SSI exemption under Notification No. 175/86 depends on clubbed clearances; later lease does not revive eligibility after threshold breach.

SSI exemption under Notification No. 175/86 was held to depend on the aggregate value of qualifying clearances in the preceding financial year, applying the notification's clubbing provisions to clearances by a manufacturer from one or more factories and by one or more manufacturers from a factory. A later lease of the unit and production of an SSI certificate did not revive eligibility where the prescribed limit had already been crossed. The exemption was treated as attaching to the statutory conditions governing the factory and its clearances, not merely to the identity of the later lessee. The unit was therefore not entitled to the benefit of the notification, and the denial of SSI exemption was affirmed.

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Issues: Whether exemption under Notification No. 175/86 was admissible to a leased unit where the aggregate value of clearances of the earlier manufacturer from one or more factories had exceeded the prescribed limit in the preceding financial year.

Analysis: The notification was read as a complete scheme of exemption subject to the conditions in its various paras. Paragraph 3 was held to require clubbing of clearances in the two situations specifically mentioned, namely clearances by a manufacturer from one or more factories and clearances from any factory by one or more manufacturers. The relevant test was the aggregate value of clearances in the preceding financial year, and the fact that the unit was later taken on lease and supported by an SSI certificate did not alter the eligibility position if the prescribed limit had already been crossed. The reasoning was supported by the view that the exemption is attached to the statutory conditions governing the factory and the clearances, not merely to the identity of the later lessee.

Conclusion: The unit was not entitled to the benefit of Notification No. 175/86 and the exemption claim failed.

Final Conclusion: The appeal was rejected and the order denying SSI exemption was affirmed.

Ratio Decidendi: Eligibility for SSI exemption under Notification No. 175/86 depends on the aggregate value of qualifying clearances under the notification's clubbing provisions, and a later change in management or leasehold occupation does not revive the exemption where the statutory threshold was already exceeded in the preceding financial year.

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