Area-based exemption survives technical Khasra mismatch where the factory lies in a notified industrial area.

Area-based exemption under Notification No. 56/2002-C.E. could not be denied where the unit was located in SICOP Industrial Area, Kathua, a notified area, and the Naib Tehsildar's certificate showed that the relevant Khasra number covered the factory site within the same industrial area. The omission of that Khasra number from the entry against SICOP, while appearing against the adjoining SIDCO Industrial Estate, was treated as a technical discrepancy that did not defeat the substantive condition of location in a notified industrial area. The exemption was therefore available and denial on that basis was unsustainable.

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Issues: Whether the assessee was entitled to area-based exemption under Notification No. 56/2002-C.E. when its unit was situated in SICOP Industrial Area, Kathua and the relevant Khasra number was mentioned against the adjoining SIDCO Industrial Estate, but not against SICOP Industrial Area.

Analysis: The unit was undisputedly located in SICOP Industrial Area, Kathua, which was itself a notified area under Annexure II to the notification. The certificate of the Naib Tehsildar showed that the same Khasra number formed part of SICOP/SIDCO Industrial Area, Kathua and that the factory site fell within that Khasra. The fact that the Khasra number was not separately listed against SICOP, while being listed against the adjoining SIDCO estate, did not defeat the substantive requirement of location in a notified industrial area. The exemption notification could not be denied merely on a technical discrepancy in the Khasra mapping where the industrial area itself stood notified.

Conclusion: The assessee was entitled to the exemption. The denial of benefit was unsustainable and the appeals succeeded.

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