SSI exemption under Notification No. 175/86 turns on State registration, not commodity-specific certification, for loan licencee-manufactured goods.

Notification No. 175/86 was interpreted as requiring only that the factory be registered with the Directorate of Industries in any State as a small scale unit, without any further condition that the SSI registration be commodity-specific. On that reading, goods manufactured for loan licencees remained eligible for exemption where the loan licencees were themselves registered SSI units in their respective States. Affixation of the loan licencee's brand name did not by itself disqualify the goods, and objections based on the place of registration did not sustain a duty demand. The Revenue's challenge therefore failed and the exemption remained available.

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Issues: Whether the respondents were entitled to the benefit of Notification No. 175/86 when the goods were manufactured for loan licencees whose SSI registrations were not commodity-specific and who were registered as small scale units in their respective States.

Analysis: The availability of the exemption turned on the scope of paragraph 7 of Notification No. 175/86. That provision was construed as requiring only that the factory be an undertaking registered with the Directorate of Industries in any State, and not as imposing a further condition that the SSI certificate must be commodity-specific. Since the loan licencees were registered SSI units in their States and were eligible for the exemption, paragraph 7 did not disentitle the goods merely because the brand name of the loan licencee was affixed. The objections based on the geographical location of the loan licencees and the penalty order did not displace the finding that no demand was sustainable.

Conclusion: The exemption under Notification No. 175/86 was held available and the Revenue's challenge to the orders of the Collector (Appeals) failed.

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