Excisable scrap must count toward clearance limits where an exemption proviso turns on total clearances and tariff coverage.

Stainless steel scrap generated in utensil manufacture had to be included in the computation of clearances under the exemption notification because the proviso excluded manufacturers whose preceding year clearances exceeded the prescribed limit. The Court applied the principle that goods do not cease to be excisable merely because an exemption notification removes them from duty, and the scrap remained relevant as tariff-covered goods. As a result, the scrap formed part of the clearance value and the challenge to denial of exemption failed.

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Issues: Whether stainless steel scrap arising in the manufacture of utensils was to be included in the computation of the value of clearances for the purpose of the exemption notification.

Analysis: The exemption was subject to a proviso excluding manufacturers whose total clearances in the preceding financial year exceeded the prescribed limit. The scrap in question was admittedly covered by Tariff Item 26. The Court applied the principle that goods do not cease to be excisable merely because an exemption notification relieves them from duty, and therefore the scrap could not be ignored in computing the value of clearances.

Conclusion: The scrap had to be included in the computation and the challenge to denial of exemption failed.

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