in the future.

However, the exemption availed by such industrial unit, prior to such reduction, would not be recoverable from the industrial unit.

Further, a manufacturer would be required to produce a certificate from the general manager of the concerned district industries centre to the jurisdictional deputy commissioner of central excise to the effect that the unit has created such additional regular employment.

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