Area Based Exemption available to New Unit Successor to Previous Unit and Adjacent Units: CESTAT [Read Order]

The Principal Bench of CESTAT at New Delhi in the case of M/s Spring Dells v Commissioner of Central Goods & Service Tax held that area based exemption under central excise available where the new unit successor to the previous unit and to adjacent units.

Appellant, a partnership firm with their factory at Roorkee developed a private industrial campus by laying in a private road, construction of boundary wall, construction of different sheds in the campus, so that industrial units could produce goods and avail the Area-based exemption under Notification No. 50/2003-CE.

Aggrieved by the decision of the subordinate authority holding that the connectivity of the 3 sheds/plots through the corridor, etc cannot be said to merge the new unit with the original unit, the appellants have filed the present appeal.

The issues before the Authority were threefold. (1) Whether the Area-based exemption was correctly availed under Notification No. 50/2003-CE. (2) Whether in view of circulars prescribed, 3 manufacturing facilities so stated can be said to be a single factory, eligible for the aforementioned exemption (3) Whether the goods lying in the factory were liable to be seized/confiscated attracting penalties u/s 11AC and Rules 26 ad 27 of the Central Excise Rules.

According to the revenue, the appellant was wrongly availing the Area-based exemption as the expanded capacity in another plot could not be considered adjacent. The ground was raised after it was observed during the preliminary scrutiny that the appellant had misled the jurisdictional central excise department by way of non-disclosure of the said expansion unit.

The Bench constituting of members Mr. Anil Choudhary and Mr. C.L. Mahar as judicial and technical members held that the appellant is entitled to the area-based exemption for the reason that it is admittedly the successor of the previous unit entitled to the exemption. Further, since all the units/sheds are located in one private industrial complex, these units can be said to be adjacent to each other.