Area-based excise exemption may continue after ownership change if the new owner files the required written option before first clearance.

A change in ownership of an industrial unit does not, by itself, end an existing area-based excise exemption under Notification No. 50/2003-CE. The operative requirement, as clarified, is that the new owner must exercise the option in writing before the first clearance from the unit. If that procedural condition is met, the remaining exemption period may continue despite the slump sale and change in management. The discussion also notes that a filed declaration and intimation were relied on as evidence of compliance with the written-option requirement.

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Issues: Whether the petitioner, having taken over an industrial unit under a slump sale and changed ownership, could continue to avail the area-based excise exemption under Notification No. 50/2003-CE, subject to exercising its option in writing before the first clearance.

Analysis: The unit had earlier been availing exemption under Notification No. 50/2003-CE. A subsequent circular issued by the Central Board of Excise and Customs clarified that a change in ownership of a unit already enjoying an area-based exemption would not by itself defeat the balance exemption period, provided the new owner exercised the option in writing before making the first clearance. The petitioner had pleaded compliance and had filed a declaration and intimation for availing the exemption. On those facts, the controlling question was whether the written option had been exercised in time as required by the circular.

Conclusion: The petitioner was entitled to the exemption if it had exercised the written option before the first clearance, and the writ petition was allowed.

Final Conclusion: The impugned communications were set aside in effect, and the petitioner's claim to continue the area-based excise exemption was upheld, subject to fulfilment of the stated procedural requirement.

Ratio Decidendi: A change in ownership does not extinguish an already enjoyed area-based excise exemption where the new owner exercises the required option in writing before the first clearance.

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