Strict construction of exemption notifications denies relief to a new unit, and delayed provisional assessment finalisation does not invalidate demand.

A new manufacturing unit that had not effected clearances in the preceding financial year was held ineligible for exemption under Notification No. 8/74-C.E., because the notification was construed strictly and applied only where the expressed eligibility condition was met. A delayed finalisation of provisional assessment did not, by itself, invalidate the demand, as the trade notice did not create any automatic legal consequence after three months. On these grounds, the revision application was rejected and the order-in-appeal was upheld.

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Issues: (i) Whether a new manufacturing unit, which had not effected clearances in the preceding financial year, was entitled to the benefit of Notification No. 8/74-C.E. for the clearances made in 1975-76; (ii) Whether the demand raised upon finalisation of provisional assessment was invalid because the finalisation took place after three months.

Issue (i): Whether a new manufacturing unit, which had not effected clearances in the preceding financial year, was entitled to the benefit of Notification No. 8/74-C.E. for the clearances made in 1975-76.

Analysis: The exemption notification was held to contemplate a unit already operating and effecting clearances in the preceding financial year. Its condition in the table was not satisfied where the unit had commenced commercial production only in 1975-76 and no tyres could have been cleared in the preceding year. Exemption notifications were required to be construed strictly, and the language of the notification did not justify extending it to new units by a strained interpretation.

Conclusion: The assessee was not entitled to the exemption under Notification No. 8/74-C.E. for the new unit.

Issue (ii): Whether the demand raised upon finalisation of provisional assessment was invalid because the finalisation took place after three months.

Analysis: The trade notice relied upon did not create any legal consequence that provisional assessments stood finalised ipso facto after three months. The delayed finalisation, by itself, did not render the demand unlawful or bad in law.

Conclusion: The challenge to the demand on the ground of delayed finalisation failed.

Final Conclusion: The revision application was rejected and the order-in-appeal was upheld as correct in law.

Ratio Decidendi: An exemption notification must be construed strictly according to its plain terms, and a unit that did not satisfy the expressed eligibility condition cannot claim the benefit by implication; likewise, delayed finalisation of provisional assessment does not, without a legal mandate, invalidate the resulting demand.

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