Incentive exemption must be computed on net duty after set-off; different credit schemes cannot be treated as identical.

Notification No. 198/76-CE had to be applied by reference to the net duty actually payable after giving effect to the set-off available under Notification No. 21/77-CE, because the exemption language required duty under the tariff to be read with exemption notifications in force. The Department's method of computing the incentive after deducting the set-off was therefore correct. The discrimination argument also failed, as set-off and proforma credit operated under different schemes with separate conditions and could not be treated as equivalent for parity purposes. The Department's assessment approach was upheld.

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Issues: Whether the incentive exemption under Notification No. 198/76-CE was to be computed before or after deducting the duty set-off available under Notification No. 21/77-CE, and whether the method adopted by the Department resulted in discrimination.

Analysis: Notification No. 198/76-CE exempted excess production from so much of the duty leviable on scooters under Item 34 of the Central Excise Tariff read with any exemption notification in force as was in excess of 75% of such duty. The wording showed that the incentive had to be calculated with reference to the net effective duty actually payable, and the expression requiring the tariff duty to be read with the exemption notification in force could not be ignored. The Department's method therefore correctly applied the set-off under Notification No. 21/77-CE before working out the incentive under Notification No. 198/76-CE. The claim of discrimination also failed because set-off and proforma credit were different procedures with their own conditions, and parity could not be claimed across different schemes.

Conclusion: The correct method was the Department's method, and the plea of discrimination was rejected.

Final Conclusion: The appeal failed, and the assessment method adopted by the Department was upheld.

Ratio Decidendi: Where an exemption notification expressly requires duty leviable under the tariff read with notifications in force to be considered, the incentive must be computed on the net duty actually payable after giving effect to the applicable set-off or exemption already operating.

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