2012 (7) TMI 834 - AT - Central Excise

Denial of Area based exemption under Notification No. 56/2002-C.E. - Held that - Moreover, the exemption Notification No. 56/2002-C.E. exempts the goods covered by this notification, manufactured by the units located in the Industrial Growth Centers, Industrial Infrastructure Development Centers or Export Promotion Industrial Parks or Industrial Estates or Industrial areas or Scheme areas or Commercial Centers, as specified in Annexure II to the Notification. Thus, if unit is located in the Industrial area which is mentioned in Annexure II to the Notification, in our view the condition of the notification would be satisfied and the duty exemption under this notification cannot be denied. Though the Annexure II to the notification besides mentioning the Industrial Areas/Industrial Estates etc. also mentions against each Industrial Area/Industrial Estate, the Khasra No. covered by that Industrial Area, just because the Khasra No. on which unit is located does not figure in the list of Khasra number mentioned against the Industrial area in which the unit is located, the exemption cannot be denied so long as there is no dispute that the Industrial area in which the unit is located, is notified in the notification, as there can be mistake in mentioning the Khasra numbers covered by a particular Industrial area or there may be cases where a particular Khasra number is part of two adjacent industrial areas. Department does not dispute that the appellant s unit is located in SICOP Industrial Area, Kathua and that SICOP Industrial Area, Kathua figures in the Annexure II to the Notification against Sl. No. (2)(II)(C)(1). In view of this, just because the Khasra No. 126/68/37 min of the plot on which the unit is located, is not mentioned against SICOP Industrial Area, but is mentioned against adjoining SIDCO Industrial area, the benefit of exemption cannot be denied. The impugned orders are, therefore, not sustainable - Decided in favour of assessee.

Summary

Issues:
Interpretation of area-based exemption under Notification No. 56/2002-C.E. for a manufacturer of MS Conduit Pipes located in J & K.

Detailed Analysis:
1. Background and Dispute: The appellant, a manufacturer of MS Conduit Pipes, availed area-based exemption under Notification No. 56/2002-C.E. The dispute arose when the Commissioner (Appeals) disallowed the exemption, stating that the Khasra Nos. where the unit was located were not mentioned against the Industrial Area specified in the notification. The Commissioner relied on a Supreme Court judgment emphasizing strict construction of exemption notifications.

2. Arguments by the Appellant: The appellant's counsel argued that the unit's location in either SICOP or SIDCO Industrial Estate should not affect eligibility for duty exemption. The appellant's unit fell within Khasra No. 126/68/37 min, which was part of both SICOP and SIDCO Industrial Areas as per the Naib Tehsildar's certificate. The appellant contended that being situated in the specified Industrial Area should suffice for exemption, regardless of specific Khasra No. listings.

3. Arguments by the Respondent: The Departmental Representative defended the Commissioner's decision, emphasizing that the specific Khasra No. listing against the Industrial Estate SICOP was crucial for exemption eligibility. As Khasra No. 126/68/37 min was not listed under SICOP but under SIDCO, the appellant should not qualify for exemption.

4. Judgment: The Tribunal noted that the appellant's unit was within the SICOP Industrial Area, Kathua, which was listed in the notification. The Tribunal emphasized that the Industrial Area's mention in Annexure II should suffice for exemption, even if specific Khasra No. listings differed. It was highlighted that errors could occur in Khasra No. listings or cases where a Khasra No. was part of multiple adjacent Industrial Areas. Therefore, the Tribunal set aside the Commissioner's decision, ruling in favor of the appellant and allowing the appeals.

In conclusion, the Tribunal's judgment clarified that the Industrial Area's inclusion in the notification was the primary factor for exemption eligibility, irrespective of specific Khasra No. listings against that area. The decision emphasized a pragmatic approach in interpreting exemption notifications to prevent undue denial of benefits based on minor discrepancies in Khasra No. listings.