2017 (11) TMI 18 - AT - Central Excise

Area Based Exemption - N/N. 50/2003-CE dated 10.6.2003 - denial on the ground that the benefit of notification already extended to the original unit cannot be continued to the present appellant since the appellant has set up a completely new unit with fresh machines, making use of only the land and building of the original unit - Held that - the present appellant purchased an existing unit already availing the benefit of area based exemption w.e.f. from 28.5.2007 but they have chosen to make use of only the land and building of old unit. They installed fresh machines and started manufacture of a completely different and new commodity which has not been made by the original unit - The notification extend the benefit to new units started in the specified areas for a period of ten years from the date of commercial production. The units are required to be installed and commissioned prior to 31.3.2010. The appellant has set up a new unit after the cut off date on the same land and building which was existing in the erstwhile unit. The unit in the present form has come into existence only on 28.3.12. i.e. after the cut off 31.3.2010 and hence the benefit of N/N. 50/2003 cannot be extended to the appellant. Appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against denial of area-based exemption under notification No. 50/2003-CE for manufacturing plastic caps and bottles.

Analysis:
The appellant purchased an existing unit already availing the exemption but started manufacturing a new product after the specified cut-off date. The appellant claimed continuity of exemption under CBEC circulars, arguing that the change in ownership and product should not affect the exemption eligibility. However, the Revenue contended that the appellant set up a new unit with fresh machines, utilizing only the land and building of the original unit. The Tribunal noted that the appellant's new manufacturing activity constituted a new unit post the cut-off date. The Tribunal emphasized that the ownership change and the complete replacement of machinery indicated the establishment of a new unit, not a continuation of the old one under new ownership. The Tribunal differentiated the case from circulars allowing additions to existing units for new products, concluding that the appellant did not qualify for the exemption due to setting up a new unit after the specified date.

Therefore, the Tribunal upheld the Revenue's decision, rejecting the appeals against the denial of area-based exemption under notification No. 50/2003-CE for manufacturing plastic caps and bottles.