SSI exemption under Notification No. 1/93-C.E. could not be split across factories when the manufacturer had chosen normal duty for one unit.

Notification No. 1/93-C.E. was construed as granting the small-scale industry exemption to the manufacturer as a whole, even where goods were produced from more than one factory. Where the manufacturer had elected to pay duty at the normal rate for one unit, that option could not be selectively disregarded for another unit manufacturing the same goods. The exemption claimed for the second unit was therefore not available, and the demand and penalty were upheld.

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Issues: Whether a manufacturer having more than one factory could avail the SSI exemption under Notification No. 1/93-C.E. in respect of one unit while paying duty at the normal rate for another unit of the same manufacturer.

Analysis: Notification No. 1/93-C.E. applied to a manufacturer manufacturing goods from one or more factories. The notification was read as giving the option to the manufacturer as such, not separately for each factory. Since the manufacturer had chosen to pay duty at the normal rate in respect of one unit, the same option could not be selectively ignored for the other unit manufacturing the same goods. The Commissioner (Appeals) had therefore erred in allowing the exemption for the second unit.

Conclusion: The SSI exemption was not available in the manner claimed, and the demand and penalty were sustainable.

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