Installed machinery test and refund adjustment determine exemption eligibility and refund computation under the notification.

Refund received because the assessee was found not liable to pay the amount under an appellate tribunal order could not be treated as profit for computing clearance value, and had to be excluded from the relevant financial year's calculation. For exemption eligibility under the notification, only the value of plant and machinery actually installed in the industrial unit could be counted; machinery purchased but not installed could not be included. On that basis, the assessee remained entitled to the exemption and refund relief, and the authority was required to recalculate the refund accordingly.

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Issues: (i) Whether the refund amount granted pursuant to the appellate tribunal's order could be treated as profit for computing the clearance value for the relevant financial year; and (ii) whether the value of machinery purchased but not installed could be included while determining eligibility for exemption under the relevant notification.

Issue (i): Whether the refund amount granted pursuant to the appellate tribunal's order could be treated as profit for computing the clearance value for the relevant financial year.

Analysis: The refund arose because the assessee was found not liable to pay that amount under the tribunal's decision. A sum returned to the assessee on that basis does not represent profit earned by the company, and therefore it could not be loaded into the clearance value as profit for the earlier financial year.

Conclusion: The refund amount could not be treated as profit and had to be excluded while working out the refund entitlement.

Issue (ii): Whether the value of machinery purchased but not installed could be included while determining eligibility for exemption under the relevant notification.

Analysis: The notification required consideration only of the value of plant and machinery installed in the industrial unit. The pleadings specifically stated that machinery worth a substantial amount was purchased but not installed during the period. There was no effective denial or finding that the machinery in question was installed, and the authority's order did not show that this distinction was applied. On that basis, only the installed machinery could be counted for the monetary limit under the notification.

Conclusion: The value of machinery not installed could not be included, and the assessee remained entitled to the exemption benefit.

Final Conclusion: The assessee was entitled to refund relief for both financial years, and the authority was directed to recalculate and release the refund in accordance with the tribunal's decision and the court's findings.

Ratio Decidendi: For exemption notifications that turn on the value of installed plant and machinery, only machinery actually installed can be counted, and a refund arising from appellate relief cannot be treated as profit for computation of clearance value.

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