Exemption under Notification 1/93 was not lost by paying duty on Nepal exports; later domestic clearances remained eligible.

Payment of duty on exports to Nepal did not amount to exercise of the option under paragraph 4 of Notification No. 1/93 so as to forfeit exemption for later home-consumption clearances. The clarification treating clearances to Bhutan or Nepal as relevant for computation did not create a legal fiction that converted export clearances into clearances for home consumption. Because exports to Nepal were not covered by paragraph 1 as such, duty payment on those exports could not be treated as an election to forego the benefit of Notifications Nos. 1/93 and 16/93 for subsequent domestic clearances in the same financial year. The denial of exemption was therefore unsustainable.

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Issues: Whether payment of duty on exports to Nepal amounted to exercise of the option under paragraph 4 of Notification No. 1/93 so as to deny the benefit of Notifications Nos. 1/93 and 16/93 for subsequent home-consumption clearances.

Analysis: The notification granted exemption to specified goods cleared for home consumption. The clarification treating clearances to Bhutan or Nepal as included for the purpose of computation under the notification did not convert export clearances into clearances for home consumption by legal fiction. Since exports to Nepal were not covered by paragraph 1 as such, payment of duty on those exports could not amount to an election under paragraph 4 to forgo the exemption for later domestic clearances in the same financial year.

Conclusion: The denial of the exemption was unsustainable, and the appellants remained entitled to the benefit of Notifications Nos. 1/93 and 16/93 for subsequent clearances.

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