Small Scale Exemption continues for prior beneficiaries despite lack of fresh registration in the succeeding year.

Small scale exemption under Notification No. 175/86-C.E. was preserved for a manufacturer who had validly availed the benefit in the preceding financial year, even if fresh small scale registration was absent in the subsequent year. The notification's text created an exception to the general registration requirement, and the tribunal's view was that prior lawful availing of the exemption was sufficient to continue the benefit. On that basis, denial of the exemption was held unsustainable and the assessee was entitled to relief.

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Issues: Whether the assessee was entitled to the benefit of Small Scale Exemption under Notification No. 175/86-C.E. for the relevant subsequent financial year despite not being registered as a small scale unit during that period, where the exemption had already been availed in the preceding financial year.

Analysis: Para 4 of Notification No. 175/86-C.E. made the exemption applicable to a factory registered as a small scale industry, but also carved out an exception for a manufacturer who had been availing the exemption in the preceding financial year. The assessee had admittedly availed the notification in the financial year 1989-90, and the tribunal relied on the notification text as well as its earlier view that once the benefit had been validly availed in the preceding year, denial of the benefit in the succeeding year was not warranted merely for want of fresh registration during that period.

Conclusion: The denial of the small scale exemption was unsustainable, and the assessee was entitled to the benefit of the notification.

Final Conclusion: The impugned order was set aside and the appeals were allowed, resulting in relief to the assessee.

Ratio Decidendi: Where the exemption notification itself preserves the benefit for a manufacturer who had been availing it in the preceding financial year, the exemption cannot be denied in the succeeding year solely because fresh small scale registration was absent for that period.

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