Small scale exemption turnover must include eligible branded rural-area clearances; unconditional pre-deposit waiver was not justified.

Branded goods manufactured in a rural area factory remained eligible for the small scale exemption even if cleared on payment of duty, but that eligibility did not exclude them from the aggregate value of clearances for the next financial year. The relevant test was whether the clearances were ineligible under the notification; only such ineligible clearances could be left out of the turnover computation. On that basis, the branded rural-area clearances had to be included, and the appellant was not shown to have a prima facie case for complete waiver of pre-deposit, with absence of pleaded financial hardship also noted.

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Issues: Whether branded goods manufactured in a rural area factory, though cleared on payment of duty, were required to be included in the aggregate value of clearances for determining eligibility to the small scale exemption in the next financial year, and whether the appellant had made out a prima facie case for unconditional waiver of pre-deposit.

Analysis: The exemption notification permitted branded goods manufactured in a factory located in a rural area to enjoy the exemption. For computing the aggregate value of clearances, the relevant question was whether such eligible branded clearances had to be excluded merely because duty had been paid on them. The Tribunal held that the exclusion applied only to clearances that were ineligible for exemption under the notification. Since the branded goods manufactured in the rural area factory were themselves eligible for exemption, they were required to be included while computing the aggregate value. On that basis, the appellant could not establish a prima facie case for complete waiver of pre-deposit, and absence of pleaded financial hardship was also noted.

Conclusion: The branded clearances were includible in the aggregate turnover for exemption eligibility, and unconditional waiver of pre-deposit was not warranted. The appellant was directed to deposit 50% of the duty, with waiver and stay granted only for the balance on compliance.

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