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2016 (4) TMI 266 - AAR - Central ExciseAvailability for benefit of Notification No. 50/2003-C.E. dated 10.06.2003 - Area based exemption - expansion of an eligible unit after the cut off date of sun set clause - Goods manufactured from the unit established from expansion of the existing unit - Manufacture of footwear - Premises where the benefit of Notification No. 50/2003-CE dated 10.6.2003 is already being availed and where the applicant proposes to effect the substantial expansion, are the same and one premises - Revenue submitted that since the proposed new unit will come into existence after sun set clause i.e. after 31.3.2010, the said unit will not be eligible to enjoy the benefit of the said exemption notification and shall have to pay duty at the applicable rates. Held that - it is noticed that the Circular No. 939/29/2010-CX dated 22.12.2010 issued by CBEC has clarified that Notification No. 50/2003-CE does not place a bar or restriction on any addition / modification in the plant or machinery or on the production of new products after the cut-off date. In the instant case, applicant proposes to manufacture shoes of different brand and design by installing fresh plant/machinery. Further, the contention of Revenue that the applicant proposes to take separate factory license, ESI No. and PF Codes for expanded Haridwar Plant II, therefore, it will not fall under the category of existing unit, is not correct. Relevant Notification No. 50/2003-CE, as also CBEC Circular dated 22.12.2010 and 17.02.2012, do not envisage such condition. In view of said clarifications issued by CBEC, applicant can continue to avail the benefit of excise exemption. Also it is observed from the Circular No. 960/03/2012-Cx dated 17.02.2012 that the situation of expansion of an eligible unit by acquiring an adjacent plot of land and installing new plant and machinery on such land, is akin to expansion by way of installing new plant and machinery inside the existing plot/premises. CBEC clarified that in such cases, the exemption should continue to be available from the residual period of exemption. Here, the applicant proposes to effect expansion wherefrom the new unit had started commercial production w.e.f. 26.03.2010. Therefore, in view of Circular dated 17.02.2012, applicant is eligible for said exemption. - Decided in favour of appellant
Issues Involved:
1. Eligibility of the proposed Unit-II for excise duty exemption under Notification No. 50/2003-CE. 2. Applicability of the sunset clause to the proposed Unit-II. Issue-wise Analysis: 1. Eligibility of the proposed Unit-II for excise duty exemption under Notification No. 50/2003-CE: The applicant, M/s Lakhani Footwear Private Ltd, proposed a substantial expansion by installing more than 25% additional plant and machinery at their existing location in Haridwar. They planned to create a new unit, Haridwar Plant-II, within the same plot but separated by a wall, and sought to maintain separate factory licenses, ESI, and PF codes for the new unit. The applicant argued that this expansion qualifies under the substantial expansion clause as per Board’s Circular No. 772/5/2004 CX. dated 21.1.2004 and thus should continue to enjoy the excise duty exemption under Notification No. 50/2003-CE. The Revenue objected, stating that the proposed Unit-II would be an altogether different entity from the existing unit and that the new unit, coming into existence after the sunset clause of 31.03.2010, would not be eligible for the exemption. The ruling observed that the applicant had submitted the required Intimation/Declaration dated 29.03.2010, showing compliance with the conditions of Notification No. 50/2003-CE. The Notification exempts goods from units located in specified areas from whole of the duty of excise, subject to the unit commencing commercial production before 31.03.2010. The applicant’s unit commenced commercial production on 26.03.2010, thus satisfying the conditions. The ruling further referenced CBEC Circular No. 939/29/2010-CX dated 22.12.2010, which clarified that the notification does not restrict any addition/modification in the plant or machinery after the cut-off date. The applicant’s proposal to manufacture new products by installing fresh plant/machinery was consistent with this clarification. Therefore, the applicant could continue to avail the benefit of excise exemption. 2. Applicability of the sunset clause to the proposed Unit-II: The Revenue’s second objection was that the proposed Unit-II, coming into existence after the sunset clause of 31.03.2010, would not be eligible for the exemption. The applicant relied on CBEC Circular No. 960/03/2012-CX dated 17.02.2012, which clarified that the expansion of an eligible unit by acquiring an adjacent plot of land and installing new plant and machinery should continue to enjoy the exemption for the residual period. The ruling observed that the proposed expansion within the same plot (Khasra No. 72 and 74) was akin to the situation described in the Circular. It emphasized the intention of the Government’s New Industrial Policy, which aimed to facilitate industrial development and generate employment in Uttarakhand. Denying the exemption for the expanded unit would contradict this policy. Conclusion: The ruling concluded that the benefit of Notification No. 50/2003-CE dated 10.06.2003 would be available to goods manufactured from the expanded unit, Haridwar Plant-II. The applicant’s proposal to effect substantial expansion within the same plot and the compliance with the conditions of the notification and relevant CBEC circulars justified the continuation of the excise duty exemption.
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