Small-scale exemption depends on prior actual availment of the scheme, not licensing-control declarations, under the notification.

Small-scale exemption under Notification No. 175/86 depended on either registration as an SSI unit or coverage under the proviso for manufacturers who had actually availed the earlier exemption scheme in the preceding financial year. A certificate for a different unit could not by itself establish eligibility for the unit in question, but that did not defeat exemption where the record showed prior availment of the relevant exemption and clearances remained within the prescribed limits. Filing declarations under licensing-control notifications was held not to be the test for "availing of the exemption" under the notification. The exemption claim therefore succeeded on the basis of prior actual exemption availment.

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Issues: Whether the appellants were entitled to the exemption under Notification No. 175/86-Central Excises dated 1-3-1986 for the classification lists in question despite the absence of an SSI certificate for the Lower Parel unit and despite no declaration having been filed under the licensing-control notifications.

Analysis: The exemption under para 4 of Notification No. 175/86 applied to a factory registered as a small scale industry, but the proviso also protected manufacturers who had been availing of exemption under the specified earlier notifications in the preceding financial year. The certificate relating to the earlier Andheri unit could not be treated as a certificate for the Lower Parel unit, but that did not defeat the claim if the appellants were otherwise covered by proviso (b). The expression "availing of the exemption" was held to depend on the actual availability of exemption on the basis of turnover and the conditions of the earlier notifications, and not on whether declarations had been filed for exemption from licensing control under Notification No. 111/78 or Notification 2/81. The record showed that the appellants had been within the exemption scheme in the preceding financial year and that the clearances remained within the prescribed limits.

Conclusion: The appellants were entitled to the benefit of Notification No. 175/86-Central Excises dated 1-3-1986, and denial of exemption was unsustainable.

Final Conclusion: The exemption claim succeeded on the footing that prior availment of the relevant small-scale exemption brought the appellants within the protective proviso to the notification, independent of licensing-control declarations.

Ratio Decidendi: Entitlement to a small-scale exemption notification may be established by actual prior availment of the notified exemption scheme, and not by compliance with licensing-control declarations, where the governing proviso turns on prior exemption availment in the preceding financial year.

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