Chronological exemption under excise notification limited to first clearances only; selective allocation was not permitted.

Notification No. 3/2001-CE was interpreted as granting exemption only to the first clearances in chronological order up to an aggregate of 3,500 MT during the financial year, not to any clearances chosen at the assessee's discretion. Goods cleared outside that sequence were therefore liable to duty. The argument that the demand should fail on revenue neutrality was rejected because the notification was found to create a limited exemption tied to the order of clearances. The assessee could not claim the entire 3,500 MT in the manner adopted, and the duty demand was sustainable.

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Issues: Whether the assessee was entitled to exemption under Notification No. 3/2001-CE by treating the aggregate quantity of 3500 MT as available for clearances at any stage during the financial year, and whether the demand could be defeated on the ground of revenue neutrality.

Analysis: The exemption was held to apply only to the first clearances in chronological order up to an aggregate of 3500 MT, and not to any clearances selected at the assessee's discretion during the year. Goods not forming part of the first eligible clearances were liable to duty. The earlier view based on revenue neutrality was found misplaced in the light of the binding interpretation that the notification granted a limited exemption only to the first clearances.

Conclusion: The assessee was not entitled to claim exemption on the entire 3500 MT in the manner adopted, and the duty demand was sustainable.

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