Exempt excise clearances cannot be clubbed for SSI threshold computation; rural unit sales stayed outside aggregate turnover.

Clearances exempt from the whole of excise duty must be excluded from the aggregate value under the small-scale industry exemption notification. Applying its earlier view, the Tribunal held that clearances from the Goa rural area unit could not be clubbed with the Mumbai unit's clearances merely because the Goa unit had not been separately declared. The exempt Goa clearances therefore did not affect eligibility for SSI benefit, and the assessee was entitled to the exemption. As a result, the demand, interest and penalty did not survive.

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Issues: Whether the clearances of the Goa unit, which enjoyed exemption as a rural area unit, could be clubbed with the clearances of the Mumbai unit for computing the aggregate value under the small-scale industry exemption notification.

Analysis: The Tribunal followed its earlier decision on the same issue and read the exemption notification to mean that clearances exempt from the whole of excise duty are to be excluded while determining the aggregate value of clearances. Since the Goa unit had availed the exemption for goods manufactured in a rural area, those clearances could not be added to the Mumbai unit clearances merely because the existence of the Goa unit had not been declared. No valid reason was found to depart from the earlier view.

Conclusion: The clearances of the Goa unit were not liable to be clubbed with the Mumbai unit clearances, and the assessee was entitled to the exemption.

Final Conclusion: The demand, interest, and penalty did not survive, and the appeal succeeded with consequential relief in accordance with law.

Ratio Decidendi: Clearances that are exempt from the whole of excise duty must be excluded from the aggregate turnover computation under the exemption notification, and such exempt clearances cannot be clubbed with other unit clearances for denying SSI benefit.

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