COMMISSIONER OF CENTRAL EXCISE versus M/S M.P.V. & ENGG. INDUSTRIES

Citation: [2003] 2 S.C.R. 924 · Decided: 11-03-2003 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Dismissed

Judgment (excerpt)

A 
COMMISSIONER OF CENTRAL EXCISE 
v. 
MIS M.P.V. & ENGG. IND!JST!U~S 
MARCH I I, 2003 
B 
[S.N. VARIAVA AND B,P. SINGH, JJ.) 
Central Ewise Rules, 1944: Sub-rule I of Rule 8. 
Exemption Notification d(Jted March J,[98(i-8enefit pf exemption-
C Registered Small Scale Industries-Effective dat(! of entitlement to-Held: When 
the Industry qualifies as small scale industry, a liberal approach is permissible 
in granting benefits of exemption provided it does no violence to the language 
of notification-Since the industry was regi~ter(!d as small scale industry, 
benefit of exemption accrues with effect from the qate on which application 
D for registratio11 was made before the competent authority-Since Tribunal did 
not record clear .finding as to whether second application for registration was 
in continuation of the first application for registration, the matter is remitted 
to Tribunal to record its finding on the issue-Directions issued. 
Respondent-manufacturer commenced production of cooling towers 
E and had applied for griwt of registration to th~ competent !1Uthority in 
December, l 986. The application was QOt disposed of. In the meanwhile, 
respondent applied afresh for permanent registration of the industry as 
small scale ipdustry in February, 1988 and the authority gra1Jted 
permanent registration to the respondent as small scale industry on March 
p 31,1988, Respondent applied to the Revenue for availing benefit of certain 
exemption coptained in the Notification dated March 1,1986. Revenue 
granted benefit of the Notification with effect froIIJ 31.3.1988 when 
registration certificate was issued to th~ responaent. On appeal, Tribunal 
held tlu1t the respondent was eligible to the be11efit of exemption in terms 
G of the Notific11tion with effect from the date of l!pplication for rf!gistration 
of the industry as small scale industry. 
It was i;pntended f()r the respondent that since the notification does 
not prescribe the date from which a certificate pf registration becomes 
effective, the right to claim exemption under the Notificatiop !lows from 
H sta(µs as small scale industry; the competent authority by issuance of 
924 
• 
.~ 
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C.C.E. v. M.P.V. & ENGG. INDUSTRIES 
925 
registration certification merely recognised the status of the respondent A 
as small scale industry on the date of such application. 
Disposing of the appeal, the Court 
HELD: 1.1. With a view to give some relief to small scale industries, 
certain exemptions were provided vide notification dated March 1,1986. B 
The exemption was meant to benefit an industry which qualified as a small 
scale industry. With a view to avoid any controversy as to their status as 
a small scale industry, the notification recognised the certificate issued by 
the Director of Industries to this effect. Once it is found by the Director 
of Industries that the industry qualifies as a small scale industrial unit, C 
he is bound to issue the certificate of registration. [928-E, F) 
1.2. It would be unreasonable to deprive a small scale industry of 
the benefit under the notification particularly when the notification does 
not in terms provide that the certificate shall become effective from the 
date of its issuance. [928-G, H] 
D 
1.3. The competent registration authority must examine the claim 
of the respondent to be a small scale industry strictly and in accordance 
with the rules. However, once it is found that the industry qualifies as a 
small scale industry, in the matter of grant of exemption a liberal approach 
is permissible provided it does no violence to the language of the E 
notification. In a case of this nature it is only reasonable to take the view 
that the benefit of exemption will accrue to a unit found to be a small scale 
industrial unit from the date on which the application was made for grant 
of registration certificate. Such a unit should not be deprived of the benefit 
to which it is otherwise entitled as a small scale industrial unit merely p 
because the authorities concerned took their own time in disposing of the 
application. Therefore, the benefit of exemption under the notification in 
question should be extended to the respondent with effect from the date 
on which the application for grant of registration was made by it before 
the competent authority. (931-B, DJ 
Collector of Central Excise v. Parle Exports (Pvt.) Ltd., (1988) 38 ELT 
741; State of UP. and Anr. v. Haji Ismail Noor Mohammad and Co., (1988) 
3 SCC 39

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