Prospective application of small scale exemption amendment kept pre-3-12-1997 captive clearances outside aggregate value and avoided duty

The amendment to the small scale exemption notification inserting paragraph 5(f) was treated as prospective, so captively consumed lay flat tubings could be included in aggregate value only from 3-12-1997. Under the unamended notification, exempt finished goods and their captive inputs were not to be counted together for exemption purposes. The later clarification only operated to prevent inputs from being treated as exempt under paragraph 3(c) where the finished goods were exempt under another notification. Clearances made before 3-12-1997 were therefore excluded from the aggregate value, and the post-amendment clearances remained within the first exemption slab, leaving no duty liability on the assessee.

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Issues: Whether the amendment to the small scale exemption notification introducing paragraph 5(f) operated prospectively so as to require captive clearances of lay flat tubings to be included in the aggregate value only from 3-12-1997, and whether duty was payable on the clearances made prior to that date.

Analysis: The applicable notifications granted exemption to the finished goods and, under the unamended provision, captively consumed lay flat tubings were not to be counted where the finished goods were exempt. The subsequent amendment clarified that where the finished goods were exempt under another notification, the inputs could not be treated as exempt under paragraph 3(c). Relying on the earlier Tribunal decision holding that the amendment was prospective, the clearances made before 3-12-1997 could not be included in the aggregate value. On the figures in the record, the post-amendment clearances remained within the first exemption slab.

Conclusion: The amendment took effect only prospectively from 3-12-1997 and there was no duty liability on the respondent for the clearances in question.

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