Base period under excise exemption notification could include duty-free clearances; petitioners' restrictive reading was rejected.

For determining the base period under Notification No. 198/76-C.E., paragraph 1(b) governed exclusions from excess-clearance computation and did not control base-period fixing under paragraph 2. The plain language of paragraph 2 did not require that the first clearance be duty-paid, and the notification scheme allowed even duty-free clearances to be relevant in identifying the base period and comparing excess production or clearances. The base period was therefore upheld as determined by the lower authorities, and the revision was rejected.

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Issues: Whether, for determining the base period under Notification No. 198/76-C.E. dated 16-6-1976, the first clearance of the specified goods had to be taken from the date on which the goods were first cleared on payment of central excise duty, or from the date on which they were first cleared when exempt from duty.

Analysis: Paragraph 1(b) of the notification was held to deal with clearances to be excluded while computing excess clearances for the purpose of the exemption and not with the fixing of the base period under paragraph 2. The plain language of paragraph 2 did not support the view that only duty-paid clearances could be counted for base-period determination. The scheme of the notification also showed that even duty-free clearances could be relevant for computing excess production or clearances vis-a -vis the base period.

Conclusion: The base period was to be determined under paragraph 2 as applied by the lower authorities, and not on the basis suggested by the petitioners. The revision was rejected.

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