Installed plant valuation for exemption must exclude irrelevant items and disclosed material only; adverse demand failed on natural justice grounds.

Eligibility for exemption based on the value of installed plant and machinery required a proper item-wise valuation of only legally relevant machinery and related utility items. Reliance on the balance sheet was not sustainable because it had not been disclosed in the notice as a document proposed to be relied upon, depriving the appellants of a fair opportunity to meet that material. The chartered accountant's certificate also required factual scrutiny on each entry, as several items did not clearly constitute installed plant and machinery. The finding that the prescribed monetary limit was exceeded was therefore unsustainable, and the matter was remanded for fresh decision after proper verification.

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Issues: Whether the appellants were entitled to exemption under the relevant notifications on the ground that the value of plant and machinery installed did not exceed the prescribed limit, and whether the adjudication could be sustained on the basis of the balance sheet and chartered accountant's certificate.

Analysis: The demand turned on the correct valuation of the installed plant and machinery for purposes of the exemption notifications. The reliance placed on the balance sheet was held unjustified because it had not been disclosed as a document to be relied upon in the notice, depriving the appellants of an opportunity to meet the inference sought to be drawn from it. The chartered accountant's certificate also required scrutiny item-wise, as several entries plainly did not represent installed plant and machinery, while other items, including certain utility or auxiliary items, needed individual factual examination. Since the material had not been properly investigated on these lines, the finding that the monetary limit was exceeded could not be sustained.

Conclusion: The appeal was allowed, the adjudication order was set aside, and the matter was remanded for fresh decision after proper factual verification.

Ratio Decidendi: For determining eligibility to an exemption dependent on the value of installed plant and machinery, only legally relevant plant-and-machinery items can be counted, and adverse reliance on material not disclosed in the notice violates natural justice and cannot sustain the demand.

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