Small scale exemption on job-work clearances cannot be denied solely because the principal manufacturer lacks eligibility.

Job-work clearances of a small scale unit could not be excluded from exemption eligibility merely because the principal manufacturer was not itself entitled to small scale exemption. On a prima facie reading of Notification No. 175/86-C.E., the unit's eligibility had to be assessed with reference to its own status, and the lower authority's contrary approach was found inconsistent with the notification. The applicants were therefore granted stay and waiver of recovery of the duty demanded.

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Issues: Whether clearances effected on job work for another manufacturer, who was not eligible for small scale exemption, could be included while computing eligibility for exemption under Notification No. 175/86-C.E., and whether the applicants were entitled to stay and waiver of recovery of the duty demanded.

Analysis: The applicants were a small scale unit availing the exemption under Notification No. 175/86-C.E. and also undertaking job work for another manufacturer. Their job work clearances had been included for the purpose of computing the exemption limit, and the lower authority denied the benefit only because the principal manufacturer was not itself entitled to small scale exemption. On a prima facie assessment, this approach was found inconsistent with the notification, as the eligibility of the applicants' unit could not be denied on that ground.

Conclusion: The applicants were entitled to stay and waiver of recovery of the duty amount.

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