Strict construction of excise exemption notifications barred retrospective relief where duty was unpaid at the time of clearance.

Exemption notifications under excise law must be construed strictly, and the claimant must bring itself squarely within their terms. The relevant entitlement is tested at the point when duty becomes leviable, namely on clearance for home consumption, not at a later stage when a demand is raised. Where a manufacturer cleared excisable goods without a licence and without payment of duty at the time of removal, the exemption could not be invoked retrospectively merely because duty was subsequently demanded under Rule 10A. The claim to exemption therefore failed and the demand was sustained against the assessee.

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Issues: Whether a manufacturer who had not obtained a licence and had cleared excisable goods without payment of duty at the time of clearance could still claim exemption under the relevant excise notifications.

Analysis: The exemption notifications were to be construed strictly, and a claimant had to show that he fell squarely within their terms. The exemption operated only in relation to clearances for home consumption and had to be examined at the point when duty became leviable, namely, at the time of clearance. Since the petitioners had manufactured and removed the goods without authority and without pre-payment of duty, and the demands were subsequently raised under Rule 10A, the exemption could not be invoked later merely because duty was demanded afterwards.

Conclusion: The claim to exemption failed, and the demand was upheld against the assessee.

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