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2020 (3) TMI 840 - AT - Central ExciseArea Based exemption - goods manufactured in the factory shed at Khasra No. 115 and Plot No. B of Khasra No. 119 - Board Circulars dated 22.12.2010, 17.02.2012 and 01.04.2013 - seizure/confiscation of goods - imposition of penalties - HELD THAT - It is undisputed that the appellant is entitled to area based exemption with respect to their main unit/ (unit-I) located at Plot F/119. Further, it is undisputed that so far the other two plots are concerned at Khasra No. 115 (Unit-II) earlier M/s Careplus was functioning and availing area based exemption vide declaration dated 27.12.2006. Thus, the appellant unit-II being admittedly the successor of M/s Careplus is also entitled to area based exemption till 27.12.2016. Further, admittedly at the present unit-III of the appellant (Plot B/119), earlier M/s Innovate was functioning and availing area based exemption vide declaration dated 27.12.2006, and admittedly the appellant unit-III is a successor of the said M/s Innovate and is accordingly eligible for exemption till 27.12.2016 under the exemption scheme (notification read with clarifications). There is a virtual corridor / private road existing between the three sheds, admittedly located in one industrial complex and hence for all practical purposes, the three units can be said to be adjacent to each other. Further, it is admitted fact that the two units namely M/s Fantasy and M/s Jyoti Lab have their entry exit gate from the South East common passage, whereas the three units of the appellant are using the common passage on the North West side. Thus, there is no practical interference in movement between the three units of the appellant and virtual corridor exits. In this view of the matter also, Unit-II and Unit-III of the appellant are held to be eligible for area based exemption. Thus, the appellant is entitled for area based exemption with respect to their unit-II located at Khasra No. 115 and unit-III located at Plot B/119 - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the appellant correctly availed the 'Area based exemption' under Notification No. 50/2003-CE for goods manufactured in the factory shed at Khasra No. 115 and Plot No. B of Khasra No. 119. 2. Whether manufacturing facilities in Khasra No. 115, Plot No. F of Khasra No. 119, and Plot No. B of Khasra No. 119 can be considered a single factory eligible for area-based exemption under the relevant Board Circulars. 3. Whether goods lying in the factory on 17.11.2016 were liable to be seized/confiscated. 4. Whether penalties under Section 11AC and Rules 26 and 27 of Central Excise Rules were rightly imposed. Issue-wise Detailed Analysis: 1. Availing 'Area based exemption' under Notification No. 50/2003-CE: The appellant's factory is located in Roorkee, Uttarakhand, and the partners developed a private industrial campus in Khasra Nos. 114, 115, 118, and 119. The area-based exemption was available for units that commenced commercial production or undertook expansion between 10.06.2003 and 31.03.2010. The appellant expanded its production by installing additional plant and machinery in Khasra No. 115 and used Plot 'B' of Khasra No. 119 for storage. The Revenue contended that the appellant wrongly claimed the exemption as Khasra No. 115 was not adjacent to Plot-F/119, thus not qualifying for the exemption. 2. Single factory eligibility for area-based exemption: The appellant argued that the units at Khasra No. 115 and Plot B of Khasra No. 119 were adjacent to Plot F/119, forming a single industrial unit eligible for the exemption. They relied on Board Circulars dated 17.02.2012 and 01.04.2013, which clarified that expansion by acquiring an adjacent plot with a common boundary qualifies for the exemption. The appellant provided certificates from a Chartered Engineer and other units certifying the continuous boundary and single entry/exit for the industrial complex. The Revenue, however, argued that the units were separated by open space and other factory premises, thus not adjacent. 3. Seizure/Confiscation of goods: The Revenue seized goods valued at ?1,11,15,702/- on 17.11.2016, believing the appellant wrongly availed the exemption. The appellant contended that the goods were inside the factory and not liable for seizure or confiscation. They argued that there was no clandestine removal or manufacturing activity and the issue was interpretational. 4. Imposition of penalties: The Revenue imposed penalties under Section 11AC and Rules 26 and 27 of Central Excise Rules, alleging mis-declaration and intent to evade duty. The appellant argued that the show cause notice was issued within the normal period of limitation, indicating no mis-declaration. They also contended that penalties were not warranted as the goods were not clandestinely removed and the issue was interpretational. Judgment: The Tribunal found that the appellant's units at Khasra No. 115 and Plot B of Khasra No. 119 were eligible for area-based exemption. It was undisputed that the main unit at Plot F/119 was entitled to the exemption. The Tribunal noted that the appellant's units had a common entry/exit and a continuous boundary, forming a single industrial complex. The Tribunal held that the appellant correctly availed the exemption and set aside the impugned order, allowing the appeals and entitling the appellants to consequential benefits. Pronounced on 13.03.2020.
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