Clubbing of clearances for small scale exemption denied where predecessor and successor sales crossed the prescribed ceiling.

Small scale exemption under Notification No. 1/93-C.E. is unavailable where the aggregate clearances from the same factory by one or more manufacturers exceed the prescribed ceiling in the relevant period. On takeover of a unit, clearances made by the predecessor and the appellant could be clubbed because the factory remained the same and the combined clearances crossed the limit under para 2, clause (b). The exemption therefore did not apply to the appellant, and the clubbing of clearances was held to be correct.

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Issues: (i) Whether the clearances made by the predecessor unit and the appellant were liable to be clubbed for determining eligibility under the small scale exemption notification.

Analysis: The exemption under para 2 of Notification No. 1/93-C.E. does not apply where the aggregate value of clearances from a factory by one or more manufacturers in the relevant period exceeded the prescribed limit. As the factory remained the same and the clearances, including those made by the earlier unit before takeover, crossed the ceiling, the case fell within clause (b) of para 2.

Conclusion: The clearances were rightly clubbed and the appellant was not entitled to the exemption.

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