Small scale exemption under Notification 1/93 cannot be denied on an obsolete registration requirement.

Exemption under Notification 1/93 remained available to a small scale unit where the factory was not registered with the Directorate General of Technical Development, because the later exemption under Section 29B of the Industries (Development and Regulation) Act, 1951 rendered the earlier registration-based exclusion inapplicable. The assessee's investment in plant and machinery was within the small scale limit, so the obsolete registration objection could not defeat the notification benefit during the relevant period. The denial of exemption was therefore unsustainable, and the unit was treated as entitled to the notification relief.

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Issues: Whether the goods cleared during the relevant period were entitled to the benefit of Notification 1/93 despite the factory not being registered with the Directorate General of Technical Development.

Analysis: The exemption under the notification was available to small scale units and also to units other than those specifically excluded. The exclusion for factories registered with the Directorate General of Technical Development was held inapplicable because the relevant registration requirement had ceased to operate after the later exemption notification under Section 29B of the Industries (Development and Regulation) Act, 1951. The appellant's investment in plant and machinery was within the small scale limit, and the earlier registration-based objection could not defeat the notification benefit during the period in question.

Conclusion: The denial of exemption was not sustainable, and the assessee was held entitled to the benefit of Notification 1/93.

Final Conclusion: The appeal succeeded and the order denying the exemption was set aside.

Ratio Decidendi: Where a later statutory exemption removes an earlier registration requirement, denial of an exemption notification on the basis of that obsolete requirement is unsustainable if the assessee otherwise falls within the class of eligible small scale units.

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