Strict construction of exemption notifications bars notional capacity claims where concessional duty depends on licensed or installed capacity.

An exemption notification tied concessional duty to the factory's licensed or installed capacity certified by the Development Officer, and that wording had to be construed strictly. Industrial policy press notes allowing production increases up to 25% did not alter the notification, so no notional licensed capacity could be read into it. The later amendment under Notification No. 152/79 introduced specific changes, but did not remove the original restriction for the relevant period. The exemption claim based on notional capacity was therefore unsustainable and the restriction remained applicable.

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Issues: Whether the exemption under Notification No. 142/78-Central Excises could be extended on the basis of a notional licensed capacity, and whether the subsequent amendment under Notification No. 152/79 altered the restriction applicable to clearances for the relevant year.

Analysis: The exemption notification linked concessional duty to the factory's licensed capacity or installed capacity as certified by the Development Officer of the Directorate General of Technical Development. The industrial policy press notes permitting production increases up to 25% did not modify the terms of the notification, and there was no basis for reading into it a concept of notional licensed capacity. The amendment made by Notification No. 152/79 introduced specific changes, but left the relevant restriction under the original notification otherwise intact for the period in question.

Conclusion: The claim for exemption based on notional licensed capacity was not sustainable, and the restriction in the notification remained applicable. The issue was decided against the assessee and in favour of the Revenue.

Ratio Decidendi: An exemption notification granting concessional duty with reference to licensed or installed capacity must be construed strictly, and its terms cannot be enlarged by importing a notional capacity concept from industrial policy materials unless the notification itself so provides.

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