Exempt goods remain excisable for exemption thresholds; limitation runs from the show cause notice, and the amendment was prospective.

Goods wholly exempted under a Rule 8(1) notification remain excisable goods, so their clearances are includible in computing eligibility under a separate exemption scheme unless the notification expressly excludes them. The limitation objection failed because the show cause notice itself disclosed the basis and extent of the proposed demand, and the later quantification was only a continuation of that notice. The amended notification was treated as prospective, not retrospective, because it was already in force when the relevant classification list was filed and a provision is not retrospective merely because it operates on antecedent facts.

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Issues: (i) Whether goods wholly exempted under a notification issued under Rule 8(1) of the Central Excise Rules, 1944 cease to be excisable for the purpose of computing the aggregate value of clearances under Notification No. 71/78-C.E. dated 1-3-1978 as amended. (ii) Whether the demand was barred by limitation, the relevant six-month period being computed from the show cause notice or from the later demand quantification. (iii) Whether Notification No. 141/79-C.E. dated 30-3-1979 was to be treated as having retrospective effect.

Issue (i): Whether goods wholly exempted under a notification issued under Rule 8(1) of the Central Excise Rules, 1944 cease to be excisable for the purpose of computing the aggregate value of clearances under Notification No. 71/78-C.E. dated 1-3-1978 as amended.

Analysis: Goods exempted by a notification under Rule 8(1) continue to retain their character as excisable goods. In the absence of any contrary indication in Notification No. 71/78, the value of clearances of such exempt goods must be included while determining eligibility under the exemption scheme, because exemption from duty does not convert excisable goods into non-excisable goods.

Conclusion: The issue is decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the demand was barred by limitation, the relevant six-month period being computed from the show cause notice or from the later demand quantification.

Analysis: The show cause notice clearly disclosed the basis and extent of the proposed demand, and the subsequent quantification was only a continuation of that process. Reading the notices together, the assessee had sufficient notice of the demand, so the limitation period could not be computed from the later quantification date.

Conclusion: The limitation objection fails and the issue is decided against the assessee.

Issue (iii): Whether Notification No. 141/79-C.E. dated 30-3-1979 was to be treated as having retrospective effect.

Analysis: The amended notification was already in force when the relevant classification list was filed. A provision is not retrospective merely because it relies on antecedent facts for its operation. The amendment was prospective in application to the assessee's claim.

Conclusion: The issue is decided against the assessee.

Final Conclusion: The exemption claim failed on merits, the limitation challenge was rejected, and the plea against application of the amended notification was also rejected.

Ratio Decidendi: Goods wholly exempted from duty under a notification issued under Rule 8(1) of the Central Excise Rules, 1944 remain excisable goods, and their clearances are includible for determining eligibility under a separate exemption notification unless the notification expressly provides otherwise.

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