Exemption eligibility under clearance-threshold notification depends on unit-level aggregate turnover, preserving deemed Modvat credit.

Eligibility under Notification No. 1/93-C.E. depended on the aggregate clearances in the preceding financial year and the exercise of the prescribed option for the relevant duty regime. The disqualifying condition applied only where the unit as a whole had exceeded the prescribed preceding-year limit; clearances above the concessional slab did not by themselves remove exemption status. On that basis, a manufacturer that had not crossed the aggregate eligibility threshold in the previous year continued to qualify as a unit availing exemption under the notification and was entitled to deemed Modvat credit.

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Issues: Whether a manufacturer who had crossed the concessional clearance slab under Notification No. 1/93-C.E. but had not exceeded the prescribed aggregate clearance limit in the preceding financial year could still be treated as a unit availing exemption under the notification for the purpose of deemed Modvat credit.

Analysis: The notification made eligibility dependent on the aggregate clearances in the preceding financial year and required the manufacturer to exercise an option for the relevant duty regime in the current year. The disqualifying condition applied only when the aggregate value of clearances in the preceding financial year exceeded the prescribed limit. The expression used in the governing circular and order referred to the unit as a whole, not to individual clearances beyond the concessional slab. Since the respondent unit had not crossed the preceding-year limit, it continued to fall within the class of units availing exemption under Notification No. 1/93-C.E.

Conclusion: The respondent was entitled to be treated as a unit availing exemption under Notification No. 1/93-C.E. and was not denied the benefit of deemed Modvat credit.

Ratio Decidendi: Eligibility under an exemption notification that turns on a financial-year clearance threshold is determined with reference to the unit as a whole and the prescribed eligibility condition, not by isolating clearances above the concessional slab when the statutory disqualification is not otherwise attracted.

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