Area-based exemption denied where fresh machinery and a different product created a new unit after the cut-off date.

Area-based exemption under Notification No. 50/2003-CE was confined to new units set up in the specified area and commissioned before the cut-off date. Where an existing unit is effectively replaced after that date by fresh machinery on the same land and building, and the new undertaking manufactures a different product, the successor cannot claim continuation of the original exemption. The facts showed that only the land and building remained, while the earlier unit had ceased in substance and a new unit came into existence after the cut-off date. On that basis, the exemption was held unavailable and the denial of benefit was sustained.

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Issues: Whether the appellant, after purchasing an existing unit, installing fresh machinery on the same land and building, and commencing manufacture of a different product after the cut-off date, remained entitled to area-based exemption under Notification No. 50/2003-CE.

Analysis: The exemption was available only to new units set up in the specified area and commissioned before the prescribed cut-off date. On the facts, the earlier unit had ceased to exist in substance, with only the land and building remaining. The appellant had installed new machinery and commenced manufacture of a completely different commodity. This was not a mere change in ownership of an existing exempt unit, nor a case of additional plant and machinery being added to the same unit. The unit in its present form came into existence only after the cut-off date.

Conclusion: The appellant was not entitled to continue the benefit of the area-based exemption, as the unit was treated as a new unit set up after the cut-off date and the exemption could not be extended.

Final Conclusion: The denial of exemption was upheld and the appeals failed.

Ratio Decidendi: Where an existing unit is effectively replaced by a new unit with fresh machinery and different products after the cut-off date, the successor unit cannot claim continuation of area-based exemption meant for the original unit.

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