Exemption for a distinct new product line requires separate examination under the new industrial unit test, despite prior manufacturing activity.

Exemption under Notification No. 32/99-C.E. depended on whether a unit commencing manufacture of fragrances and flavours could be treated as a new industrial unit under clause 3(a), even though it already manufactured other products. The notification covered either new industrial units starting commercial production on or after 24-12-1997 or existing units undertaking substantial expansion of at least 25%. Because the earlier order focused mainly on expansion and installed capacity, without examining the distinct new product line under clause 3(a), the matter was remitted for fresh consideration of eligibility on that basis, with liberty to raise other issues before the Commissioner.

---

---

Issues: Whether the appellants were entitled to exemption under Notification No. 32/99-C.E. dated 8-7-1999 on the basis that the unit manufacturing fragrances and flavours constituted a new industrial unit within the meaning of clause 3(a).

Analysis: The notification extended benefit either to new industrial units commencing commercial production on or after 24-12-1997 or to existing units undertaking substantial expansion by at least 25%. The dispute turned on whether the appellants, though already carrying on manufacture of other products, could be treated as a new unit for the newly commenced line of fragrance and flavour manufacture. The existing order had proceeded mainly on the footing of expansion and installed capacity, but had not examined whether the new product line itself satisfied clause 3(a). Since the notification was intended to encourage both new industrial activity and expansion in the North Eastern Region, the question required fresh determination on that aspect.

Conclusion: The matter was remitted for reconsideration of the appellants' eligibility under clause 3(a), with liberty to raise other issues before the Commissioner.

Ratio Decidendi: A unit already engaged in manufacturing some products may still require separate examination as a new industrial unit for a distinct new line of manufacture where the exemption notification so permits.

---