Area-based exemption cannot be denied for a minor khasra omission when the industrial unit stands on contiguous plots forming one compound.

Area-based exemption under Notification No. 50/2003-C.E. could not be denied merely because one small khasra number was not specifically mentioned where the unit stood on adjacent, contiguous khasras forming a single compound. The omitted khasra covered only a negligible part of the factory plot, and the exemption was aimed at the industrial unit as an area-based entity rather than strict identification of every inch of land used for machinery. On that basis, the assessee was held entitled to the exemption and the demand was not sustainable.

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Issues: Whether the assessee was entitled to area based exemption under Notification No. 50/2003-C.E. dated 10.06.2003 despite one small khasra number not being specifically mentioned in the notification.

Analysis: The unit was established on adjacent khasras forming one compound, and the omitted khasra constituted only a negligible portion of the total factory plot. Since the exemption related to an area-based industrial unit and not to every inch of land used for machinery, denial of the benefit on such a minor omission was not justified where the plots were contiguous and the undisputed manufacturing unit was located there.

Conclusion: The assessee was entitled to the area based exemption and the demand could not be sustained.

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