Exclusion of exempt clearances under Notification No. 80/80 applies even when goods became specified only in the current year.

For eligibility under Notification No. 80/80, clearances of goods that were exempted under another Rule 8(1) notification could be excluded under Explanation IV even if those goods became "specified goods" only in the current year and were not so classified in the preceding financial year. The relevant test was whether the goods had the character of specified goods in the year for which exemption was claimed and had been cleared in the preceding year; the Explanation did not require prior-year classification as specified goods. That construction supports exclusion of such clearances from the preceding-year threshold and preserves eligibility for the exemption.

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Issues: Whether, for determining eligibility under Notification No. 80/80, the value of clearances of goods which became "specified goods" in the current year but were not so classified in the preceding financial year could be excluded under Explanation IV when they had been exempted under another notification.

Analysis: Paragraph 2 of Notification No. 80/80 fixes eligibility by reference to the aggregate value of clearances in the preceding financial year, and Explanation IV directs that clearances of specified goods exempted from the whole of duty under another notification issued under Rule 8(1) of the Central Excise Rules, 1944 are not to be taken into account. The relevant inquiry was whether the goods had the character of specified goods in the year for which exemption was claimed and had been cleared in the preceding year, not whether they were already specified goods in the preceding year itself. The wording of the Explanation did not impose any such additional restriction, and the subsequent classification of the goods as specified goods supported their exclusion while computing the threshold under the notification.

Conclusion: The exclusion was permissible, the respondents remained eligible for exemption under Notification No. 80/80, and the revenue appeal failed.

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