SSI exemption follows substantive eligibility under revised policy, even when formal registration is issued later.

Where an assessee had already applied for Small Scale Industry registration and the authorities delayed issuance of the certificate, exemption under Notification No. 175/86 as amended by Notification No. 244/87 was available from the date eligibility arose under the revised investment limit, not merely from the date of formal registration. The revised Ministry of Industry policy raised the SSI investment ceiling to Rs. 35 lakhs, and the delay in certification was attributable to the authorities. The later grant of registration on the same policy basis could not be used to defeat substantive eligibility, so the exemption remained admissible and the demand could not be sustained.

---

---

Issues: Whether the assessee, whose application for Small Scale Industry registration was pending and delayed by the authorities, was entitled to the exemption under Notification No. 175/86 as amended by Notification No. 244/87 from the date its eligibility arose under the revised investment limit, rather than only from the date of actual issue of the SSI certificate.

Analysis: The revised policy of the Ministry of Industry enhanced the investment ceiling for SSI status to Rs. 35 lakhs. The assessee had already applied for SSI registration and for de-registration from DGTD, and the subsequent delay in issuance of the SSI certificate was entirely on the part of the authorities. The registration, when ultimately granted, was based on the same policy decision. Since the substantive eligibility had accrued upon the policy change and the period in dispute was after that date, the delay in formal certification could not be used to deny the exemption. The conclusion was supported by earlier Tribunal decisions on identical facts.

Conclusion: The exemption was admissible from the date the assessee became eligible under the revised SSI policy, and not merely from the date of actual grant of registration, with the result that the demand could not be sustained.

Ratio Decidendi: Where an assessee has substantively become eligible for SSI status under a revised policy and the grant of formal registration is delayed by the authorities, the exemption cannot be denied solely because the certificate was issued later.

---