Clearance computation under small scale exemption excludes fully exempt parts and accessories cleared for specified further manufacture.

Clearances of parts and accessories exempted under Notification No. 167/79-C.E. were required to be excluded when computing aggregate clearances for small scale exemption under Notifications No. 77/85-C.E. and No. 213/86-C.E., because the former granted a complete duty exemption for specified use and was not an exemption based on value or quantity of clearances. Procedural safeguards or Chapter 10 requirements attached to the exemption did not change its character. On that footing, the Revenue's challenge failed and the exempt clearances were kept outside the aggregate value computation.

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Issues: Whether clearances of parts and accessories exempted under Notification No. 167/79-C.E. were required to be excluded while computing the aggregate value of clearances for small scale exemption under Notification No. 77/85-C.E. and Notification No. 213/86-C.E.

Analysis: Notification No. 167/79-C.E. granted exemption from the whole of the duty of excise on parts and accessories of motor vehicles and tractors when intended for use in further manufacture of excisable goods. The exemption was complete and was not one granted on the basis of the value or quantity of clearances made in a financial year. The fact that certain procedural safeguards or Chapter 10 procedure were required for specified modes of use did not alter the character of the exemption. The small scale exemption notifications excluded only those clearances which were exempted by another notification not based upon value or quantity, and therefore the clearances covered by Notification No. 167/79-C.E. fell outside the computation of aggregate clearances.

Conclusion: The clearances under Notification No. 167/79-C.E. were to be excluded for computing the value of clearances under the small scale exemption notifications, and the Revenue's challenge failed.

Ratio Decidendi: An exemption notification granting complete duty exemption for specific use, though subject to procedural conditions, is not an exemption based on value or quantity of clearances and is therefore excluded from the clearance computation under a small scale exemption notification framed in that language.

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