2018 (6) TMI 231 - AT - Central Excise

Area Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - exemption sought by the appellant under area based exemption from 27.03.2010 to 26.03.2020 and it was allowed only upto 24.11.2013 - whether M/s. LPT has set-up a new manufacturing unit or continued with the manufacturing activity as has been undertaken by M/s. LEPL? - Held that - It is clear that M/s. LEPL had stopped the production before amalgamation and had also plant and machinery were shifted to another place and Central Excise registration was also surrendered. M/s. LPT has started a new unit with new plant and machinery for manufacturing of new products - Similar issue came up before this Tribunal in the case of Wipro Enterprises Ltd vs. CCE, Shimla 2018 (2) TMI 787 - CESTAT CHANDIGARH , where it was held that the new unit is entitled for exemption from the date of start of commercial production. The facts of the present case are on better footing then the case of Wipro Enterprises Limited 2018 (2) TMI 787 - CESTAT CHANDIGARH wherein the unit was a manufacturing unit and the same unit has started new manufacturing line in the same premises and this Tribunal held that the new unit is entitled for exemption from the date of start of commercial production - Admittedly, in this case, M/s. LPT started a new unit for manufacturing of mobile batteries, mobile chargers and accessories by installing new plant and machinery - Therefore, in the light of decision of Wipro Enterprises Limited, M/s. Luminous Power Technology Pvt. Limited (M/s. LPT) is entitled for exemption under N/N. 50/2003-CE dated 10.06.2003 from 27.03.2010 to 26.03.2020. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Eligibility for area-based exemption under Notification No. 50/2003-CE.
2. Interpretation of "new industrial unit" versus "existing unit" post-amalgamation.
3. Applicability of Circulars dated 20.12.2010 and 17.02.2012.
4. Legal precedents and judicial interpretations relevant to the case.

Detailed Analysis:

1. Eligibility for Area-Based Exemption under Notification No. 50/2003-CE:
The appellant sought exemption under Notification No. 50/2003-CE from 27.03.2010 to 26.03.2020, which was only allowed up to 24.11.2013. The core issue was whether the appellant's unit, post-amalgamation, qualified as a new industrial unit or a continuation of the previous unit.

2. Interpretation of "New Industrial Unit" Versus "Existing Unit" Post-Amalgamation:
The appellant argued that M/s. LPT set up a new manufacturing unit for mobile batteries and chargers with new plant and machinery, distinct from the old unit of M/s. LEPL, which had ceased production and relocated its machinery. The department contended that the exemption period should be limited to the original ten years granted to M/s. LEPL, citing the amalgamation and transfer of licenses and exemptions.

3. Applicability of Circulars Dated 20.12.2010 and 17.02.2012:
The appellant argued that the Circulars dated 20.12.2010 and 17.02.2012 were inapplicable as they pertained to situations where new products were manufactured alongside existing ones, whereas M/s. LPT had set up an entirely new unit. The department relied on these Circulars to argue that the exemption continued only till 24.11.2013.

4. Legal Precedents and Judicial Interpretations:
The appellant cited several judicial decisions to support their claim that a new industrial unit, even within the same premises, qualifies for fresh exemption if it meets the criteria of new plant and machinery and distinct production lines. Key cases included:
- Devidayal Electronics and Wires Ltd. v. UOI: Defined "industrial unit" as a separate part of a complex.
- CCE v. Himalayan Co-op Milk Product Union Ltd.: Affirmed that different parts of a factory could be treated as separate units.
- Wipro Enterprises Limited v. CCE, Shimla: Ruled that new production lines within the same premises qualify for fresh exemption.

Tribunal's Findings:
The Tribunal found that M/s. LEPL had ceased production and relocated its machinery before amalgamation. M/s. LPT had set up a new unit with new machinery and a distinct production line. The Tribunal held that this new unit qualified for exemption as a new industrial unit under Notification No. 50/2003-CE, independent of the previous unit's exemption period.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, granting M/s. LPT exemption from 27.03.2010 to 26.03.2020. The decision was based on the interpretation that the new unit set up by M/s. LPT was distinct and met the criteria for a new industrial unit, thereby qualifying for the full exemption period under the relevant notification.