Capital investment for exemption must be confined to the exempting unit, not clubbed with separate manufacturing units.

For exemption under Notification No. 199/75, the relevant capital investment is confined to the plant and machinery of the industrial unit manufacturing the exempted electric wires and cables; machinery in a separate aluminium rod unit in the same complex cannot be clubbed merely because it is part of the same overall premises. The commentary also notes that the refund claim was not barred by unjust enrichment on the facts discussed, as the authorities cited were treated as inapplicable and the Tribunal's earlier view was followed. The overall point is that separate excise-registered units are assessed by reference to their own investment base for exemption purposes.

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Issues: (i) Whether, for availing exemption under Notification No. 199/75, the capital investment in plant and machinery had to be confined to the industrial unit manufacturing the exempted wires and cables, or whether plant and machinery used for manufacture of aluminium rods in a separate unit in the same complex could be clubbed; (ii) Whether the refund claim was barred by the doctrine of unjust enrichment because duty had allegedly been recovered from buyers.

Issue (i): Whether, for availing exemption under Notification No. 199/75, the capital investment in plant and machinery had to be confined to the industrial unit manufacturing the exempted wires and cables, or whether plant and machinery used for manufacture of aluminium rods in a separate unit in the same complex could be clubbed.

Analysis: The notification contemplated manufacture of electric wires and cables by an industrial unit, with the capital investment on plant and machinery installed therein not exceeding the prescribed limit. The manufacturing activity for aluminium rods and the activity for wires and cables were carried on as distinct units, with separate excise licences and separate sheds, even though they were located in the same complex. The relevant investment was therefore that attributable to the unit producing the exempted goods. The machinery relating to the aluminium rod unit could not be aggregated for determining eligibility for the exemption.

Conclusion: The capital investment had to be confined to the plant and machinery of the unit manufacturing wires and cables. The department's objection on clubbing failed.

Issue (ii): Whether the refund claim was barred by the doctrine of unjust enrichment because duty had allegedly been recovered from buyers.

Analysis: The plea of unjust enrichment was not accepted in the facts of the case. The authorities relied upon by the department were held inapplicable, and the Tribunal followed its earlier view that this doctrine did not bar the refund sought on the present record.

Conclusion: The refund claim was not defeated by unjust enrichment.

Final Conclusion: The department's appeal failed, and the refund-based exemption entitlement of the assessee was sustained on the basis that only the plant and machinery of the wires and cables unit was relevant for the notification.

Ratio Decidendi: For an exemption linked to capital investment in an industrial unit, the relevant investment is that of the specific unit manufacturing the exempted goods, and separate units in the same complex cannot be clubbed merely because one supplies raw material to the other.

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