Commercial production before the cut-off date defeats exemption under Notification No. 20/07-C.E. for a new industrial unit.

Exemption under Notification No. 20/07-C.E. was unavailable because the unit had already commenced commercial manufacture before the prescribed cut-off date. Contemporaneous RG-1 records and ER-1 returns showed clearance of railway sleepers in January 2007, and there was no supporting evidence that the activity was only trial production or otherwise non-commercial. The contemporaneous records were treated as decisive, so the claim that initial production was merely trial production was rejected.

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Issues: Whether the appellant was entitled to exemption under Notification No. 20/07-C.E. dated 25-4-2007 when the unit had manufactured and cleared railway sleepers before 1 April 2007.

Analysis: The notification granted exemption only to a new industrial unit commencing commercial production on or after 1 April 2007 and not later than 31 March 2017. The record showed that 4900 railway sleepers valued at Rs. 28.5 lakhs were manufactured and cleared in January 2007, and the same were reflected in the RG-1 records and ER-1 returns. There was no evidence that the clearances were non-commercial or merely trial production. The plea that the initial production was trial production was not accepted in the face of the contemporaneous records showing commercial manufacture and clearance.

Conclusion: The appellant was not entitled to the benefit of the notification, as commercial production had commenced before the notified cut-off date.

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