New industrial unit exemption upheld where closed factory surrendered registrations, changed machinery, and resumed production afresh

A later manufacturing setup at the same site was treated as a new industrial unit because the earlier unit had remained closed for a substantial period, its excise registration and factory licence were surrendered, machinery was transferred or sold, and fresh statutory registrations and clearances were obtained before production resumed. On those facts, the later establishment was not regarded as a mere renovation or continuation of the old unit. The exemption under Notification No. 20/2007-CE was therefore admissible, and the Revenue's challenge to the benefit failed.

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Issues: Whether a manufacturing unit set up at the same site after surrender of excise registration, transfer and sale of machinery, and a long closure could be treated as a new industrial unit eligible for exemption under Notification No. 20/2007-CE dated 25.04.2007.

Analysis: The record showed that the earlier unit had ceased operations after the ban, the factory licence and excise registration were surrendered, machinery was transferred or sold, and fresh clearances, fresh licensing, and new registrations were obtained before recommencing production. The material supported the conclusion that the later establishment was not a mere renovation or continuation of the old unit, but a fresh industrial setup entitled to the benefit of the notification.

Conclusion: The unit was held to be a new unit and the exemption under Notification No. 20/2007-CE dated 25.04.2007 was held admissible in favour of the assessee.

Final Conclusion: The Revenue's challenge to the exemption claim failed, and the order allowing the benefit was sustained.

Ratio Decidendi: Where an earlier industrial unit has been closed for a substantial period, its registrations surrendered, and fresh statutory clearances and licensing are obtained for recommencement with new machinery, the later setup may be treated as a new unit rather than a renovated continuation for the purpose of an exemption notification.

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