Exemption eligibility under small-scale industry notification depends on prior-year benefit and proviso conditions, not DGTD registration alone.

Eligibility for exemption under Notification No. 175/86-C.E. turned not merely on the date of DGTD registration, but on whether the factory had availed the exemption in the preceding financial year so as to fall within the proviso. Paragraph 4 extended the benefit to small-scale industry factories, while clause (b) of the proviso created a specific exclusion for factories not registered with the DGTD that had already enjoyed the exemption in the earlier year or under the specified notification. Denial of exemption for 1989-90 solely because DGTD registration was obtained later was therefore incorrect, and the matter was remanded for fresh determination of eligibility.

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Issues: Whether the appellant was entitled to the benefit of Notification No. 175/86-C.E. for the financial year 1989-90 despite obtaining DGTD registration only on 12-9-1990.

Analysis: Paragraph 4 of the notification extended exemption to factories registered as small scale industries, while clause (b) of the proviso carved out an exception for factories not registered with the DGTD that had availed the exemption in the preceding financial year or under the specified earlier notification. The relevant question, therefore, was not confined to the date of DGTD registration alone, but whether the appellant had in fact availed the exemption in the preceding financial year so as to attract the proviso.

Conclusion: The denial of exemption for 1989-90 solely on the ground of absence of DGTD registration was held to be incorrect, and the matter was remanded for fresh determination of eligibility for that year.

Ratio Decidendi: Where the exemption notification itself makes availability depend on availing the benefit in the preceding financial year, subsequent DGTD registration cannot by itself defeat eligibility for the relevant year.

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