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besides causing huge casualties. With a view to attract large scale investment and
to generate new employment opportunities in the District of Kutch, the Govern-
ment of India announced an Incentive Scheme for setting up New Industries in
the earthquake affected District of Kutch, by issuing Central Excise Exemption
Notification No. 39/2001-C.E., dated 31-7-2001. The said notification granted ex-
emption to goods cleared from a New Industrial Unit set up in the Kutch District
of Gujarat prior to 31-7-2003 (which was subsequently extended to 31-12-2005)
from so much of duty of excise as was equivalent to the amount of duty paid in
cash/Personal Ledger Account (PLA) on the finished goods. That the said incen-
tive of refund of the duty paid in cash/PLA was available for the period of 5
years from the date of commencement of commercial production. The object of
the Incentive Scheme was to revive the economy in Kutch District by attracting
fresh large scale investments from entrepreneurs by setting up new industries in
the said District so as to generate new employment which in turn would help
Kutch District and its people to be brought back in the main stream with the Na-
tion. The said notification operationalised the incentive scheme in the following
manner :
(a) The eligible unit was required to produce a certificate from a High
Powered Committee comprising of a Chief Commissioner of Cen-
tral Excise and the Chief Secretary to the Government of Gujarat
certifying that the unit was indeed a new industrial unit which had
been set up on or after the date of the Exemption Notification but
not later than 31-7-2003 (this cut-off date was subsequently extend-
ed to 31-12-2005);
(b) The unit was to furnish a declaration regarding the value of invest-
ment in plant and machinery installed in the factory as on the date
of commercial production and also obtain a certificate to this effect
from the Committee confirming the original value of the invest-
ment;
(c) The procedure for claiming refund, envisaged submission of a
statement of the total duty payments (including duty paid by utili-
zation of Cenvat Credit) to the jurisdictional Central Excise Authori-
ty and verification of the above in a time bound manner by such au-
thority;
(d) The notification also provided for recovery of any excess refund
claimed/granted together with interest in case the value of plant
and machinery was wrongly declared, as also in some other eventu-
alities which were added by various amending notifications;
(e) Where fresh investment in the plant and machinery was below
Rs. 20 crores - the incentive available was for the first clearances up
to an aggregate value not exceeding twice the value of such invest-
ment from the date of commencement of commercial production, in
each year; and
(f) Where the investments were more than Rs. 20 crores - the Incentive
would be unlimited as there was no upper cap.
3.1 The original writ petitioners set up new industrial units in the
Kutch District. They made an investment in the plant and machinery of more
than Rs. 20 crores. According to them, almost the entire duty was required to be
paid in cash, the whole of which was refundable without any upper cap in terms
of the Notification No. 39/2001-C.E., dated 31-7-2001.
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