Old machinery test under trade tax exemption: a non-essential laboratory mixer did not defeat new unit status.

An old mixer machine used only in the laboratory for mixing purposes did not defeat a unit's claim to be treated as a new unit for exemption under section 4-A of the U.P. Trade Tax Act. The exemption scheme was to be construed liberally, and the post-31.03.1990 test focused on whether old machinery was essential to the manufacturing process. Because the mixer was a small, inexpensive article, not part of the essential manufacturing plant for paints and adhesives, and the unit had produced for two years without it, it was not treated as disqualifying machinery. The exemption period therefore was not curtailed, and the unit remained eligible for the full period.

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Issues: Whether the use of an old mixer machine in the laboratory of the unit, without which the manufacturing process could otherwise be carried on, disqualified the unit from being treated as a new unit for exemption under section 4-A of the U.P. Trade Tax Act.

Analysis: The exemption scheme under section 4-A and the relevant notification was intended to promote industrial development and had to be construed liberally. Under the post-31.03.1990 definition of a new unit, the emphasis was on the use of old machinery that was essential to the manufacturing process. The record showed that the mixer machine was a small and inexpensive article used only in the laboratory for mixing purposes and not as an essential part of the manufacturing plant for paints and adhesives. The unit had also carried on production for two years without that mixer. On that footing, the old mixer could not be treated as machinery that defeated the claim of a new unit.

Conclusion: The use of the old mixer machine did not justify curtailing the exemption period, and the claim for exemption for the full eligible period was allowed.

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