Unit-wise exemption under Notification 77/85-C.E. applied, while clearances from separate units were clubbed for duty liability.

Notification No. 77/85-C.E. was applied unit-wise, so capital investment in separate industrial units could not be clubbed merely because the same manufacturer operated both. The record treated the Lathikata unit and the temporary Angul contract-work unit as distinct units, and the investment at each was found to be within the exemption limit. At the same time, the clearances from both units were required to be clubbed for determining any duty liability. The matter was remanded for de novo computation of duty, if any, and for decision on open issues including limitation.

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Issues: Whether the benefit of Notification No. 77/85-C.E. was to be denied by clubbing the capital investment in plant and machinery at the Lathikata unit with machinery installed at the Angul site for contract work, and whether the clearances from both units were required to be clubbed for determining eligibility to exemption.

Analysis: The appellants consistently maintained that the plant and machinery reflected in the balance sheet related to two separate industrial units, one at Lathikata and another temporary unit at Angul for execution of contract work. The adjudicating authority had not properly examined this stand and had proceeded on the footing that machinery at both places had to be aggregated merely because the manufacturer was the same. The Notification was held to operate with reference to the capital investment of each industrial unit, and not by mechanically combining the machinery of separate units. On the available record, the investment at each unit was found to be below the monetary limit, though the record did not show whether the aggregate clearances of both units exceeded the exemption ceiling.

Conclusion: The appellants were held entitled to the benefit of Notification No. 77/85-C.E. in relation to both units, but their clearances had to be clubbed for deciding any duty liability. The matter was remanded for de novo determination of duty, if any, and other open issues including limitation.

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