SSI exemption turnover computation must include exempted clearances where Board clarification so requires, supporting extended limitation.

For SSI exemption eligibility, exempted clearances, including sprinkler irrigation systems and related cleared goods forming part of the system, were required to be included in aggregate turnover where the governing circular and Board clarification so provided. The contrary contention that such clearances were excludable from the turnover limit was rejected, and the inclusion of those clearances in the eligibility computation was upheld. The extended period of limitation was also sustained because the assessee continued its own turnover method despite the clarification, and the demand rested on investigation and private records. On that basis, the demand and penalty were maintained.

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Issues: (i) Whether the value of exempted goods, including sprinkler irrigation system and cleared goods forming part of the system, was to be included in the aggregate value of clearances for eligibility under the small scale industry exemption; (ii) whether the demand was sustainable for the extended period of limitation.

Issue (i): Whether the value of exempted goods, including sprinkler irrigation system and cleared goods forming part of the system, was to be included in the aggregate value of clearances for eligibility under the small scale industry exemption.

Analysis: The exemption under Notification No. 9/2003-C.E. required computation of aggregate clearances for the relevant period. The circular and the Budget/Board clarification relied upon in the order stated that the value of exempted goods, excluding exports, was to be included for determining the turnover limit of Rs. 3 crores. On that basis, the contention that sprinkler system and exempted goods should be excluded from turnover was rejected. The clearance of purchased items along with the sprinkler system was also treated as part of the exempted clearances and not separately excludable.

Conclusion: The inclusion of the disputed clearances in the aggregate value was upheld, against the assessee.

Issue (ii): whether the demand was sustainable for the extended period of limitation.

Analysis: The order recorded that the lower authorities had already given clear findings supporting invocation of the extended period, and that the assessee continued to adopt its own method of turnover computation despite the Board clarification. The demand was also founded on investigation and private records, which supported the invocation of the longer limitation period.

Conclusion: The demand for the extended period was upheld, against the assessee.

Final Conclusion: The order confirming the demand and penalty against the main appellant was sustained, and the appeal failed in its entirety.

Ratio Decidendi: For SSI exemption eligibility, exempted clearances are to be included in the aggregate turnover where the governing clarification so provides, and continued contrary computation in the face of Board clarification can justify the demand including invocation of the extended period.

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