Case: Commnr. Of Central Excise, Shillong Vs. M/S. North Eastern Tobacco Ltd

3. The facts not in disputes are as under:The respondent/company was granted industrial licence No. CIL : 128 (75) dated 1.5.1975 for setting up cigarette manufacturing unit at Silpukhuri, Guwahati in the State of Assam. M/s. Assam Industrial Development Corporation [hereinafter referred to as AIDC) was the promoter and the major shareholder in the company holding more than 51% of the share capital. As per the industrial licence, the factory was to be set up at Silpukhuri, Guwahati. The unit was, however, set up on the industrial plot allotted by AIDC at G.S. Road, Bangagarh, Dispur, Guwahati. On 4.3.1991, AIDC entered into a Disinvestment Agreement which was duty approved by the Government of India, Ministry of Industry, Department of Industrial Development vide its letter No.I dated 26.10.1990. According to the terms of the Disinvestment Agreement, the existing industrial shed at Bangagarh was to be handed over to AIDC and the factory was to be relocated at a new location anywhere in the State of Assam4. In accordance with the aforesaid Disinvestment Agreement duly approved by the Government of India, the existing unit at Bangagarh was closed with effect from 15.6.1994. Encouraged by the declared policy of the State in the Exemption Notification dated 8.7.1999, the company set up a cigarette manufacturing unit in Export Promotion Industrial Park at Amingaon, Guwahati in the year 1999 in which commercial production was commenced from 15.12.19995. After locating its manufacturing unit in the Export Promotion Industrial Park, Amington, the company made an application for grant of a licence under the provision of the Industries (Development and Regulation) Act, 1951. In its application for grant of industrial licence, the company made a request that the industrial licence which it possessed for the unit in operation in Bangagarh in joint collaboration with AIDC be endorsed for the new location of the unit in the Export Promotion Industrial Park at Amingaon. In response to the letter dated 25.10.2000 of the company seeking endorsement of the same industrial licence for the new location, the Joint Director of Government of India in the Ministry of Commerce & Industry wrote a letter dated 30.10.2000 to the company stating that the existing industrial licence was for location at Silpukhuri, Guwahati and the location of the unit at Bangagarh was not valid. The letter, however, states that the request of the company for change of location of the unit from Bangagarh to the Export Promotion Industrial Park, Amingaon will be decided on merits as per the prescribed procedure.

Court's reasoning:
We do not find any ground to interfere with the decision of the CEGAT and its conclusion that the unit of the company at Amingaon is entitled to the benefit of the Exemption Notification9. The Exemption Notification nowhere defines the words new industrial units. The object of Exemption Notification is obvious. It intends to encourage capital investment and establishment of industrial units in specifiedn States for the purpose of increasing production of goods, promoting development of industry and employment in the said regions10. The another important principle of interpreting an Exemption Notification is that as far as possible liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed11. In the case of Morgardshammar India Ltd. (Supra), Section 4(A) of the U.P. Sales Tax Act contained definition of new unit for availing exemption from payment of sales tax. Explanation below Section 4(A) of the U.P. Sales Tax Act defined new unit to mean a factory or workshop whether set up by a dealer already having an industrial unit manufacturing the same goods at any other place in the State or adjacent site but excluded any factory or workshop using machinery, accessories or components already used or acquired for use in any other factory or workshop in India. In the present case, no such definition or explanation is to be found in the notification and there is no material to establish that the same machinery, accessories or components used by the company in its unit at Bangagarh have been shifted for its unit at Amingaon, Guwahati14. In the present case as we have found above, there was no material before the Department that pursuant to the Disinvestment Agreement with AIDC, the unit of the company at Bangagarh which was closed in 1994 was shifted to the new location at Amingaon, Guwahati