Area-based exemption on factory expansion cannot be denied on mere doubts or unverified certificate discrepancies.

Area-based exemption under Notification No. 50/2003 on factory expansion could not be denied on the basis of unverified doubts, certificate discrepancies, or presumed deficiencies. The Tribunal noted that the central question was whether the claimed capacity expansion had actually occurred, and held that the department was expected to verify matters such as check-post movement, power load, transformer changes, and related certificates rather than rely on theoretical calculations or suspicions. Applying its earlier decision in the assessee's own case for an earlier period, the Tribunal found the denial unsustainable and set aside the impugned order, allowing the appeal in favour of the assessee.

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Issues: Whether the appellant was entitled to area-based exemption on expansion of its factory under Notification No. 50/2003 dated 10.6.03, and whether denial of the exemption for want of certain certificates and information was sustainable.

Analysis: The appeal was restored and decided on merits after the earlier dismissal on limitation was set aside. The dispute turned on whether the claimed capacity expansion had in fact taken place and whether the department could deny exemption on the basis of doubts, discrepancies in certificates, and presumed deficiencies without adequate verification. The Tribunal followed its earlier decision in the appellant's own case for an earlier period, where it was held that objections regarding check-post movement, power load, transformer changes, and certificate discrepancies could have been independently verified by the department, and that denial of exemption could not rest on theoretical calculations, suspicions, or untested presumptions. The same reasoning was applied here.

Conclusion: The denial of area-based exemption was not sustainable and the impugned order was set aside. The appeal was allowed in favour of the assessee.

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