SSI exemption for separate State undertaking units cannot be denied by clubbing clearances absent notice or notification basis.

SSI exemption under Notification No. 175/86-C.E. was available to a separately maintained sub-division of a State Electricity Board because its clearances had to be examined on its own for the exemption ceiling. The notice did not allege clubbing of clearances of other units, and aggregation could not be applied merely because the undertaking operated multiple units. Where a State Government undertaking maintains distinct units, the clearances of the relevant unit alone are to be considered unless the notification or the notice specifically supports clubbing. On that basis, the article states that the demand and penalty were set aside.

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Issues: Whether the appellant was entitled to small scale industry exemption under Notification No. 175/86-C.E. when the demand had been confirmed by clubbing the clearances of other units of the State Electricity Board.

Analysis: The appellant was a sub-division of the State Electricity Board, and the show cause notice did not allege clubbing of the clearances of other units. The exemption notification was construed in line with earlier orders holding that where more than one unit is maintained by the State Government, the clearances of that unit alone are relevant for deciding eligibility. On that basis, the appellant's clearances were required to be considered separately for determining the ceiling limit under the notification.

Conclusion: The appellant was entitled to SSI exemption under Notification No. 175/86-C.E., and the demand and penalty were set aside.

Ratio Decidendi: For the purpose of SSI exemption, clearances of separately maintained units of a State Government undertaking cannot be clubbed unless the notification or the notice specifically justifies such aggregation.

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