Exemption limit under Notification 175/86-CX: single-item manufacturer eligible for full exemption, not a split limit.

A single-item manufacturer of micro cellular rubber sheets was entitled to the full exemption limit under Notification No. 175/86-CX, because the proviso restricting exemption to two clearances of Rs. 15 lakhs applied only where more than one item was manufactured. The lower authority's view that a single-item manufacturer was confined to Rs. 15 lakhs was erroneous. On that basis, the assessee remained eligible for exemption up to Rs. 30 lakhs, and the demand of duty and equal penalty were set aside.

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Issues: Whether the assessee, manufacturing only one item, was entitled to the full exemption limit under Notification No. 175/86-CX and whether the demand and penalty could be sustained on the basis that the exemption was restricted to Rs. 15 lakhs.

Analysis: The assessee was found to be manufacturing only one item, namely micro cellular rubber sheets, and the aggregate value of clearances was stated to be below the exemption limit of Rs. 30 lakhs. The proviso to the notification was applicable only where more than one item was manufactured, in which case the exemption was split into two clearances of Rs. 15 lakhs each during the relevant period. The lower authority's reading of the notification as restricting a single-item manufacturer to Rs. 15 lakhs was held to be erroneous.

Conclusion: The assessee was entitled to the exemption up to Rs. 30 lakhs, and the demand of duty and equal penalty were set aside.

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