Exemption computation for cotton yarn clearances must include duty-paid removals after the notification became operative.

For exemption under Notification No. 1/93-C.E. as amended, cotton yarn became specified goods from 25-4-1994, so clearances from that date had to be counted chronologically toward the aggregate first-clearance limit, whether duty was paid or not. The scheme did not permit exclusion of duty-paid clearances merely because the assessee had not yet opted to avail the exemption. In the absence of an opt-out, the exemption operated on all clearances after the notification became applicable to cotton yarn. The earlier view that computation could begin only from the date of actual availing of exemption was rejected, and the Revenue's interpretation was accepted.

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Issues: Whether, for exemption under Notification No. 1/93-C.E. as amended, the value of cotton yarn cleared on payment of duty from the date cotton yarn was brought within the notification had to be included in the aggregate value of first clearances of Rs. 30 lakhs, or whether only clearances made after the assessee actually opted to avail the exemption were to be counted.

Analysis: Cotton yarn became specified goods only on 25-4-1994 under the amending notification, and from that date the exemption scheme operated for such goods. The notification provided exemption for the first clearances in chronological order up to the aggregate limit and did not permit exclusion of duty-paid clearances made after the notification became operative. The right to pay duty at tariff rate arose only by opting out of the exemption scheme, and in the absence of such opt-out the clearances from 25-4-1994 had to be reckoned in sequence, whether duty had in fact been paid or not. The earlier view that the computation could begin only from the date of actual availing of exemption was not accepted.

Conclusion: The duty-paid clearances of cotton yarn from 25-4-1994 were includible in the first clearances for the purpose of the Rs. 30 lakhs limit, and the Revenue's contention was accepted.

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