Small-scale exemption computation excludes clearances under a conditional exemption not tied to annual value or quantity thresholds.

Clearances exempted under Notification No. 167/79 were not required to be included in aggregate turnover for the small-scale exemption under Notification No. 213/86, because the earlier notification granted a conditional exemption without linking relief to the value or quantity of clearances in a financial year. Explanation II(a) to Notification No. 213/86 excluded only clearances under nil-duty or fully exempt notifications, except where the exemption itself depended on annual value or quantity thresholds. As Notification No. 167/79 did not fall within that exception, its clearances remained outside the computation base, and the assessee could claim the exemption under Notification No. 213/86.

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Issues: Whether clearances made under Notification No. 167/79, which granted conditional exemption without reference to the value or quantity of clearances in a financial year, were required to be included while computing the aggregate clearances for the benefit of Notification No. 213/86 under Explanation II(a).

Analysis: Notification No. 213/86 excluded from computation clearances of excisable goods that were chargeable to nil duty or wholly exempted by another notification, except where such other notification granted exemption based upon the value or quantity of clearances in a financial year. The relevant inquiry was therefore whether Notification No. 167/79 fell within that exception. On its terms, Notification No. 167/79 granted conditional exemption without linking the concession to the value or quantity of clearances. It was therefore not a notification of the kind excluded by the proviso in Explanation II(a), and the clearances made under it could not be counted for determining the small scale exemption limit under Notification No. 213/86.

Conclusion: The clearances under Notification No. 167/79 were not includible for computing the limit under Notification No. 213/86, and the assessee was entitled to the exemption.

Ratio Decidendi: Clearances enjoying exemption under a notification that is not based on the value or quantity of clearances in a financial year are excluded from the computation of aggregate clearances for a subsequent small scale exemption notification containing a similar exclusion clause.

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