Clubbed clearances after merger determine small-scale exemption eligibility under Notification No. 1/93.

After a High Court-approved merger creates a single legal entity, the clearances of both predecessor units in the preceding financial year must be clubbed for testing eligibility to small-scale exemption under Notification No. 1/93. The two premises operating as Unit-A and Unit-B could not be treated as separate manufacturers or separate legal entities after merger. Their combined clearances were therefore attributable to the merged undertaking, and separate exemption for Unit-B was not available.

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Issues: Whether, after merger of two erstwhile units into a single legal entity, the clearances of both predecessor units in the preceding financial year had to be clubbed for determining eligibility to small-scale exemption under Notification No. 1/93 dated 28-2-1993.

Analysis: The exemption under Notification No. 1/93 was available only where the aggregate clearances of the manufacturer did not exceed the prescribed limit in the preceding financial year. After the merger approved by the High Court, only one legal entity existed, though the merged undertaking continued to operate from two premises as Unit-A and Unit-B. The two premises could not be treated as separate legal entities or separate manufacturers after the merger. The clearances of both predecessor units therefore had to be treated as the clearances of the newly formed entity for the purpose of eligibility under the notification.

Conclusion: The clearances of the predecessor units were rightly clubbed, and the assessee was not entitled to claim separate small-scale exemption for Unit-B.

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