Small scale industry exemption depends on valid registration, not a separate plant-and-machinery valuation test.

Exemption under Notification No. 175/86-C.E. depended on whether the factory held a subsisting small scale industry registration under the Industries (Development and Regulation) Act, 1951. The notification did not create a separate disqualifying test based on the value of plant and machinery where such registration remained valid. Because the registration had not been withdrawn or cancelled by the competent authority, denial of exemption solely on the basis of alleged excess investment was not sustainable. The operative principle is that eligibility follows valid SSI registration unless that registration is lawfully cancelled.

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Issues: Whether the appellant was entitled to exemption under Notification No. 175/86-C.E. despite the value of plant and machinery exceeding the limit referred to by the department, where its registration as a small scale industry had not been cancelled.

Analysis: The exemption notification turned on whether the factory was registered as a small scale industry under the Industries (Development and Regulation) Act, 1951. The notification did not impose an independent condition based on the value of plant and machinery installed in the factory. The appellant's registration with the Directorate of Industries remained in force and had not been withdrawn or cancelled. In the absence of cancellation of registration by the competent authority, the denial of exemption solely on the basis of alleged excess investment in plant and machinery was not sustainable.

Conclusion: The appellant was entitled to the exemption and the denial thereof was unsustainable.

Ratio Decidendi: Eligibility for exemption under the notification depended on subsisting registration as a small scale industry, and not on an independent inquiry into the value of plant and machinery unless the registration had been lawfully cancelled.

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