Substantial expansion benefit applies when replacement machinery increases installed capacity, not only when old equipment remains in place.

An existing industrial unit could claim excise notification benefits for substantial expansion where installed capacity increased by at least 25% through replacement of old plant and machinery with new machinery. The departmental clarification was read as requiring a genuine increase in capacity, not merely an addition of equipment while retaining the old set intact. Because the replacement resulted in the prescribed capacity increase, the condition of substantial expansion was satisfied and the unit remained entitled to the notification benefit.

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Issues: Whether an existing industrial unit was entitled to the excise notification benefit for substantial expansion when the required 25% increase in installed capacity was achieved by installing new plant and machinery that replaced the old plant and machinery.

Analysis: The notification was read with the departmental clarification explaining that substantial expansion meant an increase in installed capacity of not less than 25% through installation of additional plant and machinery. The clarification did not confine the benefit to a mere addition of machinery while leaving the old machinery intact. If the new plant and machinery, though replacing the old set, resulted in the prescribed increase in installed capacity, the condition of substantial expansion stood satisfied.

Conclusion: The unit was held entitled to the benefit of the notification, and the departmental appeal failed.

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