TMI Blog2005 (2) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... setting up of Crude Oil Refinery. 3.Shri J.J. Bhat, learned Sr. Advocate, accompanied by S/Shri Rohan Shah, Rajesh Chander Kumar and A. M. Dave, Advocates, appeared for the appellants and Shri M. Chandrasekaran, learned Sr. Advocate along with Shri C. Harishanker, Advocate appeared for the Revenue. 4.In order to appreciate the dispute, the brief facts of the case are given below :- The appellants set up Crude Petroleum Refinery complex at Mangalore with a licensed capacity of 9 Million Metric Tons Per Annum (MMTPA) in two phases, viz. Phase-I (3 MMTPA) and Phase II (6 MMTPA). The goods imported are for the Phase-II Crude Petroleum Refinery. According to the relevant Notification, the goods specified in list 8A required for setting up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MTPA crude oil. (iv) Our attention was referred to the Ministry of Petroleum and Natural Gas by letter dated 17-3-2003 addressed to the Commissioner of Customs, Mangalore wherein it has been confirmed that MRPL has increased its refining capacity from 3 MMTPA to 9 MMTPA at Mangalore by setting up an independent stand-alone Crude Petroleum Refinery having a capacity of 6 MMTPA in addition to its existing refinery of 3 MMTPA. This clarification has been issued with an approval of Joint Secretary (Refineries) in the Ministry. (v) Our attention was drawn to a certificate issued by M/s. Engineers India Limited, a Government of India Undertaking. According to the certificate the refinery set up in Phase-II is a stand alone refine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is not that. (xi) The definition of substantial expansion under IDRA "(Industrial Development and Regulation Act), 1951 includes only setting up a new unit/undertaking. The Hon'ble Supreme Court in CIT v. Straw Board [1989 SUPP 2 SCC 523 (S.C.)] and Bajaj Tempo v. CIT [1992 (3) SCC 78 (S.C.)] has held that concessions for tax purposes to encourage industrial activity should be liberally construed. 6.Shri M. Chandrasekharan, learned Sr. Advocate appearing for the Revenue urged the following points :- (i) The appellants were already having a refinery. They imported goods only for substantial expansion. (ii) The substantial expansion is different from the setting up of a new unit. (iii) The benefit of N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Project have also certified that the second refinery has come into existence. M/s. John Brown Technologies India (P) Ltd., after a thorough study have certified the setting up of second refinery. In addition, Shri A.R. Krishnan who is an expert in the refinery field has also certified. In spite of this, the Revenue refuses to believe that a second refinery has come into existence. In Petroleum Refinery, the Petroleum Crude is subjected to fractional distillation at different temperatures and different products come out at different temperatures as each product is having its own distinct boiling point. Every refinery has got a primary unit and a secondary unit. In the particular case, the existing refinery has a primary unit with a capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpansion' here. It is always possible to extend the capacity of any Industrial unit by setting up an additional unit. Therefore, the Revenue's interpretation is not correct. We want to make it clear that if an existing unit sets up an additional unit, the exemption is available. Revenue is at liberty to call it substantial expansion. But benefit of the notification cannot be denied. The exemption is not limited to the goods imported for 'initial setting up'. The exemption is available for setting up a refinery any time in several phases. In this connection, we would like to mention that the Hon'ble Supreme Court in the case of CIT, Amritsar v. Straw Board Manufacturing Co. Ltd. [AIR 1989 SC 1490] while interpreting the words 'initial settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant to interpret the notification. In our view, such extraneous consideration should not influence the interpretation of an exemption notification. The decision of the adjudicating authority should be based on the factual evidence available and refusing to see facts results in many difficulties to the trade. In the Straw Board Manufacturing Co. Ltd. case (supra), the Hon'ble Supreme Court has observed that when a provision is made in the context of law providing for concessional rate of tax for the purpose of encouraging an industrial activity a liberal construction should be put upon the language of the statute. The Ministry of Petroleum and Natural Gas is also a part of the Government of India. It is very surprising that when the Mini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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