Area-based exemption remains available where commercial production began on time and later output used the same plant and machinery.

Area-based exemption for a new unit was linked to setting up the unit in the notified area and commencing commercial production by the stipulated date, not to manufacturing every finished product before that date. Corrugated boxes made after the cut-off date from corrugated sheets produced earlier on the same plant and machinery did not defeat eligibility, where no new machinery was installed after the cut-off date. A CBDT clarification supported the view that later production of additional products from the same plant and machinery would not by itself disqualify the unit from exemption. The benefit could not be denied on that ground.

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Issues: Whether the benefit of the area-based exemption notification was available for corrugated boxes manufactured after the cut-off date when the unit had commenced commercial production before the cut-off date using the same plant and machinery.

Analysis: The exemption was linked to the setting up of a new unit in the notified area and commencement of commercial production by the stipulated date, not to the manufacture of every finished product by that date. The corrugated boxes were produced from corrugated sheets manufactured earlier on the same plant and machinery, with no installation of new machinery after the cut-off date. The clarification issued by the Central Board also supported the view that subsequent production of additional products from the same plant and machinery would not by itself disqualify the unit from exemption.

Conclusion: The exemption could not be denied merely because corrugated boxes were manufactured after the cut-off date; the assessee remained entitled to the benefit.

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