Small scale exemption under Notification No. 1/93-C.E. can apply to one unit's clearances even when duty is paid from another unit.

Notification No. 1/93-C.E. was applied on the basis that a small scale manufacturer could avail exemption for clearances from one unit while paying duty on clearances from another unit. The analysis accepted selective use of the exemption and found that, even after clubbing the clearances of both units, the aggregate remained within the exemption limit. The Kolkata unit's clearances therefore qualified for small scale exemption, and the denial of benefit was set aside.

---

---

Issues: Whether the appellants were entitled to small scale exemption under Notification No. 1/93-C.E. for the clearances made through the Kolkata unit despite duty being paid from the Delhi unit and whether the clearances of both units were to be clubbed for determining eligibility.

Analysis: Notification No. 1/93-C.E. permitted a small scale manufacturer to avail exemption and pay duty at its option for part of the clearances. The reasoning accepted that the benefit could be applied selectively to clearances from one unit while duty was paid on clearances from another unit. The record also showed that, even on clubbing the clearances of both units, the aggregate did not exceed the exemption limit, so the Kolkata unit's clearances remained within the permissible threshold for exemption.

Conclusion: The appellants were entitled to small scale exemption for the impugned clearances through the Kolkata unit, and the denial of the benefit was set aside in favour of the assessee.

---