SSI exemption for State-owned manufacturing unit upheld under the notification wording; separate clearances were not clubbed.

The SSI exemption under Notification No. 8/2001-CE and Notification No. 8/2002-CE applied where the specified goods were manufactured in a factory belonging to or maintained by the Central Government, a State Government, or specified State instrumentalities, with clearances counted only from that factory. A manufacturing unit of Uttar Pradesh Power Corporation Ltd., treated as a Government company and State Transmission Utility, was regarded as a factory owned and controlled by the State Government and therefore fell within Explanation (E). The Revenue's reliance on a larger bench ruling under a different notification was not accepted as decisive because the wording of the notifications in issue was different. The exemption was allowed and the demand was not sustainable.

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Issues: Whether the respondent manufacturing unit was entitled to the benefit of the Small Scale Industry exemption under Notification No. 8/2001-CE dated 01.03.2001 and Notification No. 8/2002-CE dated 01.03.2002, and whether its clearances had to be clubbed with those of other units of the same corporation.

Analysis: The exemption in Explanation (E) to the notifications applied where the specified goods were manufactured in a factory belonging to or maintained by the Central Government or a State Government, or specified State instrumentalities, in which event the clearances from that factory alone were to be counted. The respondent was a manufacturing unit of Uttar Pradesh Power Corporation Ltd., which was notified as a Government company and State Transmission Utility. On that basis, the unit was treated as a factory owned and controlled by the State Government, bringing it within the scope of the explanation. The Revenue's reliance on the larger bench decision under a different notification was not accepted as decisive on the wording of the notifications in question.

Conclusion: The respondent was held entitled to the exemption and the demand could not be sustained.

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