Meaning of Small Scale Units :

Small Scale Units are not defined in the Central Excise Act 1944 or rules made thereunder. The Small Scale Unit is defined in Industries (Development and Regulation) Act, 1951 for the purpose of exempting them from Registration under that Act. The definition basically takes the investment made on the plant and machinery by any industries as the basis for determining the small scale industries. However it would be pertinent to note that the definition given under the said Act is not applicable for the purpose of getting the benefit of exemption under Central Excise. The basis for ascertaining the Small Scale Units as given in the notification mentioned in the earlier paragraph is the value of the clearances made by any units in the previous financial year. Therefore, the definition that has to be adopted for ascertaining the Small Scale Units is not as understood generally by the industry and other sectors like banking, but has to be ascertained on the basis of the value of clearances(i.e. ` 400 lakh).