Installed capacity exemption turns on overall threshold increase, not identical measurement across every manufacturing bottleneck.

Exemption under Notification No. 32/99-CE was upheld where the assessee established an overall increase of installed capacity through supporting certificates and manufacturing flow material. The variance between the Chartered Engineer's certificate and the Directorate of Industries certificate was explained by different bottleneck-based measurements in the production process, and the notification did not require every individual section of the unit to increase by the prescribed percentage. The relevant test was whether total installed capacity had increased to the threshold level, which was satisfied, so the exemption benefit was sustained.

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Issues: Whether the assessee was entitled to the benefit of exemption Notification No. 32/99-CE despite variance between the certificates regarding installed capacity, and whether the requirement of 25% increase in installed capacity was satisfied.

Analysis: The certificates issued by the Chartered Engineer and the Directorate of Industries were found to relate to different limiting factors in the manufacturing process, and the variance between them was explained by the flow chart and supporting material. The relevant test under the notification was an overall increase of 25% in installed capacity, not a requirement that each section of the unit individually increase by 25%. On either certificate, the increase exceeded the prescribed threshold.

Conclusion: The assessee satisfied the condition of increased installed capacity and was rightly granted the benefit of the exemption notification.

Final Conclusion: The appeal failed, and the exemption granted to the assessee was sustained.

Ratio Decidendi: For exemption notifications linked to expansion of installed capacity, the statutory condition is satisfied by an overall increase meeting the prescribed percentage, even if different certificates measure capacity with reference to different bottlenecks in the manufacturing process.

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