Exemption notification construed strictly: existing factory gets benefit only for production from enlarged capacity, not existing capacity.

An exemption notification must be read as a whole and strictly construed at the stage of determining coverage. The scheme distinguished between factories commencing production after the relevant date and existing factories with enlarged capacity. For an existing factory, the exemption applied only to production attributable to the enlarged capacity, not to goods produced within the pre-existing capacity. Liberal construction could be used only after the assessee had first brought the claim clearly within the notification, and the interpretation adopted avoided discriminatory or incongruous results.

---

---

Issues: Whether Notification No. 163 of 1965 exempted packing and wrapping paper manufactured by an existing factory from its entire production or only to the extent attributable to enlarged capacity.

Analysis: The notification had to be read as a whole, not by isolating the phrase "any factory commencing production". The table in the notification created two distinct categories: factories commencing production after the relevant date and existing factories with enlarged capacity. The expression "commencing production" in the first category referred to a factory beginning production of the exempted goods, and the scheme of the notification showed that an existing factory was entitled to exemption only to the extent of production attributable to enlarged capacity. The Court also held that the exemption notification could not be construed in a way that produced discrimination or incongruous results. The principle of liberal construction applied only after the assessee first brought the claim within the notification.

Conclusion: The assessee was entitled to exemption only for production attributable to enlarged capacity, and not for production falling within the existing capacity.

Ratio Decidendi: An exemption notification must be strictly construed at the stage of determining coverage, and only after the subject clearly falls within it can the exemption be given a liberal construction; the notification, read as a whole, limited the benefit to enlarged capacity in the case of an existing factory.

---