MANUFACTURING & PACKAGING IN HILL STATES QUALIFIED FOR TAX SOPS

The Government has clarified that manufacturers that carry out production as well as repackaging activity in the tax-free zone of Himachal Pradesh and Uttarakhand will be able to enjoy tax exemption. The move comes as a major respite to a number of FMCG and pharma companies in these states. The Central Board of Excise and Customs (CBEC), has directed its field officers in a circular that the benefit on excise duty exemption has to be allowed in cases where both the activity of manufacture and the peripheral activities mentioned in the notification are undertaken in Uttarakhand or Himachal Pradesh. The CBEC in January 2008 issued a notification stating that only
genuine manufacturing carried out in these states will be eligible for exemption. The clarification comes in the wake of questions from field officers as to whether benefit of area-based exemption notification would be applicable if both the activities namely the manufacture of main product (say hair oil in bulk) and peripheral activities (say repacking into bottles) are carried out in the specified areas.