SSI exemption cannot be denied for omission from registration certificate; penalty must remain proportionate to the contravention.

An SSI exemption under Notification No. 175/86-C.E. cannot be denied merely because the manufactured product is not named in the unit's registration certificate, where the notification itself does not make such inclusion a condition precedent. Board circular support and Tribunal precedent reinforced that interpretation, so the exemption remained available. On penalty, although duty liability arising from clandestine clearances was not disputed, the penalty was found disproportionate to the contravention and was reduced to Rs. 20,000. The duty demand on the admitted clearances was left undisturbed.

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Issues: (i) Whether the benefit of Notification No. 175/86-C.E. could be denied because the manufactured product was not specified in the certificate of registration issued to the small scale industrial unit; (ii) Whether the penalty imposed for the contravention was excessive.

Issue (i): Eligibility for the exemption turned on the terms of the notification, not on whether the product appeared in the registration certificate. The notification contained no condition restricting the benefit to products specifically mentioned in the certificate, and the Board circular and Tribunal precedent supported that view.

Conclusion: The exemption could not be denied on that ground, and this issue was decided in favour of the appellant.

Issue (ii): The appellant did not dispute duty liability arising from clandestine clearances. However, in the circumstances, the duty determined was only slightly above the penalty already imposed, and the amount of penalty appeared disproportionate to the contravention.

Conclusion: The penalty was reduced to Rs. 20,000, which was in favour of the appellant.

Final Conclusion: The appeal succeeded on the exemption question and the penalty was substantially reduced, leaving the duty liability on the undisputed contravention undisturbed.

Ratio Decidendi: An exemption under a notification cannot be denied for want of inclusion of the product in a registration certificate unless the notification itself makes that a condition precedent, and penalty must bear a reasonable relationship to the gravity of the contravention.

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