Departmental clarification can extend a pencil exemption to colour pencils, restoring the assessee's tax relief.

Colour pencils were treated as covered by the exemption under the 19 March 1976 notification because the departmental clarification of 19 April 1976 stated that the exemption for writing pencils extended to copying pencils and colour pencils. The clarification was relied on to construe the exempted class of pencils, and the assessee's claim for exemption on sales of colour pencils was accepted. The revision order was therefore not sustained, and the appellate order granting exemption was restored.

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Issues: Whether colour pencils were entitled to exemption under the Government notification dated 19 March 1976.

Analysis: The exemption claimed for colour pencils turned on the scope of the notification dated 19 March 1976. The Board's subsequent clarification dated 19 April 1976 stated that the exemption for writing pencils would also apply to copying pencils and colour pencils. In light of that clarification, the claim for exemption on sales of colour pencils was supported.

Conclusion: Colour pencils were held to fall within the exemption and the assessee's claim was accepted.

Final Conclusion: The revision order could not be sustained and the appellate order granting exemption was restored.

Ratio Decidendi: A departmental clarification explaining an exemption notification may be relied upon to determine that colour pencils are covered by the exempted class of pencils.

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