Judgement

B. P. JEEVAN REDDY, J. :- Leave granted.

2. The only question arising in this appeal, preferred against the judgment of the Allahabad High Court, is whether the respondent-unit qualifies as a "new unit" within the meaning of Explanation (1) to sub-section (2) of Section 4-A of the U. P. Sales Tax Act. The ground upon which the Divisional Level Committee declined to recognise it as a new unit is that a part of the machinery acquired by it for setting up its factory was purchased from M/s. Modi Steels who had purchased the said machinery earlier for their own use. A review application filed by the respondent was rejected by the State Level Committee. The writ petition filed by the respondent has, however, been allowed by the High Court holding that in Case M/s. Modi Steels had not put the said machinery to any use as contended by the respondent, the respondent-unit cannot be denied the eligibility certificate under Section 4A. The Bench purported to follow an earlier decision of the High Court in Amit Plastic Industry, Ghaziabad v. Divisional Level Committee. Merrut, (1994 UPTC 121. The High Court has set aside the orders impugned in the writ petition and remitted the matter to the State Level Committee with a direction to re-examine the material on record and to record a categorical finding as to whether or not the machinery purchased by the petitioner from M/s. Modi Steels was actually used in any other factory or workshop in India. If it is found that the said machinery was not actually used in any factory or workshop before its installation in the respondent-unit, the High Court opined, the respondent-unit would be entitled to be treated as a new unit for the purpose of Section 4-A.

3. The respondent-unit had applied for issuance of an eligibility certificate under Section 4-A of the Act on the ground that it has set up a new unit for manufacturing rolling mill guide system equipment. It had acquired machinery worth about Rs. 25 lakhs, out of which machinery worth Rs. 4,59,575/- was acquired from M/s. Modi Steels under Bill No. 244 dated April 27, 1984. Admittedly, the said machinery was acquired by M/s. Modi Steels for setting up an unit of its own but it is stated that it abandoned that idea later and sold the machinery to the respondent. The question is whether the respondent-unit cannot claim to be a "new unit" within the meaning of Explanation (i) to sub-section (2) of Section 4A on account of the fact that apart of the machinery acquired by it was acquired for use in any other factory or workshop in India.

4. Section 4A provides for exemption from sales tax of goods manufactured by a new unit during the first five-year period, subject to the terms and conditions specified therein. Explanation (i), with which alone we are concerned herein, reads as follows :

"Explanation :- For the purpose of this section,

(i) "new unit" means a factory or workshop whether set up by a dealer already having an industrial unit manufacturing the same goods at any other place in the State or an industrial unit, manufacturing any other goods on, or adjacent to, the site of an existing factory or workshop; but does not include;

(a) any factory or workshop using machinery, accessories or components already used or acquired for use in any other factory or workshop in India,

(b) any factory or workshop established on, or adjacent to the site of an existing factory or workshop manufacturing the same goods, or.

(c) any addition to or extension of an existing factory or workshop,"

5. An analysis of the definition yields the following features:

(a) if a dealer is already having an industrial unit manufacturing particular goods and if he sets up another industrial unit manufacturing the same goods at any other place in the State , it would be a new unit. In other words, if a dealer establishes a new factory or workshop on or adjacent to his existing factory or workshop, and if the new factory or workshop is meant for manufactu