Incentive notification must be applied by its own scheme, including captive consumption and correct unit-wise base-clearance computation.

A duty concession on clearances of copper wire bars was not treated as flowing from retrospective operation of Notification No. 18/77, since retrospectivity is not presumed; instead, the benefit was available under Notification No. 198/76 at the stage of clearance of the wire bars because captive consumption of copper cathodes formed part of the incentive scheme. The base-clearance computation was also incorrect because the two units had to be classified under the proper clauses for existing and later units, captive cathodes had to be included in the cathode base-clearance calculation, and the units' base clearances had to be clubbed for the manufacturer's overall base clearance.

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Issues: (i) whether the duty concession on clearances of copper wire bars was available under Notification No. 198/76 for the period from 1-7-1976 to 31-1-1977; and (ii) whether the base clearances fixed by the Assistant Collector were in accordance with Notification No. 198/76.

Issue (i): Whether the duty concession on the clearances of copper wire bars was available under Notification No. 198/76 for the period from 1-7-1976 to 31-1-1977.

Analysis: The requested retrospective operation of Notification No. 18/77 was not accepted, since a notification normally operates prospectively. However, the scheme of Notification No. 198/76, read with the manner in which duty was levied on copper cathodes and copper wire bars in the petitioners' factory, showed that cathodes captively consumed in the manufacture of wire bars were already part of the relevant incentive structure. The benefit of concession under Notification No. 198/76 could therefore be availed at the product stage when wire bars were cleared.

Conclusion: The concession was not granted on the footing of retrospective effect to Notification No. 18/77, but the petitioners were entitled to the benefit of Notification No. 198/76 at the stage of clearance of copper wire bars.

Issue (ii): Whether the base clearances fixed by the Assistant Collector were in accordance with Notification No. 198/76.

Analysis: The base clearance calculation was held to be incorrect because the two units were not treated under the proper clauses of the notification. The Ghatsila unit, having commenced before 1-4-1973, fell under the clause applicable to existing units, whereas the Khetri Nagar unit, having commenced after 1-4-1973, had to be assessed under the clause applicable to later units. The cathodes used captively in wire-bar manufacture were also required to be included in computing the base clearance for cathodes, and the base clearances of the two units were to be clubbed for determining the manufacturer's base clearance.

Conclusion: The base clearances fixed by the Assistant Collector were not correct and required redetermination under the proper clauses of Notification No. 198/76.

Final Conclusion: The impugned orders were set aside and the matter was sent back for fresh determination of base clearance and consequential demand or refund in accordance with the notification scheme.

Ratio Decidendi: Under an incentive notification, retrospective effect will not be presumed, but the notification must be applied according to its own scheme and the correct basis of computation, including captive consumption and the proper unit-wise classification for base clearance, must be followed.

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