Strict construction of exemption notifications requires clubbing factory clearances when the limit applies to the factory as a whole.

An exemption notification must be strictly construed by its plain language, and where the nil-rate limit is attached to a factory, clearances by successive manufacturers from that factory must be clubbed for the year. Trade notices and clarifications cannot override the notification's express terms. Notification No. 305/77-C.E. operated on its own conditions for manufacture on another person's account and did not displace the limit under Notification No. 71/78-C.E. Because the factory had already exhausted the prescribed nil-rate clearance limit through earlier removals, the later clearances were not entitled to independent exemption, including for a loan licensee.

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Issues: Whether, for the purpose of exemption under Notification No. 71/78-C.E. dated 1-3-78, clearances of specified goods from the same factory by different manufacturers during the same financial year had to be clubbed and whether a loan licensee could claim the benefit independently under Notification No. 305/77-C.E. dated 5-11-77.

Analysis: The notification provided that where a factory producing the specified goods is run at different times of a financial year by different manufacturers, the value of clearances at nil rate of duty from that factory in that year should not exceed the prescribed limit. The limit was attached to the factory and not to each manufacturer separately. The clarification and trade notices relied upon by the assessee could not override the plain words of the notification, and exemption claims had to be tested strictly by the language of the exemption itself. Notification No. 305/77-C.E. concerned manufacture on another person's account subject to its own conditions, and did not alter the operation of the exemption limit under Notification No. 71/78-C.E. In the facts, the factory had already exhausted the nil-rate limit through earlier clearances by the previous manufacturer.

Conclusion: The assessee was not entitled to independent exemption for the later clearances from the same factory, and the clubbing of clearances was upheld.

Final Conclusion: The appeal failed because the exemption notification was construed according to its plain terms, with the limit applying to the factory as a whole rather than separately to successive manufacturers or a loan licensee.

Ratio Decidendi: An exemption notification must be strictly construed according to its express language, and where the exemption limit is prescribed for a factory, clearances by successive manufacturers from that factory must be clubbed for determining eligibility.

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