Exempt clearances excluded from monetary limit computation under overlapping central excise exemption notifications

Clearances made free of duty under Notification No. 167/79-C.E. were excluded from the clearance value used to test the monetary limit under Notification No. 77/85-C.E., because Explanation II(a) directed that such exempt clearances not be taken into account. The Tribunal accepted that the explanation's language was clear and that the value could not be added merely on concern about possible misuse of the notifications. It also noted that where two separate exemption notifications apply, their benefits operate independently unless the notification itself provides otherwise; the exemption under Notification No. 77/85-C.E. therefore remained available.

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Issues: Whether clearances of goods availing exemption under Notification No. 167/79-C.E. were required to be included in computing the clearance value for the benefit of Notification No. 77/85-C.E., as amended.

Analysis: The exclusion turned on Explanation II(a) to Notification No. 77/85-C.E., which stated that clearances made free of duty under another notification issued under Rule 8 of the Central Excise Rules were not to be taken into account while computing the clearance value for the monetary limit. The Tribunal accepted the Collector (Appeals)' reading that the language of the explanation was clear and that the value of such exempt clearances could not be added merely on the basis of an apprehended misuse of the notifications. It also accepted that where two separate notifications apply, their benefits operate independently unless the notification itself provides otherwise.

Conclusion: The value of clearances under Notification No. 167/79-C.E. was not includible for computing the limit under Notification No. 77/85-C.E., and the assessee was entitled to the exemption claimed.

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