Separate clearance computation under exemption notification cannot be defeated by clubbing on an unrelated constitutional test.

Notification No. 1/93 required separate computation of clearances where specified goods were manufactured in a factory belonging to or maintained by the Government or other specified public bodies. The Tribunal held that the appellant's civil sub-division of the U.P. State Electricity Board had to be treated separately for this purpose, and clubbing of clearances was not justified. It further noted that reliance on Article 12 of the Constitution did not answer the distinct exemption question under the notification. The clubbing order was therefore unsustainable, and the separate Modvat issue did not require adjudication.

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Issues: Whether the clearances of the appellant's units could be clubbed for determining eligibility under Notification No. 1/93, and whether the appellant was entitled to be treated separately for computing clearances under Explanation VIII to paragraph 7(ii) of the notification.

Analysis: Explanation VIII to paragraph 7(ii) of Notification No. 1/93 provides that where specified goods are manufactured in a factory belonging to or maintained by the Central Government, a State Government, or the other specified public bodies, the clearances from that factory alone are to be taken into account. On the facts, the appellant was a civil sub-division of the U.P. State Electricity Board, and the reasoning adopted in the impugned order based on Article 12 of the Constitution did not answer the distinct question under the exemption notification. The Tribunal held that the notification required separate treatment of the factory's clearances and that clubbing was not justified.

Conclusion: The appellant was entitled to be treated separately for computing clearances under Notification No. 1/93, and the order directing clubbing of clearances was unsustainable. The appeal succeeded, and the issue relating to Modvat credit did not require separate adjudication.

Ratio Decidendi: Where an exemption notification directs that clearances from a factory belonging to or maintained by the Government are to be taken into account separately, such clearances cannot be clubbed on the basis of a different legal test unrelated to the notification's wording.

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