Export clearances and exemption limits require chronological duty adjustment where duty was already paid on exempted slab clearances.

Export clearances, if included in the aggregate value for computing the small scale exemption limit under Notification No. 38/97-C.E., must be paired with adjustment of duty already paid on those clearances during the exempted slab. The duty paid on such exports is to be treated as a deposit, and the total clearances must be examined chronologically for correct re-quantification of liability. On that basis, the impugned order was set aside and the matter remanded for fresh quantification of duty in accordance with this adjustment principle.

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Issues: Whether export clearances were to be included in computing the aggregate value of clearances for the small scale exemption under Notification No. 38/97-C.E. dated 27-6-1997, and if so, whether duty paid on such export clearances had to be treated as a deposit and adjusted while re-quantifying the duty liability.

Analysis: The appellants had availed the small scale exemption and had also effected exports on payment of duty. Revenue's view was that export clearances were not excluded by the notification and, therefore, had to be added to the aggregate value of clearances, with the result that the threshold of Rs. 50 lakhs stood crossed. The Tribunal accepted that if export values were required to be included for the purpose of the exemption limit, the duty paid on those exports, made when the clearances were still within the exemption slab, could not be ignored. Such duty was to be treated as a deposit and the entire clearances were required to be examined in chronological order for proper adjustment and re-quantification of the duty liability.

Conclusion: The inclusion of export clearances, if applied, had to be accompanied by adjustment of the duty already paid on those clearances while re-quantifying the liability, which was in favour of the assessee.

Final Conclusion: The impugned order was set aside and the matter was sent back for fresh quantification of duty in accordance with the above principle.

Ratio Decidendi: Where export clearances are brought into the aggregate value for exemption computation, duty already paid on such clearances during the exempted slab must be treated as a refundable deposit and adjusted in chronological re-quantification of liability.

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