Manufacturer-based exemption under Notification No. 175/86 is limited once Modvat credit is availed for specified goods.

Notification No. 175/86 was read as a manufacturer-based exemption scheme, not as one that could be applied separately to different factories or product lines of the same business. The Tribunal treated the distinction between manufacturers who avail Modvat credit under Rule 57A and those who do not as controlling, and preferred a harmonious construction supported by contemporaneous departmental clarifications. Once a manufacturer avails Modvat credit for some specified goods, the reduced exemption level applies under the notification framework, so full exemption is not available for other specified goods cleared from the same factory.

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Issues: Whether a manufacturer who avails Modvat credit for certain specified goods can still claim full exemption under Notification No. 175/86 for other specified goods cleared from the same factory.

Analysis: Notification No. 175/86 was construed as a whole. The exemption scheme distinguished between manufacturers who avail the input duty credit facility under Rule 57A of the Central Excise Rules and those who do not. The relevant provision was held to operate with reference to the manufacturer, not to individual factories or separate product lines within the same manufacturer's business. The Tribunal preferred a harmonious reading of the notification, accepted the departmental clarifications as contemporaneous exposition, and held that once the manufacturer chooses to avail Modvat credit for some specified goods, the reduced exemption level applies under the notification framework.

Conclusion: Full exemption under Notification No. 175/86 was not available to a manufacturer for certain specified goods if Modvat credit was availed for other specified goods.

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