Retrospective exemption denial barred where later amendment cannot defeat benefits already earned under the earlier notification.

Exemption under Notification No. 175/86-C.E. was available for clearances made before 24-4-1986, and the assessee's entitlement had to be judged under the regime then in force. The restrictive proviso inserted later by Notification No. 260/86 could not operate retrospectively to deny that earlier benefit. The demand was also considered framed on the wrong basis because, after 24-4-1986, the relevant question was the availability of Notification No. 138/86-C.E. The exemption for the disputed clearances was upheld and the duty demand was unsustainable.

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Issues: Entitlement of the assessee to exemption under Notification No. 175/86-C.E. for the clearances made from 1-4-1986 to 23-4-1986, and the effect of the subsequent amendment to Notification No. 138/86-C.E. by Notification No. 260/86 dated 24-4-1986 on that entitlement.

Analysis: The exemption under Notification No. 175/86-C.E. and the benefit under Notification No. 138/86-C.E. were available on the facts as they stood prior to 24-4-1986, and the assessee had acted within that regime for the relevant clearances. The later insertion of the restrictive proviso by Notification No. 260/86 could not be used to retrospectively deny the benefit already availed for the earlier period. The demand was also framed on the wrong basis, since the proper controversy after the amendment would have been the availability of Notification No. 138/86-C.E. from 24-4-1986 onwards, not the denial of Notification No. 175/86-C.E. for the earlier period.

Conclusion: The assessee was entitled to the exemption for the disputed clearances, and the duty demand was not sustainable.

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