M.S. Scrap from manufacturing process of TMT bars qualifies as 'specified goods' under budgetary support notifications, as it undergoes same process and is not excluded, entitling reimbursement despite unit registration for principal products.

JUDGMENT :

RAJNESH OSWAL, J.

1. The case set up in the present petition by the petitioner is that, in terms of Notification No. 56/2002-CE dated 14.11.2002, the petitioner established a new unit for the manufacture of Tor Steel, M.S. Angle, M.S. Flat, M.S. Round, M.S. Square, Ribbed Bars and TMT Bars and commenced its commercial production with effect from 04.10.2005. In terms of the said notification, the petitioner was entitled to exemption from payment of excise duty, by way of refund, for a period of ten years from the date of commencement of commercial production.

2. In the interregnum, Notification No. 01/2010-CE dated 06.02.2010 came to be issued, whereby certain specified goods manufactured and cleared from units located in the erstwhile State of Jammu & Kashmir were exempted from excise duty. The said exemption was also available to new industrial units or to the industrial units existing before 06.02.2010 which had undertaken substantial expansion by way of increase of not less than 25% in the value of fixed capital investment in plant and machinery or had made new investments in terms of the prescribed conditions.

3. The petitioner completed the substantial expansion of its unit and commenced commercial production with effect from 26.05.2015 and, on the recommendation made by the District Industries Centre, the General Manager, DIC, Jammu acknowledged the said date of production as 26.05.2015 in favour of the petitioner.

4. Thereafter, upon the roll out of the GST regime with effect from 01.07.2017, the Government of India rescinded Notification No. 56/2002 dated 14.11.2002 and Notification No. 01/2010-CE dated 06.02.2010 vide Notification No. 21/2017 dated 18.07.2017. Subsequently, the Government of India issued Notification No. 10(1)/2017-DBA-II/NER dated 05.10.2017 (SBS) as well as CBEC Circular No. 1060/9/2017-CX dated 27.11.2017 providing for budgetary support, whereby an amount equivalent to 58% of the Central Goods and Services Tax (CGST) and 29% of the Integrated Goods and Services Tax (IGST) paid by the petitioner, after utilization of the input tax credit, was to be granted.

5. The State Government adopted the scheme introduced by the Government of India and issued similar notifications allowing reimbursement of State taxes as well as a portion of the Central taxes vide Notification Nos. 519 and 521, both dated 21.12.2017. For availing the benefit of budgetary support under the impugned Central Notification as well as the aforesaid State Notifications, the unit concerned was required to qualify as an “eligible unit.” The term “eligible unit” for the purpose of availing budgetary support has been defined in Para 4.1 of the Central notification, whereas the definition of “eligible manufacturing unit” has been provided in the State Budgetary Support Notification Nos. 519 and 521 dated 21.12.2017.

6. It is stated that the definition of “eligible unit” as provided in the State Notifications clearly demonstrates that the eligibility for State budgetary support is dependent upon the eligibility under the Central Budgetary Support Notification dated 05.10.2017. Accordingly, the satisfaction of the eligibility conditions under the said Central Notification by a manufacturing unit has a direct bearing upon its entitlement to the benefits under the State Budget