SSI exemption under Notification No. 175/86 excludes duty-paid clearances from the aggregate ceiling calculation.

For SSI exemption under Notification No. 175/86, clearances already subjected to duty are excluded from the aggregate value used to test the prescribed monetary ceiling. The Tribunal held that only duty-free clearances relevant to the exemption limit could be counted, so the assessee remained entitled to the benefit where those clearances did not exceed the threshold.

---

---

Issues: Whether, for the purpose of Notification No. 175/86 dated 1-3-86 granting SSI exemption, clearances on which duty has been paid are to be included while computing the aggregate value of first clearances up to the prescribed limit of Rs. 30 lakhs.

Analysis: The respondents were registered as a small scale unit manufacturing goods falling under Chapters 84 and 73 of the Central Excise Tariff Act, 1985. Their clearances under one chapter had crossed the lower exemption limit and duty had been paid on the excess, while clearances under the other chapter remained below the prescribed ceiling. The Tribunal held that clearances already subjected to duty could not be aggregated for determining whether the nil-rate clearances had crossed the Rs. 30 lakhs limit under the notification. The benefit of the exemption was therefore available so long as the duty-free clearances did not exceed the prescribed threshold.

Conclusion: The respondents were entitled to the benefit of Notification No. 175/86 and the appeal of the Revenue failed.

Ratio Decidendi: For SSI exemption under Notification No. 175/86, clearances on which duty has been paid are not to be counted in computing the aggregate value of duty-free clearances for crossing the prescribed monetary ceiling.

---