Commissioner Of Central Excise And Service Tax Derhadun vs. M/S Paraj Exim

Held

The Court held that the factual aspect of whether the unit was availing the benefit of area-based exemption prior to its transfer to M/s Paraj Exim had attained finality. The initial remand by the CESTAT was solely for the verification of this fact. The factual report confirmed that the gold and silver unit was availing the benefit of the exemption notification when it was transferred by M/s Om Sai Motor Industries. The Court found that since the unit was already availing the benefit of exemption at the time of transfer in 2015, the same benefit could not be denied to the respondent. The Court also referred to CBEC Circular No. 960/03/2012 dated 17.02.2012, which clarifies that a change of ownership or factory premises does not disqualify a unit from availing area-based exemption. Therefore, the CESTAT rightly upheld the continuation of the exemption benefit. The Court found no merit in the Revenue's appeal.

Facts

The Revenue appealed an order dated 22.08.2022 by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi. The dispute concerns whether M/s Paraj Exim, the respondent, was entitled to area-based exemption under Notification No. 50/2003-CE dated 10.06.2003, when it purchased a unit from M/s Om Sai Motor Industries on 02.11.2015. The CESTAT had previously, by order dated 08.01.2018, remanded the matter to the adjudicating authority for verification of this specific issue. Following the remand, the Assistant Commissioner, CGST Division, Rudrapur, vide order dated 13.08.2018, held that the unit was indeed availing the area-based exemption at the time of transfer. This was upheld by the Commissioner (Appeals) on 20.02.2019. The CESTAT then dismissed the Revenue's appeal on 22.08.2022, leading to the present appeal by the Revenue.

Key Issues

1. Whether M/s Paraj Exim was entitled to avail the benefit of area-based exemption under Notification No. 50/2003-CE dated 10.06.2003, when it purchased the unit from M/s Om Sai Motor Industries on 02.11.2015, turning on the interpretation of the notification and the conditions for transfer of such exemptions. Contentions: Petitioner (Revenue): Argued that the entitlement to the exemption needed to be verified, and the subsequent orders in favour of the respondent were not justified. Respondent (M/s Paraj Exim): Contended that the unit was already availing the area-based exemption at the time of purchase, and this benefit should continue. Relied on the findings of the adjudicating authority, Commissioner (Appeals), and CESTAT, as well as CBEC Circular No. 960/03/2012 dated 17.02.2012, which states that change of ownership or premises does not debar a unit from availing area-based exemption.