Clarification regarding admissibility of Area based exemption in Central Excise


Dated 09th April 2013

Government of India (CBEC) vide Circular No. 968/02/2013-CX dated: 1st April, 2013, on the issue of admissibility of area based exemption has clarified as below:

Inviting attention to Board’s circular No. 960/03/2012-CX dated 17.02.2012 issued from F.No. 110/03/2011-CX3 wherein admissibility of exemption under Notification Nos 49/2003-CE and 50/2003-CE, both dated 10.06.2003, in certain specified situations was clarified. In para 5 of the said circular, it was clarified that expansion of an eligible unit by acquiring an adjacent plot of land and installing new plant and machinery on such land, is akin to expansion by way of installing new plant and machinery inside the existing plot/premises and that in such cases, the exemption should continue to be available for the residual period of exemption.

CBEC clarifies further:

Para 5 of the aforesaid circular dated 17.02.2012 is meant for a situation where the expansion is done by acquiring the adjoining plot with at least one common boundary which merges with the existing plot/premises to make it one unit. Installing of new plant and machinery in a plot which is away from the existing plot is not akin to the situation mentioned in para 5 of the said circular. Installation of plant and machinery on such a plot would tantamount to setting up another unit by the manufacturer, the eligibility of exemption of which is independent of the eligibility of exemption to the existing unit. It is therefore clarified that the clarification in para 5 of the circular N. 960/03/2012-CX dated 17.02.2012 is meant for the units which undertake expansion by acquiring the adjoining plot with at least one common boundary with the existing plot and merge it with the existing plot/premises to make it one unit.

SOURCE: GOVT. OF INDIA, Ministry of Finance

 

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