Small-scale exemption cannot be denied solely for factory relocation where prior-year eligibility and relaxed registration conditions are met

Exemption under Notification No. 175/86-C.E. could not be refused merely because a factory was shifted to new when the manufacturer otherwise satisfied the relaxed registration conditions in the proviso to paragraph 4. The decisive factor under proviso (b) was whether the exemption had been availed in the previous year, and once that condition was met, change of location did not by itself defeat the benefit. The concern that this reading might allow multiple new units to claim relief was addressed by the notification's clubbing mechanism for clearances. The interpretation was consistent with earlier Tribunal precedent and Board instructions.

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Issues: Whether a manufacturer who was otherwise entitled to the benefit of Notification No. 175/86-C.E. could be denied the exemption merely because the factory was shifted to a new premises and the new location was not separately registered with the industrial authorities.

Analysis: The exemption notification granted relief to goods manufactured in factories registered with the Director of Industries or the Development Commissioner (Small Scale Industries), but that requirement stood relaxed by the proviso to paragraph 4. Under proviso (b), the relevant consideration was whether the manufacturer had availed the exemption in the previous year. The Tribunal held that once this condition was satisfied, the benefit could not be denied solely because the premises were shifted. The argument that such an interpretation would permit multiple new factories to claim the benefit was rejected, since the notification contemplated clubbing of clearances where necessary. The issue was also covered by the earlier Tribunal decision relied upon and by the Board's instructions.

Conclusion: The shifted factory was not disentitled to the exemption, and the denial of benefit on the ground of change of location was unsustainable. The appeal was liable to be dismissed.

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