SSI exemption excludes clearances to a 100% EOU, and undisputed receipt and use defeats turnover inclusion.

Clearances of excisable intermediate goods supplied to a 100% export oriented undertaking are excluded from the aggregate value of clearances for SSI exemption under Notification No. 8/2003-CE. Where the goods were admittedly received by the EOU, duly reflected in the records of both units, and used in manufacture of final products exported out of India, the turnover could not be added to the home-consumption computation merely because of alleged documentation defects. On that basis, the SSI threshold was not breached and the related demand, interest, and penalty were unsustainable.

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Issues: Whether the value of clearances of intermediate goods supplied by the appellant to its 100% Export Oriented Undertaking was includible in the aggregate value of clearances for determining eligibility to small scale industry exemption under Notification No. 8/2003-CE.

Analysis: The notification excluded clearances to a hundred percent export oriented undertaking from the computation of aggregate value of clearances for home consumption. The goods in question were admittedly supplied to the appellant's sister concern, a 100% EOU, were duly recorded in the books of both units, and were used in manufacture of final products that were ultimately exported. Once the substantive fact of receipt and use by the EOU was not in dispute, the mere objection regarding the mode of documentation could not justify adding such clearances to the SSI threshold.

Conclusion: The value of clearances to the 100% EOU was not includible in the SSI exemption computation, and the demand, interest, and penalty were unsustainable.

Ratio Decidendi: Clearances of excisable goods to a 100% export oriented undertaking are excluded from the aggregate value of clearances for SSI exemption, and such clearances cannot be brought into the home-consumption turnover merely because of alleged procedural defects in documentation when receipt and use by the EOU are undisputed.

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