Rural area exemption must be applied in full; branded clearances eligible for exemption count toward SSI aggregate value.

An exemption notification allowing a manufacturer to opt out of rural area exemption must be applied as a whole, not selectively. Under Notification No. 8/2003-CE, clearances bearing another person's brand name are excluded from SSI computation only when they are themselves ineligible under paragraph 4. Where goods are manufactured in a rural area and remain eligible for exemption under paragraph 4(c), those branded clearances cannot be omitted from the aggregate value merely because duty was paid on them. The note therefore states that such clearances must be included for SSI threshold computation, and the demand was upheld.

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Issues: Whether an assessee eligible for rural area exemption under Notification No. 8/2003-CE can decline that benefit and exclude the clearances of goods bearing another person's brand name from the aggregate value for SSI exemption.

Analysis: Paragraph 2(i) of Notification No. 8/2003-CE gives a manufacturer the option not to avail the exemption, but that option operates for the notification as a whole and not in parts. Paragraph 3(a) excludes only those clearances bearing another person's brand name which are themselves ineligible under paragraph 4. Since paragraph 4(c) makes goods manufactured in a rural area eligible for the exemption, such clearances do not fall within the exclusion in paragraph 3(a). The notification therefore cannot be applied selectively by paying duty on branded clearances while ignoring them for computing the aggregate value.

Conclusion: The clearances of goods bearing another person's brand name had to be included in the aggregate value. The assessee was not entitled to exclude them for claiming SSI benefit, and the demand was upheld against the assessee.

Ratio Decidendi: An exemption notification that permits an option to forgo the exemption must be applied in its entirety, and clearances that are otherwise eligible for exemption cannot be excluded from the aggregate turnover computation merely because duty was paid on them.

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