Small scale exemption cannot extend to an unregistered unit merely because another unit of the same manufacturer is registered.

An unregistered Mumbai manufacturing unit was denied small scale exemption under Notification No. 175/86-C.E. because it did not satisfy the relevant paragraph 4 conditions. The Tribunal held that the existence of a separately registered Ahmedabad unit of the same manufacturer did not make the Mumbai unit a registered unit, and the units could not be clubbed to extend the exemption to the unregistered unit. The Mumbai unit's duty liability therefore had to be assessed independently, and it was not entitled to the exemption.

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Issues: Whether the Mumbai unit, being unregistered, was entitled to small scale exemption under Notification No. 175/86-C.E. when the manufacturer also had a separately registered Ahmedabad unit.

Analysis: The benefit under the notification was examined with reference to the status of the Mumbai unit. The Tribunal held that the Mumbai unit was not a registered unit and did not fall within the relevant clauses of paragraph 4 of Notification No. 175/86-C.E. The mere fact that both units belonged to the same manufacturer did not justify treating the unregistered Mumbai unit as registered or extending clubbing so as to confer exemption on that unit.

Conclusion: The Mumbai unit was not entitled to small scale exemption, and its duty liability had to be computed independently.

Ratio Decidendi: Where one of two units of the same manufacturer is unregistered, small scale exemption under the notification cannot be extended to that unregistered unit merely because another unit of the same manufacturer is registered.

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