Unit-wise exemption eligibility protects refund entitlement where separately registered manufacturing units are treated independently.

Exemption eligibility under Notification No. 39/2001-CE had to be determined unit-wise where two manufacturing units were separately registered and treated as independent for central excise purposes. The first unit had started commercial production before the prescribed cut-off date, so bare pipes manufactured in that unit remained eligible for the notification. The ineligibility of the second unit manufacturing coated pipes did not defeat the first unit's entitlement. Duty relatable to the bare pipes was therefore refundable to the assessee, and the Revenue's challenge failed.

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Issues: Whether the respondent was entitled to proportionate refund attributable to bare pipes manufactured in the first unit under Notification No. 39/2001-CE dated 31.07.2001, even though the second unit manufacturing coated pipes was not eligible for the exemption.

Analysis: The first unit had commenced commercial production before the cut-off date prescribed in the notification. The record also showed that the two manufacturing units were treated as independent units for central excise registration purposes. On that footing, the unit manufacturing bare pipes was separately eligible for the benefit of the notification, while the later unit manufacturing coated pipes could be denied exemption without affecting the entitlement of the first unit. The Tribunal was therefore justified in directing assessment of duty relatable to the bare pipes and refund of that amount to the assessee.

Conclusion: The respondent was entitled to refund relatable to the bare pipes manufactured in Unit No. 1, and the Revenue's challenge failed.

Ratio Decidendi: Where two units are separately registered and treated as independent, exemption eligibility must be determined unit-wise, and entitlement of one unit is not defeated merely because another unit is ineligible under the notification.

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