Input value exclusion under Notification No. 175/86-C.E. applies even when final goods are cleared outside the notification.

Under Notification No. 175/86-C.E., the value of parts used as inputs need not be included in aggregate clearances merely because the final goods are not themselves cleared under the notification. The commentary states that Explanations II and III must be read together, so the benefit for input treatment is not confined to cases where the finished products also enjoy the notification. On that interpretation, exclusion of the input value remained available even when the final goods were cleared outside the notification, and the assessee succeeded on the issue.

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Issues: Whether, for computing aggregate clearances under Notification No. 175/86-C.E., the value of parts used as inputs in the manufacture of final goods is required to be included when the final goods are not cleared under the notification.

Analysis: The issue was treated as covered by the Tribunal's earlier majority decision. It was held that Explanations II and III to the notification have to be read together, and that the benefit relating to inputs is not confined to cases where the final goods are also cleared under the same notification. On that view, the fact that the final goods were not cleared under Notification No. 175/86-C.E. did not prevent exclusion of the input value from the aggregate clearances.

Conclusion: The value of the parts used as inputs was not required to be included in the aggregate clearances, and the assessee succeeded on the issue.

Ratio Decidendi: Under Notification No. 175/86-C.E., Explanations II and III must be read together so that the treatment of inputs does not depend on whether the final products are also cleared under the notification.

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