Exemption threshold under Notification No. 77/85 failed where plant and machinery value exceeded the prescribed limit and exclusions were not proved.

Capital investment in plant and machinery, when aggregated with clearing charges and indigenous equipment value, exceeded the Rs. 20 lakh ceiling under Notification No. 77/85, so the exemption threshold was not met. The imported wire mesh welder was to be valued at the amount taken at import clearance, and the exchange-rate dispute was not decisive on these facts. The Automatic Resetting Device could not be excluded from the computation because the notification allowed exclusion only where machinery was rendered unfit for use, and no evidence showed such unfitness; mere non-functioning was insufficient. Eligibility under the notification was therefore denied and the demand was sustained.

---

---

Issues: Whether the appellants' capital investment on plant and machinery exceeded the limit prescribed in Notification No. 77/85 dated 17-3-1985, and whether the value of the Automatic Resetting Device and related import costs were liable to be excluded for determining eligibility to the exemption.

Analysis: The value of the plant and machinery, when taken with clearing charges and the value of the indigenous equipment, exceeded the ceiling of Rs. 20 lakhs prescribed by the notification. The imported wire mesh welder was to be valued at the amount adopted at import clearance, and the exchange-rate dispute was not decisive in these proceedings. The Automatic Resetting Device could not be excluded because the notification permitted exclusion only where machinery was rendered unfit for use, and no evidence established such unfitness; mere non-functioning did not satisfy the exemption condition.

Conclusion: The appellants failed to establish eligibility under the notification, and the demand was upheld against them.

---