Exemption eligibility under industrial notification turns on plant-based "unit" meaning and trial production not counting as commercial production.

For exemption under Notification No. 50/2003-C.E., "unit" was construed to mean the plant and buildings used exclusively for manufacture, not necessarily a broader factory establishment. Trial production before the relevant date did not amount to commercial production, so it could not defeat eligibility where the notification required commencement of commercial production on or after the specified date. A change in name was treated as immaterial because the factory location matched the notified khashra numbers. On that basis, the denial of exemption could not be sustained at the prima facie stage, and interim protection against recovery was justified pending disposal of the appeals.

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Issues: Whether the appellant was entitled to stay of recovery by making out a prima facie case against denial of exemption under Notification No. 50/2003-C.E. on the grounds that the word "unit" could not be confined to a factory, and that prior trial production did not disqualify the unit as a new industrial unit.

Analysis: The notification granted exemption to specified goods cleared from eligible units in industrial growth centres or industrial infrastructure development centres, and the dispute turned on the meaning of "unit" and the effect of pre-dated production. The term "unit" was held to denote the plant and building used exclusively for manufacture, and not necessarily the factory as a wider industrial establishment. On the question of newness, the record showed that production before the relevant date was only small-scale trial production and not commercial production. Since the notification itself contemplated commencement of commercial production on or after the specified date, trial production could not be equated with commercial production for denying the exemption. The change in names was also found immaterial where the factory location corresponded with the notified khashra numbers.

Conclusion: The denial of exemption could not be sustained at the prima facie stage, and the appellant was entitled to stay of recovery pending disposal of the appeals.

Final Conclusion: The order granting interim protection was justified because the appellant raised a substantial prima facie challenge to the rejection of exemption under the notification.

Ratio Decidendi: For purposes of an exemption notification, "unit" may be construed by reference to the manufacturing plant and buildings used exclusively for the goods in question, and trial production does not amount to commercial production where the notification links eligibility to commencement of commercial production.

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