Consistent interpretation of exemption notifications led to Notification No. 8/97-C.E. benefit, with penalty set aside.

The expression "allowed to be sold in India" had to be construed consistently across the two exemption notifications governing the same clearances. Since the Commissioner had treated the goods as allowed to be sold in India for denying exemption under Notification No. 125/84-C.E., the same factual basis could not be used to deny benefit under Notification No. 8/97-C.E. on a different meaning of the same phrase. On that basis, the conditions of Notification No. 8/97-C.E. were satisfied, the penalty had no foundation, and the duty liability, if any, was required to be reworked by the adjudicating authority.

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Issues: Whether the expression "allowed to be sold in India" in the two exemption notifications had to be construed consistently, and whether the goods cleared in the relevant period were entitled to exemption under Notification No. 8/97-C.E., with consequent liability to penalty.

Analysis: The goods manufactured from indigenous raw material were treated by the Commissioner as goods allowed to be sold in India for the purpose of denying the exemption under Notification No. 125/84-C.E., while the same expression was treated as not satisfied for denying Notification No. 8/97-C.E. The phrase could not be given different meanings in two notifications governing the same class of clearances. Once the goods were treated as allowed to be sold in India on the basis adopted in the impugned order, the conditions of Notification No. 8/97-C.E. stood satisfied. In that event, the foundation for penalty also disappeared. The duty, if any, under Notification No. 8/97-C.E. was required to be reworked by the adjudicating authority.

Conclusion: The benefit of Notification No. 8/97-C.E. was held available, and the penalty was set aside. The duty liability, if any, was left to be recalculated accordingly.

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