2016 (10) TMI 382 - AT - Central Excise

Denial of area based exemption - non-fulfillment of conditions mentioned in the notification - N/N. 50/03-CE dated 1.10.2003 - acquisition of M/s.Stanley Controls a manufacturing unit located at Solan district in Himachal Pradesh - whether the denial of area based exemption to appellant is justified? Held that - The capital goods available with the earlier unit are listed and transferred to the new premises. The nature of capital goods and the fact that they were installed in the new premises have been certified by the chartered engineer in performa Part I and Part II. In terms of Board s circular dated 22.12.2010, it is clear that the provision of the said notification do not place any bar or restriction on any addition/alteration in the plant or machinery or on the production of new product by an eligible unit after cutoff date during exemption period of 10 years as per notification. It is noted that if the exemption is extended to one unit, the change in its ownership would not jeopardize the admissibility of exemption for remaining part of the period. The guidelines have been issued with regard to the shifting of eligible unit to new location. No merit in the impugned order - appeal allowed - area based exemption granted to appellant - decided in favor of appellant.

Summary

Issues:
- Disallowance of area-based exemption under Notification 50/03-CE dated 1.10.2003.
- Interpretation of conditions for availing area-based exemption.
- Validity of shifting eligible unit to new premises.
- Admissibility of exemption for the remaining period after change in ownership.
- Manufacturing of new products by the appellant.

Analysis:
The appellant entered into an agreement with a manufacturing unit availing area-based exemption under Notification 50/03-CE dated 1.10.2003. The Revenue initiated proceedings against the appellant, denying the exemption based on the conditions of the notification. The appellant contended that they fulfilled all conditions and correctly availed the exemption, shifting the acquired unit's machinery to their new premises and continuing manufacturing activities. The Assistant Commissioner had earlier held the appellant eligible for the exemption, which was not challenged, thus attaining finality.

The lower authorities questioned the genuineness of the chartered engineer's certificate submitted by the appellant. However, the Tribunal found no reason to discard the certificate, noting that the notification did not restrict changes in machinery or production of new products by an eligible unit during the exemption period. The Board's circulars clarified that a change in ownership would not affect the exemption's admissibility for the remaining period, provided the eligible unit was acquired and production continued. The evidence presented indicated the appellant's compliance with the conditions and the manufacturing of both the earlier specified product and a new product.

In light of the evidence and legal provisions, the Tribunal set aside the impugned order, allowing the appeal and granting the appellant the area-based exemption. The judgment emphasized the importance of fulfilling the conditions of the notification and clarified that changes in ownership or production of new products would not necessarily disqualify an eligible unit from availing the exemption for the residual period.