Aggregate clearance computation under exemption notifications: later excise exemption could exclude life-saving drugs from the limit.

For computing aggregate clearances under Notification No. 80/80, the value of life-saving drugs was to be excluded if the goods were exempt from excise duty under another notification in force when the exemption claim was made. The majority treated the explanation as a valuation mechanism applicable uniformly to all manufacturers and rejected a reading that would unfairly disadvantage those who had produced the same goods in the preceding year. One member dissented, holding that the later exemption could not be used to exclude goods not wholly exempt during 1979-80, as that would give the later notification retrospective effect.

---

---

Issues: Whether, for computing the aggregate value of clearances under Notification No. 80/80 dated 19-6-1980, the value of life saving drugs manufactured in 1979-80 but exempted only later under Notification No. 106/80 dated 19-6-1980 had to be excluded.

Analysis: The notification excluded from computation the clearances of specified goods exempted from the whole of excise duty by any other notification issued under Rule 8(1) and in force for the time being. The controlling question was whether the exemption had to exist in the earlier financial year itself, or whether it was enough that the goods were exempt when benefit under Notification No. 80/80 was claimed. The majority held that the explanation was only a mechanism for reckoning aggregate clearances and should be applied uniformly to old and new manufacturers. Reading it otherwise would create an artificial and unintended disadvantage to manufacturers who had produced the same goods in the preceding year. Since the life saving drugs stood exempt under Notification No. 106/80 when the exemption claim was made, their value was required to be excluded.

Conclusion: The exclusion was allowed and the appeal succeeded for the assessee.

Dissenting Opinion: One member held that the goods were not wholly exempt during 1979-80 and that applying Notification No. 106/80 to exclude their value for that year would give the later notification impermissible retrospective effect. On that view, the appeals were liable to be dismissed.

---