2017 (11) TMI 10 - AT - Central Excise

Area Based exemption - N/N. 50/2003 dated 10.06.2003 - manufacture of Motor Vehicle Parts - appellant obtained Central Excise registration in respect of Unit-I and filed a declaration on 21.04.2008 for availing area based exemption under Notification No.50/2003-CE dated 10.06.2003 in respect of Unit-II - two units located within the same premises - Held that - an identical issue has come up before this Tribunal in the assessee-Appellants own case M/s Victoria Automotive Inc & Ors. Vs CCE, Dehradun 2017 (9) TMI 934 - CESTAT NEW DELHI , where it was held that All such units are necessary part of a factory, if located in the contagious area. Each division of a factory manufacturing different identifiable items or undertaking different identifiable processes will have to be considered as a unit of the factory - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Denial of area-based exemption under Notification No.50/2003 to the assessee-Appellants for the period January 2010 to December 2010.

Analysis:
The appeals were filed against the Order-in-Original denying area-based exemption to the assessee-Appellants who were engaged in manufacturing Motor Vehicle Parts under Chapter 87 of the Central Excise Tariff Act, 1985. The dispute revolved around the existence of two separate units, Unit-I and Unit-II, within the same premises. The Tribunal referred to a previous case involving the appellants and emphasized the distinction between a factory and industrial units for the application of the exemption under Notification No.50/2003. The Tribunal highlighted that each section or part of a factory manufacturing a different commodity should be treated as a separate manufacturing unit eligible for exemption, as the duty exemption is unit-wise and not factory-wise. The Tribunal also cited clarifications from the CBEC regarding the application of the notification to new assembly lines within existing factories.

The Tribunal further discussed the interpretation of the term "industrial unit" in the context of the notification and referenced legal precedents to support the view that different terms like "unit" and "factory" cannot be equated for the purpose of the exemption notification. It was clarified that the exemption is granted to new or substantially expanded industrial units, not with reference to a factory as a whole. The decision highlighted that the definition of "factory" under the Central Excise Act is broader and cannot be applied to units involved in the manufacture of specified goods. The Tribunal concluded that the impugned order denying the exemption was not legally sustainable and set it aside, allowing the appeals filed by the assessee-Appellants. The judgment reiterated the principle that different sections of a factory producing distinct items should be considered as separate units eligible for exemption, emphasizing the unit-wise nature of the exemption under Notification No.50/2003.