SSI exemption eligibility turns on manufactured clearances only; traded goods cannot be included in the threshold calculation.

SSI exemption eligibility under Notification No. 8/2003-CE had to be tested by computing the aggregate value of clearances on manufactured goods only, because the exemption applies to manufacture and not trading activity. Since the limit was crossed only by adding traded goods, exclusion of those values kept the aggregate within the prescribed threshold, and denial of exemption on that basis was not justified. The appellant was therefore entitled to the exemption.

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Issues: Whether, for eligibility to small scale industry exemption under Notification No. 8/2003-CE dated 1.3.2003, the aggregate value of clearances in the preceding financial year was to be computed by including traded goods.

Analysis: The exemption was available to manufactured goods and not to trading activity. The threshold limit of Rupees Three Hundred Lakhs had been crossed only because the value of traded goods was added in the preceding financial year. Once traded goods were excluded, the aggregate value remained within the prescribed limit. The denial of exemption on the basis of such inclusion was therefore not justified.

Conclusion: The aggregate value for SSI eligibility had to be computed only with reference to goods manufactured by the appellant. Inclusion of traded goods was incorrect, and the exemption was available to the appellant.

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