Captively consumed parts counted in aggregate clearances, so the small-scale exemption threshold was crossed under Notification No. 80/80-C.E.

Captively consumed rotors and stators used in manufacturing monoblock pumps were not excludable from aggregate clearances for small-scale exemption under Notification No. 80/80-C.E. The notification excluded inputs used for further manufacture only when the inputs and finished goods fell under the same tariff item, and electric motors and power driven pumps were treated under different tariff items. Because rotors and stators remained classifiable within the tariff description of electric motors and parts thereof, they continued to count toward aggregate clearances. On the figures stated, the exemption threshold was crossed, so the exemption was unavailable for the relevant period and the confirmed demand remained sustained.

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Issues: Whether the value of captively consumed rotors and stators used in the manufacture of monoblock pumps was required to be included in the aggregate clearances for eligibility under Notification No. 80/80-C.E., and whether the appellants had crossed the exemption limit for the relevant period.

Analysis: The notification denied exemption where the aggregate value of clearances in the preceding financial year exceeded the prescribed limit. Its explanatory provision excluded clearances of inputs used for further manufacture only where the inputs and finished goods fell under the same tariff item. Electric motors fell under Tariff Item 30, while power driven pumps fell under Tariff Item 30A. The appellants' own figures showed substantial clearances, and even if the amount relating to motor parts used in monoblock pumps were reduced, the aggregate still exceeded the prescribed limit. The contention that the items used were merely rotors and stators, and not electric motors as such, did not help the appellants because those parts were still covered by the tariff description of electric motors and parts thereof.

Conclusion: The captively used rotors and stators could not be excluded from the clearances computation, and the appellants had exceeded the exemption threshold under Notification No. 80/80-C.E.

Final Conclusion: The exemption was not available to the appellants for the relevant period, and the demand confirmed by the appellate authority stood sustained.

Ratio Decidendi: Where a small-scale exemption notification excludes captively consumed inputs only when the inputs and finished goods fall under the same tariff item, captively used parts that remain classifiable within the tariff item covering the input cannot be excluded from aggregate clearances for eligibility.

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