Clarificatory exemption restoration for compounded rubber treated as continuous through the intervening period.

A restoration notification for compounded rubber was treated as clarificatory because the earlier exemption was withdrawn and then promptly revived through a composite rescission exercise. On that reasoning, the exemption was regarded as continuing through the brief intervening period, since the surrounding policy showed no intent to levy duty in that interval. The result was that excise duty was not payable for the interregnum between withdrawal and restoration, and the demand was set aside in favour of the assessee.

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Issues: Whether the notification restoring exemption for compounded rubber was clarificatory and therefore applied retrospectively, so that excise duty was not payable for the interregnum between withdrawal and restoration of the exemption.

Analysis: The earlier exemption for compounded rubber was withdrawn by Notification No. 64/94-CE dated 1.3.1994 and restored shortly thereafter by Notification No. 74/94-CE dated 28.3.1994 by reviving the earlier exemption notification. The short interval and the nature of the Government's action showed that the withdrawal was not intended to alter the settled exemption policy for the product, but only to rescind several notifications in a composite exercise. The restoration was therefore treated as clarificatory and as making explicit what had remained the governing position. Applying the same reasoning that had been accepted in an identical exemption-restoration situation, the interregnum could not be treated as a period attracting duty.

Conclusion: The notification restoring exemption was held to be clarificatory and effective for the disputed period, and the duty demand was set aside in favour of the assessee.

Final Conclusion: The assessee was entitled to exemption for the disputed period, and the excise demand could not be sustained.

Ratio Decidendi: Where an exemption is withdrawn by a composite rescission notification and is promptly restored by a subsequent notification reviving the earlier exemption, the later notification may be treated as clarificatory and the exemption may be regarded as continuing during the intervening period if the surrounding policy and context show no intention to impose duty in that interval.

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